The first time we wrote about Geberit, a leading sanitary products supplier based in Switzerland, the stock was trading near CHF 540 a share. That was in late-2020, when we thought that there were much more attractive investments to pick up. Over three years later now, the stock price is more or less unchanged, currently below CHF 530.
That three-year period, however, included a surge to CHF 780 and a crash to CHF 407. While some traders might have made something out of it, this stomach-turning volatility was definitely not worth it from a long-term investor’s perspective. The lack of share price appreciation in recent years is not surprising, given that Geberit ‘s 2023 revenue was the same as in 2019. Elliott Wave analysis somehow predicted that the stock was going to be dead money at best and any gains were likely to be unsustainable.
On the other hand, it is also true that GEBN is up 29% since October. Can this be a sign that things are about to change for the better or is it just a bull trap? The updated chart below gives us a hint.
Similar Elliott Wave setups occur in the Forex, crypto and commodity markets, as well. Our Elliott Wave Video Course can teach you how to uncover them yourself!
Geberit ‘s weekly chart reveals that the rally in 2021 was nothing more than an extended fifth wave. It is marked (5) and completes a five-wave impulse, which had begun twenty years prior, in 2001. The five sub-waves of wave (3) are also visible, while wave (4) was a running flat correction. The Elliott Wave theory states that a three-wave correction follows every impulse.
This is what the 2022 selloff stands for. Given that its structure is impulse, as well, and labeled 1-2-3-4-5, it fits in the position of wave (a) of a bigger (a)-(b)-(c) zigzag correction. This means that the recent recovery to CHF 557 should be wave (b) and is therefore likely to be temporary. Wave (c) needs to complete the wave cycle, before the bulls can really return.
It makes sense for wave (c) to drag Geberit stock down to the 61.8% Fibonacci support near CHF 320. This would imply a 40% decline from current levels. It would bring the stock’s P/E down from 29 today to the much more reasonable for a no-growth company 17. Some could argue that even then the stock would not be cheap enough, but there would at least be a big bullish Elliott Wave setup.
In our Elliott Wave PRO subscriptions we provide analyses of Bitcoin, Gold, Crude Oil, EURUSD, USDCAD, USDJPY and the S&P 500 every Sunday and Wednesday! Check them out now!
