An Indian Stock to Watch

Here’s a stock to put on your long-term radar.

It’s an Indian stock: one that trades on the New York Stock Exchange, so it’s one of a rare breed.

The company?

Tata Motors Ltd. (NYSE: TTM), India’s prized automaker. It competes with the likes of Toyota and Honda in Japan, and General Motors and Ford in the U.S.

And fundamentally, Tata stacks up well on several measures.

With a price to earnrnings (P/E) ratio of 9.7, the company is a good value. It’s on par with Ford’s 10.7 P/E and GM’s 12.2 P/E. And it’s a true steal relative to Toyota’s 15.6 P/E and Honda’s 18 P/E.

Even better, as Ford, GM, Toyota and Honda have watched their total sales contract over the past five years, Tata has grown sales by nearly 40%.

However, as a stock-market technician at heart, I’m most excited about the specific patternrn Tata’s stock has been building.

It’s called an ascending triangle. Look:

See larger image

There are two reasons why I find this patternrn particularly useful.

For one, it contains a well-defined upper boundary. For Tata, this horizontal price level comes in right at $30. A break above this price is typically an unequivocally bullish signal.

For another, the patternrn allows me to project price targets based on the size of the triangle. The one in the chart above calls for an initial target at $45 per share, once the $30 level is broken. That move represents nearly a doubling of the current market price, which is about $23.

This is one ride you don’t want to miss.

But don’t jump on board just yet.

India is still stuck in the emerging market rut, as Harry explained above. And the ascending triangle patternrn isn’t confirmed until a break above $30.

I’ll make sure this stock stays on our radar in the months ahead. I’ll tell you when the time comes to give this one gas.

Adam O’Dell

Using his perfect blend of technical and fundamental analysis, Adam uncovers investment opportunities that return the maximum profit with minimum risk.