PreMarket Prep Stock Of The Day: Will NXP Semiconductors Continue To Rally Despite Market Retreat?

On days like this (Tuesday), which got off to a bad start on Monday after the close with Walmart Inc.'s WMT rare guidance cut, there are still stocks that will move higher.

Of course, an issue will need a positive catalyst to do so and NXP Semiconductors NV NXPI did with a second-quarter beat.

Dennis Dick, co-host of the PreMarket Prep Show, identified it as an issue that may rally despite the retreat in the broad market, making it the PreMarket Prep Stock Of The Day.

What A Rally: On July 5, the issue bottomed at $140.33 and rebounded to close at $145.91. That marked the lowest level for the issue since it bottomed in November 2020 at $136.02.

So far, the rebound off that low has been capped with a double top from last Thursday at $180.14 and Friday at $180. Also, the highest close for the rally was made last Thursday at $179.95. The issue drifted lower on Friday and Monday, going into the print with a close of $174.13.

Q2 Report: After the close on Monday, the company reported adjusted quarterly earnings of $3.52 per share which beat the analyst consensus estimate of $3.35. This is a 3.69% increase over earnings of $2.44 per share from the same period last year.

The also company reported quarterly sales of $3.31 billion, which beat the analyst consensus estimate of $3.27 billion by 1.22%. This is a 27.50% increase over sales of $2.60 billion in the same period last year.

PreMarket Prep Take: When the issue was being covered on the show, it was trading in the red by a few dollars at the $172 area. “They were buying this stock up after its report, and then the Walmart news hit and they began to sell everything," said Dick, adding, “This could be a sneaky one, if the S&Ps hold up, this is actually the kind of stock that could get bought.”

The author of this article noted the importance of breaching the closing price, $174.13, which could lead to a rally in the issue.

NXPI Price Action: The S&P 500 index was unable to mount a rally off the open, but the issue certainly did. However, it certainly was not an easy one to catch on the long side. After what turned out to be a higher open, the issue peaked in the first three minutes at $177.88 and reversed course. The ensuing decline found support just under the close at $174.01 and began to rebound.

It revisited that area just before noon EST and as of 1:30 p.m. EST drifted back towards the high for the session.

Moving Forward: Based on the daily charts, the next potential resistance is at its June 10 high, $182.97. Above that is the closing price from June 9, $184.22, and the high from that session at $194.71.

The discussion on the issue from Tuesday’s show can be found here:

Photo: Courtesy NXP Semiconductors