Although not our usual fare, we are always open to the idea of buying stocks that look like they are set to advance, especially now while we are waiting for the precious metals sector to get its act together.
Good Natured Products Inc. (GDNP:TSX.V) looks like it has a bright future, because the company has developed and manufactures bioplastic products and packaging, that are made from plants not plastic and are thus degradable, and thus help to provide a solution to the growing plastic waste problem. One imagines from the company's name that the working atmosphere there is good so that if, for example, an employee goes and asks for a raise, the boss refuses with a cheery smile on his face.
Stockholders in the company have had a rather rough time of it so far, as we can see on the latest 4-year chart, for after a brief rally when it came to market in the spring of 2015, it has been downhill all the way in a bear market that persisted until the summer of last year. After that, however, a convincing Cup & Handle base has formed that has been accompanied by a signature volume pattern indicating that a valid base pattern is forming. Of particular note is the strong Accum-Distrib line, which is a convincing sign that the stock is reversing here. The base has formed beneath a clear zone of resistance, which means that a clear breakout above the Handle of the base pattern and above this resistance will signal the start of a bull market in this stock.
On the 1-year chart we can see the Cup & Handle base pattern in much more detail. In particular we can see that the volume pattern is very bullish, with strong volume on the rise out of the right side of the Cup, which has eased right back as the Handle reaction has formed. With the price and 50-day moving average now above the 200-day, the latter should turn up soon. This chart makes clear that we are at a good entry point here, although it should be pointed out the Handle reaction/ consolidation could continue for a while longer before upside breakout from the pattern occurs.
Conclusion: Good Natured Products looks to be at a very good entry point here, but you shouldn’t expect it take off higher two days after you buy it, although the positive pattern means that it could take off higher at any time. The company's stock trades in terribly light volumes on the US OTC market, where it should be avoided for this reason. There are 93.4 million shares in issue with a float of 56.4 million.
Good Natured Products website
Good Natured Products Inc, GDNP.V, SLGBF on OTC, closed at C$0.10, $0.09 on 16th March 2018.
Clive Maund has been president of www.clivemaund.com, a successful resource sector website, since its inception in 2003. He has 30 years' experience in technical analysis and has worked for banks, commodity brokers and stockbrokers in the City of London. He holds a Diploma in Technical Analysis from the UK Society of Technical Analysts.
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Charts provided by the author.
The above represents the opinion and analysis of Mr Maund, based on data available to him, at the time of writing. Mr. Maund's opinions are his own, and are not a recommendation or an offer to buy or sell securities. Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stock market analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund's opinions on the market and stocks can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction.