Today we are going to look at Aflac (AFL) to see if their stock performance is as safe as the insurance they sell. In glancing at their chart it is in a very strong uptrend so lets see what the fundamentals look like as well. We will look at the 7 fundamental parameters I look to see if a stock can be considered a growth stock. Then we will take a look at the technical analysis side using the setups I have created and use for my trades. I have no plans to own AFL in the next 72 hours and do not hold any positions in Aflac (AFL).
Aflac (AFL): Is Their Stock as Safe as the Insurance?
There are 7 fundamental markers I look for in a stock. I try to only purchase growth stocks so these are the parameters I look for to see if a stock meets the majority of the markers. I prefer to have all seven fulfilled. You can it more in depth here: https://evancarthey.com/how-to-scan-for-winning-stocks-an-insiders-view-to-my-process/
- Market Cap: > $300 million
- EPS growth past 5 years: >0%
- P/E: Over 10
- EPS growth next 5 years: >0%
- Sales growth past 5 years: Over 20%
- Debt/Equity: <0.1
- Sales growth qtr over qtr: Over 5%
Does the stock meet these 7 markers?
- Market Cap: 36.70B (YES)
- EPS growth past 5 years: 2.30% (YES)
- P/E: 12.90 YES
- EPS growth next 5 years: 6.19% (YES)
- Sales growth past 5 years: -2.00% (NO)
- Debt/Equity: 0.25 (NO)
- Sales growth qtr over qtr: -4.50% (NO)
I used Finviz.com for the fundamental analysis screener. With AFL hitting only 4 of the 7 markers it is not a growth stock. Aflac does have a lower Debt/Equity marker even though it is higher than 0.1. The biggest concern I see is their sales growth. Both the past and the present.
Before I would trade just about any stock that fit my technical parameters. Unfortunately, I have had to learn the hard way that the fundamentals of a stock are just as important (if not more) than the technical setups.
Technical Analysis for Aflac (AFL)
Aflac is currently in a short setup. It has just hit the 127.2% Fibonacci extension level. The current exit is the pink line at $46.42. The exits could move if price continues to move up.
The exits can move if price continues to move up first. If price moves up and hits the maroon line at $56.72 then the exit moves to the pink line at $51.40. But if price moves up to $63.09 before hitting either of the previous exits then the exit moves to the purple line at $57.24. This would be the final time you would move the exit even if price continues to move higher.
So if you do take this trade you want to increase the amount you short the stock at each level to ensure you are in profit when price does retrace back to the exit. I am using the weekly time frame for this setup since the uptrend has been going on so long.
Overall with a 2.21% dividend this stock has been fantastic if you like to buy and hold a stock. That doesn’t mean this will continue but for the past 8+ years it would have been a great place to park some money.
That short setup is the only one I see. We need volatility for the setups I look for and this stock doesn’t have much volatility right now.
Popular Links
Here are a couple of links if you are looking at how I view the market and some trade setups. You can create your own trading style and setups. Quit paying losing traders to teach you. The only thing they teach is how to lose money.
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