MSA Safety (NYSE:MSA) develops, manufactures, and sells safety products and tech solutions for people and facility infrastructure protection.
These include gas and flame detection systems, firefighter helmets, air-purifying respirators, eye and face protection products, ballistic helmets, gas masks, and other protective apparel. The company was founded 110 years ago and went public in the early 1970s.
The stock has been beating the S&P 500 index both recently and long-term. It has nearly doubled from its 2022 bottom and is up more than twelve-fold from its 2009 low. Buying at the wrong time can still result in a painful loss, however, as the 72%, 42%, and 37% declines in 2008, 2020, and 2022, respectively, demonstrated.
So, the question is, can investors rely on MSA Safety stock to keep rising as the price approaches the $200 mark? After seeing the chart below, we don’t think so.
It depicts a five-wave impulse pattern, labeled I-II-III-IV-V, which took over two decades to form. Wave II marks the 2008 Financial Crisis, while wave 4 of III stands for the COVID-19 panic of early 2020.
All five sub-waves of wave III are visible. Wave IV ended shortly after touching the 38.2% Fibonacci support level.
This means that the recent new all-time high must be part of the final wave V, which can already be marked 1-2-3-4-5, as well.
The Elliott Wave theory states that a three-wave correction follows every impulse. Furthermore, it usually erases the entire fifth wave and then some.
So, once wave V is over, the negative phase of the Elliott Wave cycle should begin. If the count above is correct, we can expect MSA Safety‘s market value to be cut in half over the next couple of years.
Given the company’s low single-digit revenue growth rate and the stock’s P/E of 25, this is not as extreme a prediction as it may sound.