Conclusion, Investment Implications, Strategy

STERIS plc (STE) is amid favorable conditions to resume its May 2020 Strategic advance from major underlying support near $173.65, which is currently being tested.  A sustained rise above this area would target an additional 15% rise to $203.90 per share. 

Analysis and Rationale

Healthcare company STERIS plc (STE) provides infection prevention and other procedural products and services worldwide. It operates in four segments: Healthcare Products, Healthcare Specialty Services, Life Sciences, and Applied Sterilization Technologies.  The company was founded in 1985 and is based in Dublin, Ireland.

The rightmost green highlights in Chart 1 below show that STE testing major underlying support at its 200-day moving average, currently at $173.65 while reversing from monthly (our Tactical time period) oversold extremes. The other green highlights show that previous instances of this, in December, October, and August 2020, helped trigger the resumption of the stock’s May 2020 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 $173.65 area would indicate this is indeed the case and would target an additional 15% rise to $203.90 per share. 

Table 1 below shows that considering the aforementioned upside target and a protective stop placed below the $170.36 area, a long entry price of $178.00 would provide a 1:3.4 risk/reward ratio (risking $1.00 to make $3.40) with an initial risk of 4.3%.

Table 1


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