Kellogg Company (NYSE:K) is trading at $69.59. The price is at the resistance level of $70. The company has tested the resistance level in the last few weeks. It hit a high of $73 before pulling back. The price activity affirmed the resistance. While investors could still expect gains, we think the stock will pull back.
Kellogg Company is trading at a forward PE of 15.27. The company’s EPS was recorded at $4.36 last year. This year, the company expects 8% growth. The growth rate places the PEG ratio at 4.49. The stock is certainly overvalued.
Kellogg also worries about inflation and supply chain costs. There might be challenges in achieving the projected growth. It all depends on how well the company controls the costs. Investors will be cautious in discounting the projections from the company.
Kellogg Company trades reliably between $60 and $70
Source – TradingView
Technical analysis indicates that Kellogg Company is trading close to a resistance level of $70. The stock has support at $60. A study of the price performance shows that the stock may adopt a cyclical trading pattern.
The stock would be alternating between the support and resistance levels. Investors would take a profit by trading the trend price movements. With a strong momentum rating, the stock can be expected to remain within the pattern.
Summary
We recommend selling Kellogg Company at current prices. The stock is about to pull back in accordance with the established cyclical pattern. The stock will find support at levels between $55 and $60 where investors can re-enter.
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