Raytheon Technologies – Whopping 60% Shorting Opportunity?If you like this idea, please don’t forget to Boost it.
Fundamental Indicators:
Sector – Industrials
US Business Cycle Stage – late cycle, when this sector is neutral
Revenue – consistent growth for the past 5 years, although just 6% average annual rate, the performance in 2022 TTM is considerably slowing down
Profits – although slight increase in 2022TTM, it has still not recovered to pre-pandemic levels
Net margin – 7% which is still below pre-pandemic levels
P/E – the highest historic level with ratio of 31 compared to S&P500 with 21, Industrials sector with 21 and historic average level of 11
Liabilities - debt ratio is at 0.55 which is within the norm, Net Debt/ EBITDA is 2.48 – no problems with debt
Conclusion – although the company is recovering from pandemic but still hasn’t caught up to the previous levels, and given current overpriced valuation, it is very likely to go into correction to get back to the fair value
Technical Analysis (Elliott Waves):
Main scenario of this idea suggests that we are still observing development of the global growth cycle which is currently at the stage of starting corrective wave 4 (see higher timeframe graph)
Since the longest correction in the shape of a Running Triangle that has lasted between 1987 and 1994 completed, this company has enjoyed explosive growth with circa 2100%. However, the whole movement is choppy with a lot of crossings hence likely to be an Ending Diagonal (see guidelines for Ending Diagonals below)
The historic high which was formed in March 2022 was the point of completion of wave 3 in the Ending Diagonal and now we are observing formation of the first leg of wave 4, presumably as a double zigzag. Wave W has completed, wave X is likely to finalise at the price level $97.32
Once completed, there will be another bull run in wave Y with the target range $67-$78 – which may present up to 30% shorting opportunity. However, longer term target is potentially $40 which is whopping 60%
This is a higher timeframe to reflect the full history of Raytheon Technologies Corporation and to provide full wave count:
This is the link to the guidelines for Ending Diagonals
What do you think about Raytheon Technologies Corporation and its short term prospects?
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