Jabil Circuit For Your Portfolio?

12/11/09 11:37:18 AM

by Koos van der Merwe

With the world economy on its way to recovery, many market participants believe that technology companies should make up a good part of your portfolio.

Security: JBL
Position: Accumulate

Jabil is an electronics solutions company providing comprehensive electronics design, production, and product management services to global electronics and technology companies. Their customers span all industries, including consumer products; aerospace and defense; automotive; business automation; computing and storage; industrial, instrumentation, and medical; networking; and telecommunications. The company advertises that it brings electronics products to the market faster and more cost-effectively by providing a complete electronic product supply chain management around the world. With more than 85,000 employees and facilities in 21 countries, the company provides a comprehensive solutions to customers in a range of industries.

FIGURE 1: JBL, MONTHLY

Graphic provided by: AdvancedGET.

Figure 1 is a monthly chart and shows how the share price fell from a high of $68.20 in September 2000 along with the dotcom bubble to a low of $11.24 by October 2002. The price then recovered to $43.59 by March 31, 2006, and then crashed with the market meltdown to a low of $3.30 by March 2009.

FIGURE 2: JBL, DAILY

Graphic provided by: AdvancedGET.

Figure 2 is a daily chart and shows that the share price made a double bottom in June and July 2009. This led to a strong rise from $6.64 to a high of $15.51 by October 21, 2009. The share price appears to have now moved into a flag pattern, and a breakout at $14.26 gives the share price a target of $21.54 (15.51 - 6.64 = 8.87 + 12.67 = 21.54). The moving average convergence/divergence (MACD) shown has given a buy signal. Volume, however, has been falling.

Jabil Circuit is a share that you should place on your watchlist for a future buy. Those with a higher-risk profile could buy at present levels.

Koos van der Merwe

Has been a technical analyst since 1969, and has worked as a futures and options trader with First Financial Futures in Johannesburg, South Africa.