MUSA (Long) - Find me a better base

NYSE:MUSA   Murphy USA Inc.
  • And it is not just the base, the fundamentals are also robust. MUSA has immense amount of sales and even with the price rise we have seen, the P/S ratio is still staggeringly low at 0.4. The P/E ratio is also low at 13.
  • The reason behind the stellar share price performance is mainly the consistent growth in sales, regardless of market conditions, the stock has outperformed.
  • The reason why the stock is not even higher is two-fold: (i) very low profit margins, capturing only 2.6% of sale as profits and (ii) high debt with debt/equity ratio at 2.22
  • However, the firm has been defying expectations for a while in constantly beating estimates, hence the share price
  • And with that chart setup, it seems like continuing further

  • Hard to say anything bad about this setup. I have been watching investors building this base, buying every dip and forming robust fundamentals for the past year.
  • The price clearly broke out of the base a couple days ago with volume and no resistance, ending the day at the highs.
  • This is one of my favourite setups and rarely fails (for demonstration, look at my past trades). I am not going to provide more evidence in terms of indicators and patterns, I have been watching the price action for 6 months, knowing the stock intimately, and this break looks very convincing.

  • The air is not completely clear until I see some continuation going ahead, but that could mean sacrificing returns, hence I went long on the break.
  • However, I have to caveat that if there is a sign of turning around and making this a fake breakout, immediately sell
  • A pullback to the entry point is allowed, but once we start breaking lower or lacking continuation, it is a sell signal
  • The trade is still good to enter here, but one can wait for a pullback to buy in. However, that would mean risking the trade gets away from you.

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