Look Out Below: Carriage Services (CSV)

With our median return forecast at 6.7% (nearing historical lows) and the relative strength index for the Value Line Arithmetic Average at 71.9 — we thought it might be worthwhile to check for some overbought/weakening stocks. We’ll do this on a continuing basis, inspired by Barry Ritholtz’s relatively infrequent “Look Out Below!” posts on his Big Picture blog. In this case, it’ll be Look Out Below: Individual Stocks edition. When Barry signals a macro-economic seismic event, it’s worth paying attention and at least checking or double-checking your capital preservation status if you’re in that mode.

We open with Carriage Services (CSV). Carriage Services currently has the highest relative strength index, RSI (94.8) — based on the long-term perspective shown here.

A few things …

  • There’s an element of poster child morbid poetry here. Carriage Services provides death care services and merchandise in the U.S. The company operates two segments: funeral home operations and cemetery operations.
  • The Value Line low total return forecast for CSV is 1% (based on a stock price of $13.00). Accounting for the change in stock price and long-term horizon, the low total return forecast is now -8.1%.
  • We know that an elevated RSI is just one component (puzzle piece) of a bigger picture. We also know that companies can remain in an “overbought condition” for weeks, months, quarters and in some cases — years.
  • That said, we’ll be monitoring all of our covered companies for a “retreat” from overbought — watching carefully for that long-term crossover from RSI > 70 to RSI < 70.
  • Note that the decline for Carriage Services (last RSI crossover) at the onset of the Great Recession (Halloween 2007) reached a monstrous 91% drop in stock price. We think it might be prudent to at least be aware of these conditions … and that a considered decision (selling, trailing stops, options, etc.) seem pretty worthy and potentially rewarding over the long term.
  • And lest you worry about the long-term investing selections made by your peers, Carriage Services only shows up on 0.02% of all subscriber dashboards at Manifest Investing.

We’ll be taking a look at our entire batch of companies … and flagging those (particularly our community favorites) for indications of potential Look Out Below! vulnerability.

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