Tuesday, February 1, 2011

Nidec Corporation (NASDAQ: NJ) Q1 2011 Analysis

Recent price: 23.48$
P/E Ratio: 17.41
3 month Target Price: 26.50$

Company Description
Nidec Corporation (Nidec) is a global manufacturer of electric motors, and related components and equipment. The Company classifies its operations into five business groups based primarily on the similarity of products in type and use: Small Precision Motors, Mid-size Motors, Machinery, Electronic and Optical Components, and Others. As of March 31, 2010, Nidec had 141 subsidiaries located in 19 countries and an affiliated company located in the Philippines.

Confidence Margins
Strong resistance $27.36 (+17%)
Light resistance $26.78 (+14%)
Light support $21.25 (-9%)
Strong support $20.78 (-11%)

The recent quarterly results of the company came short to the expectations of the analysts covering it. This presents a buying opportunity for this specialized Japanese conglomerate. It is currently trading at lower multiples than it's peers and this provide a good entry point.

Entry strategy
For the cautious investor:
Buy the stock for 24$ or less.

For the risk-taking trader:
Nidec Corporation has no publicly traded option contracts, therefore the best way to take more aggressive action on this stock is to use an amount of margin to leverage the position thus multiplying the potential gains.

Exit Strategy
For the cautious investor:
Sell when the stock reaches 26.50$, or keep it until 27$ if the stock crosses the light resistance level.

For the risk-taking trader:
As for the cautious investor, the position should be closed when the stock reaches 26.50$. Since the use of leverage implies greater risk, one should keep in mind that there is still some potential downside left in the current trend of the price of the stock.

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