American Home Products (Symbol: AHP)
Function
American Home Products Corporation, founded in 1926, is engaged in the discovery,
development, manufacture, distribution, and sale of a diversified line of products in three
primary businesses: Pharmaceuticals, Consumer Health Care and Agricultural Products.
Fundamental Analysis
A- Valuation
Ratio
DDM
P/E
PEG
PSR
P/B
Comparison
Intrinsic Value = $ 60.30
Market Price = $ 56.81
I.V > M.P
The company has negative
earnings
AHP =2.40
Industry =1.95
AHP > Ind.
PSR = 3.28 >3
P/B = 12.5 > 1
Comment
Undervalued
Overvalued
Overvalued
Overvalued
B- Financial Ratios
Ratios
Net Profit Margin
ROE
ROA
Current Ratio
Total Debt / Total Asset
Inventory Turnover
Company
1.01
1.78
6.58
1.73
0.42
1.81
Industry
16.73
33.87
16.23
1.54
0.72
3.01
Technical Analysis
Relative Strength Wilder
RSI is plotted on a vertical scale of 0 to 100. Movements above 70 are considered
overbought, while an oversold condition would be a move under 30. In this case, in late
April the curb reached 60s, so it’s situation to buy the stock.
Bollinger Bands
In this technique, two trading bands are placed around a moving average. Bollinger
Bands are placed two standard deviations above and below the moving average. Prices
are considered to be overextended on the upside (overbought) when they touch the upper
band. They are considered overextended on the downside (oversold) when they touch the
lower band. In this case, we see that there is a touch band in last April, that is a signal of
an important market bottom and a buying opportunity.
Moving Average (1 Line)
The moving average is plotted on the bar chart in its appropriate trading day along with
that day’s price action. There is a buy signal when the closing price moves above the
moving average. A sell signal is given when prices move below the moving average.
In this case from January the prices curb has moved above moving average that was
signaling to buy.
Moving Average (2 Lines)
The technique of using two moving averages is called “double crossover”. A buy signal
is produced when the shorter average crosses above the longer. In this case in early
April, the shorter average crossed below the longer and stays in that situation. The scope
is not big, so it’s situation to hold and see how the curbs will move in the future.
Moving Average Convergence / Divergence
MACD combines some of the oscillator principles with a dual moving average crossover
approach. It's composed of two lines. The faster line (MACD line) is the difference
between two exponentially smoothed moving averages of closing prices. The slower line
(signal line) is usually a 9 period exponentially smoothed average of the MACD line. The
buy and sell signals are given when two lines across. A crossing by the faster MACD
line above the slower signal line is a buy signal. A crossing by the faster line below the
slower is a sell signal. The best buy signal is given when prices are well below the zero
line (oversold). In this case we see that, in late April, the faster MACD line crossed
above the slower line. So it's a good signal to buy the stocks.
Moving Average Convergence / Divergence Histogram
The histogram consists of vertical bars that show the difference between the two MACD
lines. The histogram has a zero line of its own. When the MACD lines are in positive
alignment (faster line over the slower), the histogram is above its zero line. Crossings by
the histogram above and below its zero line coincide with actual MACD crossover buy
and sell signals. In this case, we have a buy signal.
Moving Average Oscillator
Most oscillators look very much alike. They are plotted along the bottom of the price
chat and resemble a flat horizontal band. The oscillator band is basically flat while prices
may be trading up, down, or sideways. When the oscillator reaches an extreme value in
either value in either the upper or lower end the band. The trader should be buying when
the oscillator line is in the lower end of the band and selling in the upper end. The
crossing of the midpoint line is often used to generate buy and sell signals. In this case
the oscillator line is in the upper end of the band.
Momentum Oscillator
The concept of momentum is the most basic application of oscillator analysis.
Momentum measures the velocity of price changes as opposed to the actual price levels
themselves. The momentum chart has a zero line. The crossing of the zero line is used to
generate buy and sell signals. A sell signal appears when the crossing occurs above the
zero line. A buy position should be taken on crossing above the zero line if the market
trend is up. In this case we have a buy signal
Point & Figure
The point and figure chart is a study of pure price movement. A buy signal is given when
one X column rises above the top of a previous X column. A sell signal is given when a
column of O's falls a previous O column. Signals are more precise on point and figure
charts. In this case, we can see that, in mid April, the x column risen above the top of a
previous x column. That is a signal to buy.
Percentage Envelopes
Percentage envelopes is used to help determine when a market has gotten overextended
in either direction. They tell us when the prices have stayed too far from their moving
average line. When prices reach one of the envelopes, the short-term trend is considered
to be overextended. The market is oversold, so it’s signal to buy.