GoPro Inc Shares Could Be On Verge Of Another Breakout

GoPro Inc GPRO shares on Tuesday were trading above the previous high of $96.45; the stock could post a bonafide upside breakout if that level is eclipsed on a closing basis.

How high can GoPro go?

What The Bulls See

• A company that is making money, even as it is known as a "go-go" recent IPO.
• A healthy cash reserve of $104.88 million.
• An acceptable balance sheet with a current ratio of 1.41 and a debt-to-equity ratio of 86 percent.
• Positive operating cash flow of $112 million annually.
• A stock that is right on the verge of a breakout to new highs with more room to the upside above that.

Related Link: Barclays Raises GoPro Inc Price Target, Struggles With Valuation

What The Bears See

• A very expensive stock: a market capitalization $11.4 billion that eclipses the enterprise value of $10.96 billion, a price-to-book of 171.15, a price-to-sales of 11.43, a price-to-earnings ratio of more than 90 versus projected 2015 revenue and EPS growth of around 25 percent.

Technical Take

Technicians note that GoPro pulled back and retraced almost 50 percent of the mid-September to late-September move when it bottomed out just below $80 last Thursday. The stock has since rallied sharply to challenge the previous high of $96.45.

Technicians now note that if a breakout occurs, GoPro could run up to the upper edge of the uptrend channel at around $109, depending on how long it takes to get to that line. Support for GoPro now comes in at around $81.31, the lower edge of the uptrend channel.

GoPro may have another $10 to $13 of upside in it if the breakout above $96.45 occurs. A turn back up in the broader market could add an additional tailwind to an already hot stock.

At time of publication, GoPro traded at $93.27, about $5 off its high of the day.