The WSX deal has gone through and I am now the proud owner of a few hundred CPG stocks along with my newly minted Raging River Exploration (RRX) and RRX warrants.
As I’ve posted before, CPG is a great company, but I do feel that it’s reaching overbought levels and these recent share prices are probably one of the reasons management has been making so many recent acquisitions using shares (WSX and REL to name two).
Analysts still have a great rating on CPG with targets in the $50 range, and I do think it’s a wonderful company – just not at the $45+ levels. That said, given I currently own the stock, I’d like to correctly time the exit of my position.
The last couple of days since the acquisition has gone through, CPG has dropped on low volumes. This may be due to people exiting their new found positions after the WSX deal, on the announcement of the RRX deal (doubtful as the deal appears accretive) and most likely, due to the strength in the rest of the market (CPG has been a relatively defensive stock in recent months).
From a technical perspective, CPG has broken down below its upward channel over the last couple of days. RSI is indicating the stock is oversold, and I expect support around $44. I will look for a bounce in this area, and then look for an exit. If there is continued strength in the macro market (questionable these days) then I see a $46-$47 exit quite possible. In the event the market does tumble, I would expect CPG to be relatively defensive again given its yield and historical defensive strength, making it a good hold in my portfolio at this time.
Happy Trading!
