- The stock has been declining after making a high during the pandemic
- The stock has seen major bearish momentum in recent times as it made a gap-down opening in June this year.
- RSI and MACD are in a downtrend and they have made a bearish crossover with their moving averages.
At the time of writing, the Croda International (LSE: CRDA) stock price has fallen more than 23% since the start of the year. One of the reasons for the fall is the recovery from the COVID pandemic.
As the company makes agriculture and pharmaceutical products, its demand increased significantly during the COVID pandemic. Consequently, the revenue experienced a sudden surge of 35% in 2021. However, since then there has been a fall in the demand which is reflected in the sales numbers.
The hidden reason
One of the major things to note here is that the company is stable, and the surge and fall in demand didn’t affect any profitability ratio majorly. This means that the investors themselves made this stock overvalued during the pandemic. The price-to-earnings ratio rose to a level of 44 in 2021, and is currently at a level of 14. On average, this figure stays somewhere between 22-25.
The revenue may have slowed down in growth, but the company is still offering attractive dividends to shareholders. With a dividend payout ratio of 45% on average, Croda International is offering a dividend yield of 1.8% on average. These payouts with a cheap P.E ratio indicate a good buying opportunity in the stock, from a long-term perspective.
Technical analysis and price prediction of CRDA stock
The CRDA stock was seen falling with a gap-down opening during the start of June this year. At the time of writing, the stock has broken a few important support levels and is trading at $5158. This level is also the current demand zone of Its immediate support level, which is at $5280. Similarly, the immediate resistance for CRDA stock is at $5602.
Beyond these immediate pivot levels for the stock, the 2nd support and resistance levels are at $497 and $5930 respectively. On the other hand, the EMAs are coming down and are rejecting the bulls. The 50 EMA is in the supply zone of $5540, which is near the immediate resistance. The 200 EMA is above at $6158.
MACD and RSI indicators
The MACD line made a bearish crossover in the recent past with its EMA line. At present, the MACD line is at -90 while its EMA is at -73. The RSI graph also shows a downtrend similar to that of the MACD. At the end of this August, the RSI line came down after touching its neutral level of 54. At present, the RSI is at the level of 36 while its SMA is at 43, indicating a decline in the strength of bulls.
Conclusion
The CRDA stock price prediction will be bearish as the indicators have suggested. The stock is likely to move to its second support of $4987. However, if the bulls are able to reverse the trend, then it might move to its immediate resistance level of $5280
Technical Levels
Support:$5280, $4987
Resistance: $5602, $5930
Disclaimer
The views and opinions stated by the author, or any people named in this article, are for informational purposes only. They do not establish financial, investment, or other advice. Investing in or trading crypto assets comes with a risk of financial loss.