From the desk of Steve Strazza @Sstrazza
As many of you know, we run A LOT of scans here at All Star Charts. In fact, I gave a presentation about them this past weekend at Chart Summit which you can rewatch here.
In this post, we’re going to share a free trade idea from our Young Aristocrats list which is one of my absolute favorites of all the various bottoms-up scans I regularly run.
The rationale behind the list and corresponding monthly column is to catch strong stocks when they are still in the early stages of their dividend growth phase* in hopes that by doing so, we’ll be buying some of the future Dividend Aristocrats…
And for those of you who aren’t familiar with this exclusive list, it’s home to some of the top-performing blue-chip names in stock market history.
Bottom line, we want to be in the markets future aristocrats, and we want to get in early. In terms of the names we highlight, we don’t just want to own them to collect a payout, but we’re also expecting higher prices and betting on the most favorable risk/reward setups in the strongest stocks.
* The criteria we use is between five to nine years of consecutive dividend increases. You can find more details about our universe in our latest edition, here.
While taking a look at this scan the other day, I came across a name that the Young Aristocrats list was absolutely designed to detect. And, guess what… I missed it and it rolled off of our “official” list last December after achieving its tenth consecutive year of dividend hikes.
But as we often say…
We make the rules, so we can break the rules
Today, we’re looking at Griffin Corp $GFF, the $1.5B multinational home and building products company that manufactures everything from garage doors to landscaping products, and security systems. We like Small-Caps, and we like Industrials – and this name checks both those boxes.
And we just love giant basing patterns like this one, especially with price coiling up against fresh all-time highs…
GFF offers a safe and steady 1.2% yield (with a very low payout ratio 0f about 20%) and has hiked it consistently with a 12% 5-year growth rate.
The stock is in a bullish momentum regime as it consolidates in a continuation pattern at a handful of key former highs.
But, it’s failed at this level plenty of times before so we want to make sure the breakout is valid before getting involved.
We’re only buyers of GFF on strength if/when it resolves higher from its current base above the 27 area. We’ll be looking to take profits at 37.50 with a timeframe of 2-4 months.
We hope you enjoyed this bonus edition of our Young Aristocrats column. Please let us know if you have any questions!