Declining growth around the globe and the Eurozone crisis at home has CNH Global (CNH, quote) down 6.45% for the week due to poor Q4 2011 earnings. However, the Dutch farm equipment maker may still be a good bet for long-term investors with good timing.
The trend is not the friend of shareholders right now, as CNH is trading below its 20-day moving average. The bottom of this average has been crossed and the share price is now trending toward the bottom range of the 50-day moving average with increasing volume, a bearish indicator.
Candlestick patterns reveal a long, engulfing negative body this week, also very bearish.
In other technical indicators, the relative strength index rating for CNH Global is 50.78. At 60, a stock is considered to be overbought. The short float is 2.98%, below the 5% mark to be considered troubling. The short float is to be expected for a farm machinery stock as the exchange traded fund for the global agriculture sector, Powershares DBA Agriculture (DBA, quote), is down 15.43% for the year.
Even with the gloomy outlook for Europe and China’s declining growth, demand in the agricultural and construction equipment markets is expected to remain positive for 2012. CNH Global has a beta of 2.68, meaning it is almost three times as volatile as the market as a whole. Year to date, the stock is up 15.98%. Now trading around $42.57 a share, the mean analyst target price over the next year is $52.67. With a price-to-earnings ratio of 10.51 and a price-to-earnings growth ratio of 0.70, both very bullish, CNH Global is a stock for long term investors to accumulate on the dips.