Technical Analysis Signals These Value Stocks Could Beat Tech And AI In Upside $KHC $CGA $OXY

Key Concepts

• Value Investing: Identifying undervalued stocks with potential for growth.
• Technical Analysis: Analyzing price charts and patterns to predict future price movements.
• Forward PE Ratio: A valuation metric comparing a company’s stock price to its expected earnings per share.
• Margin Expansion: An increase in a company’s profitability margin.
• Wedge Pattern: A chart pattern indicating a potential breakout or breakdown.
• Double Bottom: A bullish reversal pattern where the price tests a low twice.
• Inverse Head and Shoulders: A bullish reversal pattern indicating a potential upward trend.
• Measured Move: A technical analysis technique used to estimate the potential price target after a breakout.
• Carbon Capture: Technologies designed to remove carbon dioxide from the atmosphere.
• Trend Lines: Lines drawn on a chart connecting a series of price points to identify trends.

Craft Heights: Margin Expansion & Technical Breakout

Gareth Soloway highlights Craft Heights as a value play poised for potential growth, driven by a projected margin expansion in 2026 due to its “Accelerate” platform. Currently trading at a forward PE of 8, the stock could potentially reach a PE of 12-14 with margin expansion, leading to significant price appreciation. The impact of tariffs is also considered, with a potential floor being established and even a possibility of tariff reversals in 2026.

From a technical perspective, Craft Heights exhibits a highly bullish setup. The chart shows a breakout from a descending trend line, coupled with a wedge pattern and a subsequent double bottom formation. Soloway emphasizes that wedge breakouts followed by a retest of the previous low as a double bottom are particularly strong indicators of a potential price reversal, based on his 27 years of experience in technical analysis. The breakout above the wedge, followed by a bounce and retrace, reinforces this bullish signal.

Occidental Petroleum (Oxy): Warren Buffett’s Investment & Debt Reduction

Occidental Petroleum (Oxy) is presented as an attractive investment opportunity, particularly because Warren Buffett’s Berkshire Hathaway is a 28% owner, having purchased shares at a price higher than the current valuation. This allows investors to potentially acquire the stock at a more favorable price than Buffett himself.

A key fundamental factor is Oxy’s improving balance sheet. The $9.7 billion sale of OxyChem to Berkshire Hathaway will reduce total debt to $15 billion by 2026, significantly lowering interest leverage. Soloway argues that debt reduction will be a crucial factor for companies in the future, especially given current concerns in the AI stock market. Furthermore, Oxy’s “Stratus” direct air capture carbon capture structure offers potential for a premium in the stock price if successfully launched.

Technically, Oxy is forming a large inverse head and shoulders pattern, a bullish signal indicating a potential major price move. A breakout above the current level could lead to a “calculated measured move” – estimated at $70, potentially reaching a target price of $130 if breaking out at $60.

Kagra: Long-Term Trends & Consumer Spending Shift

Kagra is presented as a value play with a compelling technical setup and a potential shift in its fundamental story in 2026. The company pays dividends, adding to its appeal.

The most striking aspect of Kagra’s chart is the convergence of two long-term trend lines: one spanning from 1982 to the 2008 financial crisis low (over 40 years), and another from 1997 to the lows in 2014 and 2018 (over 30 years). Soloway describes this dual trend line convergence as “almost as good as it gets” in technical analysis. This is further supported by a trade down winner pattern.

Fundamentally, Kagra is expected to benefit from a potential shift in consumer spending, with demand potentially moving from dining out to frozen meals as consumer spending tightens – a core strength of Kagra.

Logical Connections & Overall Argument

The video’s structure is consistent: each stock is analyzed first from a fundamental perspective, outlining the reasons for potential value and growth, then followed by a detailed technical analysis of its chart. This approach emphasizes the importance of combining both fundamental and technical factors in investment decisions.

Soloway’s central argument is that these three large-cap value stocks, while not “flashy,” offer significant potential reward based on a combination of attractive valuations, improving fundamentals, and compelling technical setups. He stresses the importance of identifying secure, value-driven investments, particularly in a potentially changing market environment. He contrasts these with more speculative, high-growth stocks.

Notable Quotes

• “These could see significant appreciation in price.” – Gareth Soloway, regarding the potential of the three value plays.
• “I can get better than Warren Buffett.” – Gareth Soloway, highlighting the opportunity to invest in Occidental Petroleum at a lower price than Warren Buffett’s initial purchase.
• “Sometimes the obvious kind of core play that is more secure that has value to it…sometimes these could be the big winners coming up.” – Gareth Soloway, emphasizing the potential of value investing.

Conclusion

Gareth Soloway presents a case for three large-cap value stocks – Craft Heights, Occidental Petroleum, and Kagra – as potential investment opportunities for the coming year. He emphasizes the importance of combining fundamental analysis (margin expansion, debt reduction, consumer spending shifts) with technical analysis (breakouts, patterns, trend lines) to identify stocks with significant upside potential. The stocks are presented as relatively secure, value-driven investments that could outperform in a changing market environment, offering both capital appreciation and dividend income. He cautions that he could be wrong, but believes these stocks represent compelling opportunities for investors seeking long-term value.