Could Franco Nevada ($FNV) be ready to break even higher? (April 17, 2020)
FNV GLD FNX FNV
I want to look at Franco Nevada ( NYSE: FNV ) here. As you probably know, hopefully, you do, Gold ( NYSEARCA: GLD ), let’s look at it together. It’s doing pretty well these days for reasons that a lot of people would also already know, which is when the Fed is essentially like a helicopter full of money isn’t enough. They want a KC-135 to empty their gas tanks and put money in it and just spew it all over everywhere; that’s kind of an inflationary deal, that’s the way the market looks at it, so Gold ( NYSEARCA: GLD ) is really, really in demand.
So we look at Franco Nevada ( NYSE: FNV ). This is a stock that has some pretty monster fundamentals. We are now in a situation where we don’t get to buy it here. What would have been nice, although it turns out it’s okay, is when the stock broke out like this, on Monday; that would have been a buying opportunity right above 115.00, we didn’t get that. Now the stock is up about $10.00 higher. However, it is also telling us that it’s moving even more.
We are seeing a lot of failed breakouts these days so buying at 115.00 or so, fine, it was the right thing to do. But it could have very easily been an unprofitable trade just because the stock could have popped up and then immediately come back down. Now we actually have a little move certainty in this stock; because it popped out, it actually ran up to a new high and is now holding that level.
I think the way to trade this is, if the stock breaks out, say it runs up to here, the high was 125.56, so let’s say if the stock runs up, literally, to 125.57, that’s where you want to be buying. And then I wouldn’t put my stop down here or even down lower. I would keep the stop just below Friday’s intraday low, so that would mean right about here. So you are buying up here, you have got your stop right down there. That’s less than 6 percent; you are giving the stock room to just kind of work it’s magic sideways here.
The only time you are going out of the trade is if this trading range here, at 120.00 or so, is if that trading range is broken to the downside. And so you are buying, you are selling here for a loss, maybe that turns out to be a shakeout. Don’t let it get you out of the stock for good. You just still watch the stock and wait for another entry.
I think this stock is going to work. I think it is going to break out and just keep going. And that’s fine but I don’t get paid for thinking, I get paid for managing my risk. The downside is a move back below 120.00, that way if I am wrong at least I am not out a bunch of bucks.
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