3 Mid-Caps with Bullish Candlesticks and Analysts

Candlesticks aren’t just a popular holiday decoration. Many technical analysts depend on them heavily to shed light on a stock’s price chart.

As with classic chart patterns, there are bullish and bearish candlestick formations—and some are more prevalent than others. Among the most common bullish candle or multi-candle events are the outside bar and the engulfing line.

Not to be mistaken with a poolside tiki, an outside bar is a large candlestick that overshadows a smaller inside bar and predicts the continuation of an uptrend. A bullish engulfing line is characterized by a green (up) candlestick that completely overlaps the body of the prior day’s candlestick. These two patterns often show up on daily charts and signal an uptrend.

Combining the predictive power of bullish candlesticks and bullish analysts can be winning strategy when it comes to picking stocks. Here are three mid-cap stocks that recently lit a bullish candle and have the burning support of sell-side research firms.

Will WESCO International Stock Keep Going Up?

Like the broader indices, many stocks went on a three-day rally before Christmas and WESCO International (NYSE: WCC) was one of them. Along the way, both an engulfing line and an outside bar appeared on the daily chart. On December 23^rd, the stock opened and finished above the previous day’s close capping a 7.4% run. Although volume has faded since the start of the rally, the longer-term trend is likely up.

As one of the country’s top electrical product distributors, WESCO is benefitting from increased U.S. construction and industrial activity. Together, these two markets represent approximately 70% of sales and are complemented by growing utility, commercial, institutional, and government businesses. The company’s automated electronic procurement and inventory replenishment technology has resonated particularly well with customers who benefit from one-stop shopping—and is driving higher profit growth.

In 2022, Wesco is expected to build off a stellar year in which earnings per share are expected to more than double. The more modest 14% EPS growth slated for next year is still worth the price of admission given the stock’s 12x forward P/E ratio. Eight of the last nine analyst ratings on WESCO have been buys including the two most recent, Raymond James and Stephens, whose $165 price targets imply 28% upside.

Is Yelp Stock Expensive?

Yelp (NYSE: YELP) stock has been rangebound for most of the year, but could finally be on its way to a sustained uptrend. Last week an engulfing line pattern took hold as a December 21^st big green candle was followed by two smaller green candles. Momentum continued December 27^th when the stock strung together its first four-day winning streak since September. A pending bullish MACD crossover also suggests an uptrend is in progress.

Big things are expected of Yelp in 2022. The social network-based review website derives much of its revenue from company listings and advertising tied to the restaurant industry. As the 2022 version of the pandemic recovery unfolds, rising dining room, take-out, and delivery orders stand to deliver a fatter bottom line for Yelp shareholders. Advertising spending related to the company’s shopping and nightlife services along with new financial and health offering should also drive higher profits.

Analysts are forecasting 80% EPS growth next year to $0.65. So, while the 57x forward P/E ratio appears daunting, the stock is actually undervalued compared to the growth ahead. As new product launches like Business Highlights, Verified License, and Yelp Portfolios diversify the advertising-heavy business model, look for Yelp to get more five-star reviews from the Street.

Is Triton International’s Stock Chart Bullish?

Triton International’s (NYSE: TRTN) chart shows a bullish outside bar and engulfing line pattern. Both formations point to a continuation of the uptrend that began in mid-September after the stock gapped down despite an absence of major news. Shares of the intermodal container leasing company are on track to post their third straight year of 20%-plus returns and the latest bullish candles may all but clinch it.

Amid lingering global supply chain issues, shipping containers are hard to come by these days. That’s been good news for Triton International. Strong container demand has the company on pace to nearly double its profits this year. This has been welcomed news for shareholders as well who have seen the dividend raised and stock buyback program extended.

Cash flow growth is expected to be solid again next year as global trade activity continues to improve and government restrictions ease. Only a few analysts cover Triton International but based on the group’s forecast for 2022 EPS, the stock’s 6x forward P/E makes it one of the best bargains in the mid-cap industrial sector.