THREE NEW IDEAS AS CHINA ABANDONS ITS ONE BABY POLICY $MJN $NSRGY $DANOY $NESN.VX $BN.PA #CHINA

This post was just published on ZYX Buy Change Alert. 

As we wrote in the morning capsule, China has abandoned its long held one baby policy.  Now couples will be allowed to have two children.  The obvious beneficiaries will be baby food companies.  The three companies to consider are:

Mead Johnson (MJN)

MJN is likely to be the main beneficiary because of its focus on pediatric nutrition and nearly 49% of revenues being generated in Asia.  However it is important to not get carried away with the news and be patient to wait for a major pull back into the buy zone.  The reason is that Q3 sales in Asia fell 15% year over year due to rising local competition.

The stock needs a very wide buy zone because it can be very volatile.

Consider accumulating by scaling in on down spikes in the stock on down days in the U. S. and Chinese markets.  The buy zone is $58 to $72.56, preferably below $68.32.  Conservative investors may consider not investing unless the stock falls below $68.32.  The very long-term target zone is $120 to $128.  Stop zone on one-half the position in the zone of $56 to $56.63.  Based on your own risk tolerance, consider accumulating up to 35% of the full core position size.

Nestle (NSRGY)

Nestle is a diversified food company based in Switzerland.  Nestle is known for excellence in managing its Asian operations.  However, recently it got a black mark on the Maggi Noodles controversy in India.

The buy zone is $65 to $73.28.  Conservative investors may consider accumulating under $68.56.  Stops on one-half the position in the zone of $62 to $62.43.  The very long-term target zone is $105 to $110.

Based on your own risk tolerance, consider accumulating up to 35% of the full core position size.

Instead of buying ADRs, our international subscribers may consider buying the stock on SIX Swiss Exchange where the symbol is NESN.VX.  Please be sure to make appropriate adjustments for the zones if you are buying in Switzerland.

Danone (DANOY)

Danone is a diversified food company based in France.

The buy zone is $10.17 to $12.67, preferably below $11.26.  The very long-term target zone is $20 to $23.  Stop zone on one-half of the position is $8 to $8.43.

Based on your own risk tolerance, consider accumulating up to 35% of the full core position size.

Instead of buying ADRs, our international subscribers may consider buying the stock on Euronext Paris where the symbol is BN.PA.  Please be sure to make appropriate adjustments for the zones if you are buying in Switzerland.

Caution: it is prudent to wait patiently for these stock to pull back into the buy zone. 

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