Five Star Stock Watch: Rite Aid Corporation

After Rite Aid broke to a new high on heavy volume earlier this week it seemed as if it was time to take a look at the stock. At $6 a share its a relatively inexpensive stock to own.

Upon further review investors are probably very pleased with the performance of Rite Aid's stock over the last 12-18 months. However, if you are not already an owner of the stock, when might me a good time to get in?

The analysis below should clearly answer that question.

The company: Rite Aid Corporation

Ticker Symbol: RAD

Sector: Services

Industry: Drug Stores

Rite Aid Corporation sells prescription drugs and a range of other merchandise, including over-the-counter medications, health and beauty aids, personal care items, cosmetics, household items, food and beverages, greeting cards, seasonal merchandise, and other everyday and convenience products.

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The company offers its products to customers covered by third party payors, such as insurance companies, prescription benefit management companies, government agencies, private employers, and other managed care providers. It has a strategic alliance with GNC.

Please take a look at the one-year chart of Rite Aid below with added notations:

Rite Aid has been riding high since the end of 2012 after having bottomed at around $1 a share. Over the last 12 months the stocks has also formed a nice trendline of support that was most recently tested in the beginning of February,

Rite Aid has become a bit over-extended at this point and investors might be best suited to wait for a pullback down to the trendline support, which currently sits at around $5.

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Rite Aid isn't set to release earnings until the first week of April 2014.

No matter what your strategy, or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!