At the beginning of the year I highlighted shares of Urban Outfitters (URBN) as an attractive growth play for investors. Followers of that advice saw the stock rise from the low 20′s to the low 30′s over the course of 2005. However, recent weakness in retail stocks has caused a pullback in URBN and for those who have yet to take a position in the company, there is an opportunity here, I believe.
Not only are the fundamentals strong, but the technicals look good as well. Readers of this blog know I don’t use charts to pick stocks, but when a company I like fundamentally also has a good chart pattern, it’s usually a good entry point.
Here’s a second version of the chart, in response to the reader’s comment:
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Chad,
I’m curious. What do you see that you like in this chart?
Nothing too complicated, just the longer term support level of the stock. The support level has held for now, and I think it will hold. I don’t think business at URBN is below plan, so you have maybe $1 downside ($24-$25) versus $5-$7 upside ($30-$32).
It’s all predicated on the numbers they put up, but I like the stock long-term, so short-term weakness that tests and holds support should be an attractive entry point.
I will post another chart showing the areas of resistance and support.