Trade of the Day: CA, Inc. (CA) Stock Programmed for More Gains
CA, Inc. (NASDAQ: CA ) - This information technology company was formerly known as Computer Associates International. Despite the name change, it still develops systems software, develops database management systems and applications software. The company is on a March fiscal year and Standard & Poor's estimates earnings per share of $2.44 in FY 2017 (up from $1.78 in FY 2016), $2.47 in FY 2018 and $2.56 FY 2019.
They anticipate that EPS growth will be aided by the sale of two businesses and a share repurchase plan. The stock pays a dividend of $1.02, indicating a dividend yield of 3.2%, which S&P points out is well above the average yield of stocks in the S&P 500 .
Recently CA announced the pending acquisition of Veracode , a firm that secures internet, mobile and third-party applications.
S&P sees this as an opportunity in an area that they currently lead and believe that Veracode would enhance their leadership and is a way to put cash to work that will generate more growth.
Technically, since topping last August at about $35, CA stock has been consolidating within a wide right triangle. It is currently approaching the apex of the triangle with support at $31.75 and resistance at the 200-day moving average at $32.55.
Volume has been slightly on the side of accumulation, however a break above the 50-day moving average at $32.05 would be a welcome pre-signal of an attack on the resistance line at the 200-day moving average. Buy CA stock at $31.50 with a trading target of $36 for a proposed return of over 14%.
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