An Indian Stock to Watch

Here’s a stock to put on your long-term radar.

It’s an Indian stock: one that trades on the New York Stock Exchange, so it’s one of a rare breed.

The company?

Tata Motors Ltd. (NYSE: TTM), India’s prized automaker. It competes with the likes of Toyota and Honda in Japan, and General Motors and Ford in the U.S.

And fundamentally, Tata stacks up well on several measures.

With a price to earnings (P/E) ratio of 9.7, the company is a good value. It’s on par with Ford’s 10.7 P/E and GM’s 12.2 P/E. And it’s a true steal relative to Toyota’s 15.6 P/E and Honda’s 18 P/E.

Even better, as Ford, GM, Toyota and Honda have watched their total sales contract over the past five years, Tata has grown sales by nearly 40%.

However, as a stock-market technician at heart, I’m most excited about the specific pattern Tata’s stock has been building.

It’s called an ascending triangle. Look:

See larger image

There are two reasons why I find this pattern particularly useful.

For one, it contains a well-defined upper boundary. For Tata, this horizontal price level comes in right at $30. A break above this price is typically an unequivocally bullish signal.

For another, the pattern allows me to project price targets based on the size of the triangle. The one in the chart above calls for an initial target at $45 per share, once the $30 level is broken. That move represents nearly a doubling of the current market price, which is about $23.

This is one ride you don’t want to miss.

But don’t jump on board just yet.

India is still stuck in the emerging market rut, as Harry explained above. And the ascending triangle pattern isn’t confirmed until a break above $30.

I’ll make sure this stock stays on our radar in the months ahead. I’ll tell you when the time comes to give this one gas.

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Categories: Markets

About Author

Adam O'Dell has one purpose in mind: to find and bring to subscribers investment opportunities that return the maximum profit with the minimum risk. Adam has worked as a Prop Trader for a spot Forex firm. While there, he learned the fundamentals of trading in the world’s largest market. He excelled at trading the volatile currency markets by seeking out low-risk entry points for trades with high profit potential. An MBA graduate and Affiliate Member of the Market Technicians Association, Adam is a lifelong student of the markets. He is editor of our hugely successful trading service, Cycle 9 Alert.