|Casual dining has been a good business for the last year. Anyone who doubts it only has to look at the stock of Ruby Tuesday Inc. operator of over 440 restaurants in 26 states and the District of Columbia. For the 26 weeks ending December 2, 2003, revenues increased 14%. |
Like the menu, fundamentals for this company are looking quite inviting. With a P/E of 21 and a short interest of around 3.3% of float, it qualifies as a long candidate. More impressive is its forward P/E of 19. Institutions also hold more than 87% of the stock. Notably, OppenheimerFunds just recently nearly doubled their holdings to 2.8 million shares.
|Figure 1 – Daily chart of Ruby Tuesday (RI) showing support by the 50-line of the Reverse Engineered RSI, ascending triangle chart pattern followed by an upside break.|
|Graphic provided by: MetaStock.|
|More importantly, a number of indicators are lining up to show a possible move higher. The ascending triangle that formed from December through February recently broke to the upside and the stochasticRSI indicator just generated a buy signal. The stock shows cyclical lows every four to five weeks. These have occurred in the last six months with the recent low in the last week of March. Stocks, commodities and currencies that demonstrate cyclicality are good trading candidates for those who have a trained eye and they are especially interesting when supported by other indicators. |
With an election coming up, the dollar printing presses in high gear, and inflation on the rise, people go out a lot more and restaurants prosper. Ruby Tuesday looks to be in an excellent position, both fundamentally and technically, to benefit from the trend.
|Garibaldi Highlands, BC Canada|
|Phone # for sales:||604-898-9069|
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