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Finance

Are Shares of Turtle Beach Corp. Ready to Breakout?

A rectangle pattern has formed in the chart of Turtle Beach Corp.  A rectangle is a pattern in which horizontal lines showing significant support and resistance exist. 

Turtle Beach Corp. (HEAR) is an audio and accessory brand offering a broad selection of gaming headsets for Xbox, PlayStation, and Nintendo consoles, as well as for PC, Mac, and mobile/tablet devices.

The company has been benefiting from an increase in video gaming due to the pandemic. In addition, Generation Z and the millennial generation prefer to play games against other people across the globe. HEAR’s affordable headsets allow gamers to talk with one another while they play.

The company should see a revenue jump in the coming months due to the launch of new game consoles from Sony (SNE) and Microsoft (MSFT). HEAR has a healthy balance sheet with no net debt as of the end of the last quarter, and a current ratio of 1.7.

HEAR has shown strong growth last year, with an increase in earnings of 27.9%, and a forecast of 25% for the next year. The stock is also trading in value territory with a P/E of 13.6 and an EV/EBITDA of 11.1.

The stock has shown strong momentum over the short, mid, and long term, which has resulted in a “Buy” rating in our POWR Ratings service. It holds a grade of “B” for Buy & Hold Grade, Peer Grade, and Industry Rank. More importantly, it has a grade of “A” for Trade Grade. Let’s take a look at the 1-year chart of HEAR below with added notations:

Chart of HEAR provided by TradingView

After Rallying over 400% off its March low, HEAR has moved into a large, sideways trading range. While in the range, the stock has formed a resistance level at $21 (red), and an important level of support at $16 (green).  Thus a rectangle pattern has been formed. 

At some point, the stock will break the $21 resistance or the $16 support.  The possible long position would be on a breakout above $21. The ideal short opportunity would be on a break below $16.

Keep a close on HEAR over the next couple of weeks, as the stock reports its latest quarterly results on October 27th.

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HEAR shares were trading at $18.89 per share on Thursday morning, down $0.12 (-0.63%). Year-to-date, HEAR has gained 99.89%, versus a 8.49% rise in the benchmark S&P 500 index during the same period.

About the Author: christian

Christian is an expert stock market coach at the Adam Mesh Trading Group who has mentored more than 4,000 traders and investors. He is a professional technical analyst that is a certified Chartered Market Technician (CMT), which is a designation awarded by the CMT Association. Christian is also the author of the daily online newsletter Todays Big Stock. More…

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