It's a Target Price for a Reason


Jim Jubak Image Jim Jubak Founder and Editor,

In this market, diligence to your instinct will save you far more often than it hurts you, writes MoneyShow's Jim Jubak, also of Jubak's Picks.

This is a tough one.

Nestle (NSRGY) has hit the $69 target price—and then a bit—I set when I added the shares to my Jubak’s Picks portfolio on September 21 at $63.75.

The stock traded at $70.35 as of 1:45 p.m. New York time on February 6. That’s a 1.03% gain on this position in a little less than five months.

In my January 25 post on trading strategies for a momentum market, I noted that it’s important to keep notes in your trading diary on how aggressive you think your assumptions were when you set an initial target price for a stock. I used Nestle as an example.

My original assumptions, I felt then, were pretty aggressive back in September. That suggests to me that I shouldn’t just go ahead and raise the target price just to keep this position. This says “sell” to me here.

The only caveat is that Nestle pays its 3% dividend just once a year, a few days after the annual meeting.