As its name suggests, International Flavors & Fragrances is a global leader in the flavors and fragrances segment of the perfume and cosmetics industry. The company has a market cap of $24B and employs around 25,000 people worldwide. While IFF can trace it origin back to 1889, it went public in 1964 and became a component of the S&P 500 index in 1976.
Unfortunately for its investors, IFF stock now trades at roughly the same level it traded nine years ago, in 2014. Currently below $94, the share price down 40% from its January 2018 record of $157.40. After a lost decade it is difficult to stay optimistic and not abandon ship. However, the tide often turns precisely when all hope had been lost. Can IFF stage a recovery? The Elliott Wave chart below suggests it can.
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Assuming a five-wave impulse is going to form, it looks like starting in the early-1980s, IFF has drawn the first four waves of the pattern. We’ve labeled them I-II-III-IV. Wave II coincided with the inflation of the Dot-com bubble, when the market abandoned all “traditional” businesses to chase the internet mania. Three lower degrees of the trend are visible within the structure of wave III. Wave IV, in turn, looks like a three-wave correction marked (w)-(x)-(y).
If this count is correct, we can expect IFF stock to head north again in wave V towards a new record. Fifth waves usually exceed the top of the corresponding third wave, putting $170 within reach. In addition, the 4-hour chart below shows another bullish Elliott Wave setup.
A closer look at IFF stock’s price action since the bottom in October, 2022, reveals a complete 5-3 wave cycle. It is labeled 1-2-3-4-5-a-b-c in what should be waves (1) and (2) of V. According to the theory, the uptrend should now resume in wave (3) of V. It looks like both the long- and the short-term charts are pointing to the upside.
That being said, investors should keep in mind that profitability is expected to decline this year due to macro headwinds. This means that any share price appreciation would have to come from multiple expansion rather than organic business growth. In our opinion, this makes IFF a lot riskier than the 18 other stocks we hold in The EWM Interactive Stock Portfolio.
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