The first and only time we wrote about LKQ Corporation was in late-September, 2020. The stock had just doubled from its coronavirus plunge and was hovering around $27. Despite the recent strength, however, we thought the shares still present a good investment.
In a time of crisis one cannot rely on charts alone, so the company’s stable financials helped, as well. The main reason for us liking LKQ, though, was the textbook Elliott Wave pattern that was visible on its weekly chart. Take a look.
It took 17 year for LKQ stock to draw a complete 5-3 wave cycle on its weekly chart. Fortunately, we thought it was “going to take a lot less than that for LKQ to reach $44 again.” Last week, the stock closed above the $50 mark, up 87% since we wrote about it.
In hindsight, the bears never stood a chance. One can hardly find an asset whose price has gone down over the past ten months and LKQ stock is no exception. But at the time of writing, that surge was far from certain. In fact, health experts correctly predicted that the COVID-19 situation was going to get a lot worse. Yet, the stock market just kept climbing, taking LKQ with it.
And while stocks in general seem extremely overvalued, LKQ is trading at a mere 16 forward P/E ratio. We believe the easy money has been made already, but this in no way means it is time to bet against the stock. The bulls remain in charge for now and trying to pick a top is never worth the risk.
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!
