Hain Celestial Group (ticker: HAIN) has had a rough May. After strong 3Q gains, they said they would miss street estimates for 4Q. That news came out on May 3rd and yet HAIN’s stock price continued to rise for the next few days hitting a high on May 7th before starting its downward spiral. It broke below its 10 and 20 day moving averages on May 10th and kept sliding on May 11th when it closed below its 50 day moving average on the 12th. Two days ago it fell below its previous support around 30. HAIN closed yesterday at 29.07 as it nears its next potential support level around 28.90 and if it breaks that I could see it going as low as 28.20, the low from March 5th.
HAIN tends to be fairly slow to react to news and can be an easy stock to catch on a rebound or a pull back. I missed my move of dumping it when it started this last decline. I will be watching closely for it to stop sliding and then plan to double my investment in my IRA if I don’t sell naked puts on it. It all depends on when the slide stops. And until this slide stops I’m not going to catch this slow falling knife. HAIN could be one to consider writing puts ITM and take a larger profit on the intrinsic value melting away as the stock price climbs again.
For those not familiar with Hain Celestial, it’s a natural and organic food and personal care products company. I think I found them when researching another company and saw HAIN as a competitor with better fundamentals. A lot of Hain products make their way into our house. I think this move towards more natural and organic foods will continue keeping Hain near the top of the companies to profit from it. This is my rare play using an old Peter Lynch method of buying what you know.
Click on the thumbnail to see the chart: