Conclusion, Investment Implications, Strategy

The Kraft Heinz Company (KHC) appears to be making a major bullish trend change following 2 months of sideways investor indecision.  A sustained rise above the upper boundary of the indecision area at $32.48 would help confirm this and target an additional 10% rise to $36.20.

Analysis and Rationale

The Kraft Heinz Company (KHC), together with its subsidiaries, manufactures and markets food and beverage products in the United States, Canada, the United Kingdom, and internationally. Its products include condiments and sauces, cheese and dairy, meals, meats and seafood, frozen and chilled foods, packaged drinking pouches, appetizers, refreshment beverages, coffee, nuts and salted snacks, infant and nutrition products, and other grocery products, as well as desserts, dressings, toppings, and baking. The company offers its products under the Kraft, Oscar Mayer, Heinz, Philadelphia, Lunchables, Velveeta, Planters, Maxwell House, Capri Sun, Ore-Ida, Kool-Aid, Jell-O, Classico, McCafe, Tassimo, TGI Fridays, Taco Bell Home Originals, Plasmon, Pudliszki, Honig, HP, Benedicta, Karvan Cevitam, ABC, Master, Quero, Golden Circle, and Wattie’s names. The company was formerly known as H.J. Heinz Holding Corporation and changed its name to The Kraft Heinz Company in July 2015. The Kraft Heinz Company was founded in 1869 and is headquartered in Pittsburgh, Pennsylvania.

Chart 1 below plots KHC daily since May, showing that it is currently breaking out higher from almost 2 months of sideways investor indecision.  This indecision appears to have been the market negotiating the stock’s 200-day moving average, a widely-watched major trend proxy, which appears to be resolving itself with higher prices via a major bullish trend change.

A sustained rise above the upper boundary of the indecision area at $32.48 would help to confirm this and would target an additional 10% rise to $36.20.

Chart 1

Table 1 below shows that considering the aforementioned upside target and a protective stop placed below the $31.75 area, a long entry price of $32.87 would provide a 1:3.0 risk/reward ratio (risking $1.00 to make $3.00) with an initial risk of 3.4%.

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.