Methode Electronics (MEI) Resuming Late 2020 Advance?

Conclusion, Investment Implications, Strategy

Methode Electronics, Inc. (MEI) is amid favorable conditions to resume its November 2020 major uptrend from minor Tactical support near $47.27, which is currently being tested. A sustained rise above this area would target an additional 16% rise to $58.00 per share. This is an Asbury Momentum trade idea.

Analysis and Rationale

Methode Electronics, Inc. (MEI) designs, manufactures, and markets component and subsystem devices worldwide. It operates through four segments: Automotive, Industrial, Interface, and Medical. The Automotive segment supplies electronic and electro-mechanical devices, and related products to automobile original equipment manufacturers directly or through their tiered suppliers. The Industrial segment manufactures lighting solutions; industrial safety radio remote controls; braided flexible cables; current-carrying laminated busbars and devices; custom power-product assemblies, such as PowerRail solution; high-current low-voltage flexible power cabling systems; and powder-coated busbars that are used in various markets and applications comprising aerospace, commercial vehicles, computers, industrial, power conversion, military, telecommunications, and transportation. The Interface segment provides various copper based transceivers and related accessories for the cloud computing hardware equipment and telecommunications broadband equipment markets; user interface solutions for the appliance, commercial food service, and point-of-sale equipment markets; and luid-level sensors for the marine/recreational vehicle and sump pump markets. The Medical segment offers Dabir Surfaces, a surface support technology aimed at pressure injury prevention for use by patients who are immobilized or otherwise at risk for pressure injuries, including patients undergoing long-duration surgical procedures. The company was founded in 1946 and is headquartered in Chicago, Illinois.

The rightmost green highlights in the upper panel of Chart 1 below show that MEI is currently rebounding from a Jun 18th test of its 50-day moving average, a widely-watched minor trend proxy current situated at $47.27. Meanwhile, the blue daily relative performance line between MEI 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 MEI’s November 2020 major uptrend as defined by its 200-day MA. Note that similar tests of outright and relative support on May 12th, April 20th, Mar 25th, and Feb 18th all coincided with new Tactical periods of outright and relative strength.

Chart 1

A sustained rise above the $47.27 area would target an additional 16% rise to $58.00 per share.

Table 1 below shows that considering the aforementioned upside target and a protective stop placed below the $47.39 area, a long entry price of $49.84 would provide a 1:3.3 risk/reward ratio (risking $1.00 to make $3.30) with an initial risk of 4.9%.

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.

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Methode Electronics (MEI) Resuming Late 2020 Advance?

Conclusion, Investment Implications, Strategy

Analysis and Rationale

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Methode Electronics (MEI) Resuming Late 2020 Advance?

Conclusion, Investment Implications, Strategy

Analysis and Rationale

Asbury Research

Asbury Research subscribers get more detail on our latest analysis, and updates to our quantitative models

Schedule A 15-Minute Zoom Meeting With Us To Get More Information >>>

Asbury Research subscribers get more detail on our latest analysis,
and updates to our quantitative models