Watsco Inc. (WSO) Shares Slip, Investors Watching Closely, Here is Why

Watsco Inc. (NYSE: WSO) shares fell on Tuesday Dec 13 with lower trade volume than normal after a number of analysts weighed in on the investing value of the stock with a downgraded rating.

Meanwhile, the Dow DJIA, +0.47% climbed 106 points, or 0.6%, to 19,905. If the Dow finishes higher, it will notch its seventh straight gain.

The S&P 500 index SPX, +0.56% gained 10.45 points, or 0.5%, to 2,267 and the tech-heavy Nasdaq Composite Index COMP, +1.02% added 48 points, or 0.9%, to 5,461.

Both the S&P 500 index SPX, +0.56% and Nasdaq Composite COMP, +1.02% ended lower on Monday, with investors appearing reluctant to push shares higher ahead of the Fed meeting

Analysts at Stephens downgraded shares of Watsco Inc. (NYSE: WSO) from Overweight to Equal Weight in a research note to investors today. The company currently has a rating of Equal Weight on the stock. A number of other analysts have issued reports on the company recently, and the company has secured a consensus one-year price target of $147.36, less than the opening price of $155.33. Watsco Inc. stock has a 52-week high of $159.55. Important and fundamental digressions in the company’s actions, future direction or industry can cause downgrades as the analysts believe that the future prospects for the security have diminished from the initial recommendation.

Watsco Inc. (NYSE: WSO) shares last traded at $154.50, which is a decrease of $1.99 per share or -1.27% compared to the previous closing price. Opening at $155.33, they fluctuated from $153.15 and $155.92 throughout the day.

Watsco Inc. (NYSE: WSO) now has a market cap of 5.04B.

Watsco Inc. (NYSE: WSO) Average Daily Trading Volume

The stock’s average daily volume is 193,167 shares out of a total float 23,491,000 and some 23,991 shares traded hands yesterday, below the average. Momentum traders often use increases in trading volume to pinpoint large volume growth or dissemination by institutional investors, so trading volume is likely to increase in the next few days.

While higher trading for short periods will not mean much, conversely, a trend of heavy trading volume on the buy side over a series of days or weeks sends a positive cue to market traders that institutions may be moving in, so institutional sponsorship is very important.

Institutional sponsorship is defined by ownership of a stock by mutual funds, banks, pension funds and other large institutions.

Institutional investors such as these retain teams of analysts that investigate thousands of stocks, so it is good confirmation to see them taking a postion in a stock you’re researching.

Watsco Inc. (NYSE: WSO) Moving Averages

A moving average can also act as support or resistance. In an uptrend a 50-day, 100-day or 200-day moving average may act as a support level, as shown in the figure below.

This is because the average acts like a floor (support), so the price bounces up off of it.

In a downtrend a moving average may act as resistance; like a ceiling, the price hits it and then starts to drop again.

By identifying trends, moving averages allow traders to make those trends work in their favor and increase the number of successful trades.

With that in mind, Watsco Inc. (NYSE: WSO) now has a 50-day MA of $144.22 and 200-day MA of $141.94. It has traded in a 52-week range between $106.58 – 159.55 and today’s last price is 3.17%% lower than the 52 week high of $159.55.

Indeed, earnings growth is among the most critical things to look at in regards to stock investing and, accordingly, investors look for companies that have grown their earnings by at least 25% over 3 consecutive years.

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