The share price of United Natural Foods rose over 10% yesterday after the company raised its guidance for the year. The free cash flow estimate saw the biggest positive change to ~$200 million, which some would say makes UNFI undervalued at a market cap of just $1.6B. Others would oppose with the fact that the company also has $2B of debt on top of its equity. We side with the bulls, but for a very different reason.
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!
We lean bullish, because of the textbook Elliott Wave setup on the 4-hour chart of United Natural Foods. It consists of a five-wave impulse pattern to the upside, marked (i)-(ii)-(iii)-(iv)-(v) in wave 1, and a simple (a)-(b)-(c) zigzag correction to the downside in wave 2. Two lower degrees of the trend are also visible within wave (iii), whose wave ‘iv’ is a triangle. We’ve also labeled the five-wave structures of waves ‘v’ of (iii) and (a) of 2.
If this count is correct, the bullish reversal from $20.78 marks the beginning of wave 3 up. Given that wave 3 is usually longer than wave 1, and that wave 1 travelled $26 to the upside, UNFI stock could plausibly double to over $50 from here. It looks like the company’s tasty produce can finally produce some tasty returns for shareholders.
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!
