Teaching chickens to fly

• Posted by Greg Harmon
• on December 9th, 2015

15 years ago the movie Chicken Run came out. It was about a group of chickens that finally became aware that their peaceful farm was actually a Pot Pie processing business. Once they learned this they embarked on a plan to break out of the farm. To do so they needed to learn how to fly.

Today there is another chicken farm that is preparing to take flight. Pilgrim’s Pride ($PPC) is the second largest producer of chickens in the US. The stock has had an abysmal 2015, falling from a high over $37 to a low under $18 at the end of October. But things are starting to look up.

The chart above shows the decline. Notice that the price moved under the 200 day SMA January 28th and has stayed there ever since. That is until Wednesday. As I write the price is poking above that 200 day SMA. This is a bullish signal. And it has support for more from bullish momentum indicators. The RSI is bullish and rising and the MACD is doing the same.

The stock could be a good buy on a hold over that 200 day SMA and the August high at $23. And with over 15% short interest it has fuel to move if it can execute the initial take off. The company reports earnings next in February and does not pay a dividend. For a low cost defined risk way to participate in any upside consider the January 23 Calls (offered at about 90 cents).

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