Alliance Resource is good for dividends and momentum but wait for a lower price

Alliance Resource Partners (NASDAQ:ARLP) is the latest addition to Zacks’ list of strong buys. The stock is trading at $20. This week, the stock has so far lost 4.16%. Analysis shows that Alliance Resource Partners has notable upside potential.

Alliance Resource Partners is a coal producer in the United States. The company had an ROE of 15.93% in the last financial year. The EPS stands at $1.36 with projected growth to at least $1.44 in the current year. This puts the forward PE at 14.43. Frankly, nothing about these performance metrics sounds attractive, but they are ok.

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The most attractive features of the stock include the dividend yield of 6.80% and the strong momentum rating. These indicators make Alliance Resource good for dividend as well as momentum investing. 

Alliance Resource Partners is on a bullish trend

Analysis shows that Alliance Resource Partners is on predictable bullish momentum. The stock appears to have broken through the resistance level of $20. The stock would therefore be expected to gain from this level. However, there are reservations.

The RSI was recorded at 65.95, close to the overbought region. The stock has been trading at the high momentum levels for some time but hardly goes above RSI 70. If the stock were to maintain the same momentum, it would first retreat before gaining. The trend channel shows the support level at $17.50.

Summary

Alliance Resource will maintain the bullish trend. However, this analysis shows that the stock will retreat to $17.50. Investors should consider waiting to buy Alliance Resource at a lower price. The stock is good for dividend and momentum investing.

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