In February 2018, GlaxoSmithKline made a low around 1160 – 1112. From that moment, it has been rising, and now its price is around 1846 (close of Friday, January 17). Can it continue going up? So Is GlaxoSmithKline a Good Investment Opportunity?
What Is GlaxoSmithKline?
GlaxoSmithKline is a pharmaceutical company with headquarters in the UK. It was the result of the merger of Glaxo Wellcome and SmithKline Beecham. Nowadays, it is one of the top 10 largest pharmaceutical companies in the world.
It is not the only pharma with good behaviour on the market. Grifols in Spain and Sanofi in France, just to name a couple of them with different characteristics, are also doing good work.
What about the Stock?
We never recommend investing by looking at the dividend because we strongly believe that the price of the stock will include it and deduct it once paid. However, we know many investors still want to look at it. And in the case of GlaxoSmithKline, it is not bad at all: 4.42 percent. Of course, this number is only valid for the current price at the moment of writing this article and if they decide to keep the same dividend in the future. In these conditions, PER is 19.67.
The chart:
Now, if we look at the chart, the appearance is very good.
Based on an investor that is looking for a long-term investment and does not want to move their money every week or even every month, we can take a glance at the weekly chart. Of course, this is with dividends incorporated to the price.
If we do that, we will see that at the beginning of December 2018, it surpassed its historical top. Just after that, it went down wildly from 1564 to 1370 in just one week. That’s a surprising 14 percent drawdown. But then it recovered, and in July 2019 it surpassed the historic top again.
We think that these fast corrections when surpassing a max is usually a good signal, especially when the low made by this correction is not then broken again in the next low. In other words, it goes down quickly, but then starts to rise again, and the next correction does not go lower than the previous one.
In these cases, it seems that the most powerful investor just wants to remove the stop loss of the small investors to continue the rise without them. This is not a straight rule, but it usually happens like that.
It seems that it is what happened with GlaxoSmithKline, that is now rising with a very trustful behaviour.
Since May 2019, its corrections never went below the 30-weeks moving average.
We cannot know what will happen in the coming months, but investing here with a stop loss in the 30-weeks moving average seems like the chance to control potential losses for a nice opportunity of increases.
IMPORTANT: This is not investing advice, but a subjective opinion from the writer that may be very wrong. Please do not make investment decisions based on what you read in this blog. If you do not feel qualified to make your own decision, ask a financial consultant that you trust.
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