ChartWatchCentral Premium Stock Picks

Double-Headed Coin

by
Christina Nikolov
Founder/CEO, ChartWatchCentral, Inc.

Date: July 16, 2010
Company: Franklin Resources.
Ticker: BEN
Price: $90.14
Opinion: Bullish

Comments: After plunging more than 31% from the mid-April peak of $121.90 to the early-July bottom at $84.00, the shares of Franklin Resources (BEN) settled into a sideways trading range which is beginning to resemble a "Head And Shoulders Bottom", with the pattern's "left shoulder" and "head" lows at $87.44 and $84.00, respectively. The company touts price/book, price/earnings and price/sales multiples of 2.8, 15.1 and 4.0, versus 5.1, 13.1 and 4.1 for the Asset Management Industry. Meanwhile, the company exhibits debt/equity and current ratio figures of 0.05 and 5.2, compared with 1.1 and 2.1 for its average competitor. With fundamentals which appear to be far better than its peer group and a technical picture indicating that an upside reversal could be on the horizon, we strongly urge adding this security to your portfolio at this time. Or you could consider an option trade if you want more bang for your buck. We suggest buying the January 2011 $85/$107 Call Spread at a $9.50 debit, because our upside price target is $107 and the cost to enter this spread is cheaper than buying an October $85 call (currently offered for $9.80). It's true that your gains will be limited to that $107 strike price, but does that really matter if an 18.7% move in the share price nets you a 131% profit, should the stock jump to $107 or higher as predicted.  That said, this is definitely and investment firm which can make you money in more ways than one.