A key level of resistance has formed in the chart of Globus Medical Inc. (GMED). If that level is broken, a breakout could ensue.
GMED is a medical device company that develops and provides healthcare products and solutions to hospitals, physicians, and surgical centers. The vast majority of the company’s revenue is generated from musculoskeletal solutions products.
While the company initially struggled at the beginning of the pandemic, there has been a strong rebound since late April. GMED has seen a spike in revenue from its U.S. spine business. The company should benefit from aging demographics as an older population is more prone to musculoskeletal degeneration and fractures.
GMED has a fairly strong balance sheet and a high gross margin. While growth was lagging over the last year, both sales and earnings are expected to return strong next year. The stock’s valuation is a bit high, with a P/E of 60, but is less than the industry average.
GEMD’s stock has seen some momentum over the short-term, which has led to a “Strong Buy” rating in our POWR Ratings system, with a grade of “A” for Trade Grade and Buy & Hold Grade. This rating is reflected in its chart.
Take a look at the 1-year chart of GMED below with my added notations:
Chart of GMED provided by TradingView
During most of the past year, GMED has formed a key level of resistance at the $58 (red) area. The stock has tested that level three times since the stock’s February drop, and it is now sitting just under that area again. A solid close above $58 should lead to higher prices for GMED.
A long trade could be entered on a breakthrough of the $58 resistance level.
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GMED shares were unchanged in premarket trading Thursday. Year-to-date, GMED has declined -4.60%, versus a 12.18% rise in the benchmark S&P 500 index during the same period.
About the Author: Christian Tharp, CMT
Christian is an expert stock market coach at the Adam Mesh Trading Group who has mentored more than 4,000 traders and investors. He is a professional technical analyst that is a certified Chartered Market Technician (CMT), which is a designation awarded by the CMT Association. Christian is also the author of the daily online newsletter Todays Big Stock. More…
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