Conclusion, Investment Implications, Strategy

EastGroup Properties, Inc. (EGP) is amid favorable conditions to resume its July 2020 major uptrend from minor Tactical support near $161.88, which is currently being tested.  A sustained rise above this area would target an additional 13% rise to $195.00 per share.  This is an Asbury Momentum trade idea.

Analysis and Rationale

EastGroup Properties, Inc. (EGP), an S&P MidCap 400 company, is a self-administered equity real estate investment trust focused on the development, acquisition and operation of industrial properties in major Sunbelt markets throughout the United States with an emphasis in the states of Florida, Texas, Arizona, California and North Carolina. The Company’s goal is to maximize shareholder value by being a leading provider in its markets of functional, flexible and quality business distribution space for location sensitive customers (primarily in the 15,000 to 70,000 square foot range). The Company’s strategy for growth is based on ownership of premier distribution facilities generally clustered near major transportation features in supply-constrained submarkets. EastGroup’s portfolio, including development projects and value-add acquisitions in lease-up and under construction, currently includes approximately 45.8 million square feet.

The rightmost green highlights in the upper panel of Chart 1 below show that EGP is currently rebounding from a Jly 2nd test of its 50-day moving average, a widely-watched minor trend proxy current situated at $161.88.  Meanwhile, the blue daily relative performance line between EGP and the SPDR S&P 500 ETF (SPY) in the lower panel is rebounding from a coincident test of its 63-day moving average, which is our Strategic time period. 

Together they suggest a new Tactical buying opportunity within EGP’s July 2020 major uptrend as defined by its 200-day MA.  Note that a similar test of outright and relative support between May 6th-12th coincided with a new Tactical period of outright and relative strength.

Chart 1

A sustained rise above the $161.88 area would target an additional 13% rise to $195.00 per share. 

Table 1 below shows that considering the aforementioned upside target and a protective stop placed below the $164.14 area, a long entry price of $171.93 would provide a 1:3.0 risk/reward ratio (risking $1.00 to make $3.00) with an initial risk of 4.5%.

Table 1

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Please consult the table showing our Asbury 6 key market metrics to help determine if this investment is suitable for you.