If you're looking for some trading action, then Organovo Holdings Inc. (NYSEMKT:ONVO) and Albemarle Corporation (NYSE:ALB) are the two top names to put on your radar today. Granted, they're trading candidates for completely opposing reasons. In fact, the best "play" may be to swap one for the other. However you want to play it though, here's what you need to know about ALB and ONVO.
If the name Organovo Holdings rings a bell, it might be because yours truly named it as a budding bullish idea back on October 18th. As they say though, that was then and this is now. A lot can happen in three weeks, and in the case of ONVO, a lot did happen - the stock gained 50%.
Although the ultimate expectation from ONVO was for a move to slightly higher levels than the current price of $9.03, you deal with what the market gives you rather than try and make the market give you something it's just not willing to give up. In this case, what the market gave us was a runup that unfurled a little too rapidly for its own good. Though the weekly chart of Organovo Holdings Inc. has yet to hit the upper resistance line that's tagged the last couple of major peaks, there's not a lot of sense in being penny-wise but pound-foolish; a 50% pop isn't too shabby.
Instead, any ONVO sale proceeds might be better put to use in an Albemarle Corporation trade.
The last couple of years have been maddening - and unproductive - for ALB shareholders. The stock's gone nowhere (on a net basis) since mid-2011, though the chart simply and accurately predicted 2012's revenue and earnings lull. Albemarle is on pace to see its revenue fall to $2.61 billion this year from last year's $2.75 billion, with per-share earnings on pace to fall from $4.85 last year to $4.20 this year. As was already noted above though, nothing lasts forever. Next year is projected to be a year of recovery for Albemarle Corporation, with profits expected to grow to $4.81 per share on sales of $2.74 billion. A pipedream? Not likely. If the global economy really is on the mend the way it appears to be, then it can use a specialty chemical company like Albemarle.
The back-story isn't what makes ALB so interesting right now, however. It's the shape of the chart that suggests shares are on the verge of a big breakout.
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Though the stock didn't make any net progress over the past couple of years, there was something of a method to the madness. During that time, Albemarle was forming a converging wedge shape, and now we're almost to the point where there's no room left to roam - something's got to give. And, judging from the amount of pressure being put on a mess of technical resistance around $67.90, the undertow is a bullish one - the bulls are testing the waters and looking for an excuse to break out. More likely than not they'll find the excuse they need.
Just for the record, neither this bearish outlook on Organovo Holdings nor the bullish one for Albemarle Corporation is a judgment call on either company's merits. They're simply opportunistic trading calls based on the shape of the respective charts.
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