Conclusion, Investment Implications, Strategy
Brown-Forman Corporation (BF.A) is amid favorable conditions to resume its current Strategic advance from major underlying support near $66.26, which is currently being tested. A sustained rise above the $66.26 area would target an additional 11% rise to $76.00 per share.
Analysis and Rationale
Consumer Staples company Brown-Forman Corporation (BF.A) manufactures, bottles, imports, exports, markets, and sells various alcoholic beverages. It provides spirits, wines, whiskey spirits, whiskey-based flavored liqueurs, ready-to-drink and ready-to-pour products, ready-to-drink cocktails, vodkas, tequilas, champagnes, brandy, bourbons, and liqueurs. The company offers its products primarily under the Jack Daniel’s, Woodford Reserve, Canadian Mist, GlenDronach, BenRiach, Glenglassaugh, Old Forester, Early Times, Slane Irish Whiskey, Coopers’ Craft, el Jimador, Herradura, New Mix, Pepe Lopez, Antiguo, Finlandia, Korbel Champagne, and Sonoma-Cutrer brands. It is also involved in the sale of used barrels, bulk whiskey, and wine; and provision of contract bottling services. The company serves retail customers and consumers through distributors or state governments; and retailers, wholesalers, and provincial governments directly. It has operations in the United States, the United Kingdom, Germany, Australia, Mexico, and internationally. Brown-Forman Corporation was founded in 1870 and is headquartered in Louisville, Kentucky.
The rightmost green highlights in Chart 1 below shows that BF.A is testing major underlying support at its 200-day moving average, currently at $66.26, while monthly (our Tactical time period) oversold. The other green highlights show that previous instances of this, in late October and late June 2020, helped trigger the resumption of the current major uptrend as defined by the 200-day MA. This sets up a low-risk buying opportunity because, If that major uptrend is still valid, this is where it should resume.
Chart 1
A sustained rise above the $66.26 area would indicate this is indeed the case and target an additional 11% rise to $76.00 per share.
Table 1 below shows that considering the aforementioned upside target and a protective stop placed below the $65.85 area, a long entry price of $68.32 would provide a 1:3.1 risk/reward ratio (risking $1.00 to make $3.10) with an initial risk of 3.6%.
Table 1
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