Vestas Wind Systems is the world’s largest wind turbine manufacturer. The company has installed almost 60 000 wind turbines in 76 countries around the globe. Last year’s record breaking revenue of 10.2 billion euro helped the stock gain enough inertia to give Vestas Wind Systems a market cap of $19.2 billion as of this writing.
It feels as if all the winds are blowing in Vestas’ direction. However, complacency is among the most dangerous things in the market, since stock crashes usually come out of nowhere. Vestas is likely going to deliver a strong result for 2017 as well, but who knows how the market would interpret it. So instead of blindly following the common knowledge that higher profits lead to higher stock prices, let’s take a look at Vestas Wind Systems’ weekly price chart and see what the Elliott Wave Principle has to say.
The weekly chart shows the stock’s progress since 2012. As visible, the uptrend has already formed a clear five-wave impulse between $4 and $96.40 per share. The bulls’ march in waves 1, 3 and 5 was interrupted by corrections in waves 2 and 4. The point is that according to the theory, a three-wave decline follows every impulsive rally. This mean that before Vestas’ shareholders see another increase in their fortunes, they would probably have to deal with a significant pullback in wave (2/B), which could be expected to drag the stock price back to the support area of wave 4 of (1/A) near $55 a share.
It is true that clean energy is the future and Vestas Wind Systems’ management is doing an excellent job unlocking the company’s great potential. We believe Vestas would make a great long-term investment. Not at $95 per share, though. Better buying opportunities would start emerging once the price approaches $60.