Friday, September 30, 2011

5 profitable tech stocks with 50-DMA turning bullish

Stocks went on another wild on Thursday (window-dressing?) and in an interesting turn of events the Dow finished up over 1% while the NASDAQ 100 finished down 1%. This was surprising to me since tech has been trading in a much more positive way than most other sectors or indexes.

This could mean there is a buying opportunity coming up for the following stocks. These five companies are all profitable and their 50-day exponential moving averages are in the process of turning up. (Note that we found these stocks using a freely available preset for the Premium Stock Screener at TradingStockAlerts.com)

Here are the five stocks, all of which were trading above their 50-day EMA as of the close on Thursday. I have included a quick take on their financial status, current valuation and technical outlook.

  • CommVault Systems, Inc. (CVLT) -- This company has solid financials but is somewhat over-priced. Nevertheless, the stock is in an up-trend. It could be a buy on a pullback if you are comfortable with the elevated valuation. CommVault is a player in the virtualization space, which remains one of the hottest sectors within tech.
  • FactSet Research Systems Inc.(FDS) -- This company has solid financials and it is fairly priced. In terms of the chart, the stock is more or less going sideways. We consider it a BUY on a breakout and with the 50-DMA turning up, the breakout may be at hand. FactSet, a provider of financial information, recently released good earnings, has been buying back stock and continues to grow internationally.
  • Jabil Circuit, Inc.(JBL) -- This company also has solid financials and it is considered to be deep value. In terms of the chart, it has been more or less going sideways for the last month. We consider it a BUY on a breakout and with the 50-DMA turning up and a big up-day on Wednesday, the breakout looks to be happening right now. There is a risk a market downturn could drag it back into its channel which wouldn't be altogether bad news as it would provide a cheaper entry point. Jabil recently beat earnings expectations and delivered positive forward guidance and that is the primary reason behind the excellent action this week.
  • Oracle Corporation (ORCL) -- This company also has solid financials and it is considered to be reasonable value. This stock has also been more or less going sideways but has shown much more positive behavior in the last few weeks. Unfortunately it was just rejected at its 200-day EMA. Oracle just came out with a great earnings report so the stock is getting some favorable attention lately. We consider it a BUY on a breakout and with the 50-DMA turning up, the breakout would be confirmed if it eventually moves above that 200-EMA.
  • Teradata Corporation (TDC) -- This company has solid financials and it is fairly priced. In terms of the chart, the stock has started a nice up-trend. We consider it a BUY on a pullback and with tech weakening perhaps the pullback looks to be here sooner rather than later. Teradata is a major player in "big data", another hot tech sector, and provides one of the database platforms often used in enterprises for data warehousing and analytics.
Another note: the ratings on financial status, current valuation and technical outlook were all obtained by using the Stock Search function found at the top of every page on TradingStockAlerts.com, our sister site. Try it out by clicking on any of the stock symbols of the five stocks above.

Disclosure: no positions in any stocks mentioned in this post




Sunday, September 25, 2011

SPY -- at best still bottoming, worse to come?

Here we go again.

At the beginning of August SPY crossed below its 200-day moving average and made brutal downward move. Since that time, the ETF and many other indices and their associated ETFs have been tracing out what is know as a "bear flag" on their daily charts. This week SPY and the rest broke below the bottom line of the flag pattern. Here's what it looks like:


The blue lines show the flag. The black oval shows where we ended the week. Despite a rally on Friday, SPY is clearly on bearish side of this pattern. Furthermore, a sizable gap was opened up on the way down. In addition, the bottom line of the flag pattern, formerly support, now becomes resistance. The expectation now that the breakdown has occurred is that SPY could fall another 10 to 15 points.

With SPY about to test the low for 2011, we should see what some of our Trade-Radar market measures are telling us.

The view from Alert HQ --

For those readers who are new to TradeRadar or who don't remember what this is all about, the data for the following charts is generated from our weekly Alert HQ process. We scan roughly 6200 stocks and ETFs each weekend and gather the statistics presented below.

In this first chart below we count the number of stocks above various exponential moving averages and count the number of moving average crossovers, as well. We then plot the results against a weekly chart of the SPDR S&P 500 ETF (SPY).


The number of stocks above their 50-day EMA (yellow line) has dropped into the low range originally established in the beginning of August. The number of stocks whose 20-day EMA is above their 50-day EMA (magenta line) is drooping once more and the yellow line has dropped below it again. These are not bullish developments. At best, it looks like we continue to be stuck in a multi-week bottoming phase.

To put things in perspective, the number of stocks above their 50-day EMA is reaching another extreme low while the number of stocks whose 20-day EMA is above their 50-day EMA is getting to a low but, unfortunately, might still have a way to go.

The next chart provides our trending analysis. It looks at the number of stocks in strong up-trends or down-trends based on Aroon analysis.


After hitting real bearish extremes (red line at a high, yellow line at a low) in early August stocks swung positive but breadth has not been great. Note how the yellow line, representing stocks in an up-trend, never hit much of a peak while the red line, representing stocks in down trends did actually reach a fairly low level. This indicates that many stocks stopped declining but their recoveries were not strong enough to actually qualify as a strong up-trend.

Now we see large numbers of stocks resuming their down-trends but we are not at an extreme yet. You know what that means, right? More room for stocks to fall.

Conclusion --

All in all, I can't imagine stocks suddenly rallying from here unless there are dramatic moves to support the markets either from Europe or Washington or both.

The charts presented here suggest weakness will be with us for a while. Plan accordingly...



Thursday, September 15, 2011

Standex International -- this rally only the beginning?

As I was poking through the Alert HQ results of the last few days, one company’s name seemed to keep popping up: Standex International Corporation (SXI).

Standex showed up on the following screens/reports at TradingStockAlerts.com:

Furthermore, if you enter the symbol into the Stock Search function on TradingStockAlerts.com, you will see that Standex comes up as a BUY there, too

Background --

Standex International Corporation is a small-cap diversified manufacturing company with the following five divisions:
  1. Food Service Equipment Group - manufactures commercial food service equipment for restaurants, convenience stores, quick-service restaurants, supermarkets, drug stores, hotels, casinos, and corporate and school cafeterias, as well as serves health science and medical markets. 
  2. Air Distribution Products Group - manufactures metal ducts and fittings for residential heating, ventilating, and air conditioning applications. 
  3. Engraving Group - offers texturizing molds used in the production of plastic components and embossed and engraved rolls and plates, as well as process tooling and machinery serving the automotive, plastics, building products, synthetic materials, converting, textile and paper, computer, houseware, and construction industries. 
  4. Engineering Technologies Group - provides solutions in the fabrication and machining of engineered components. 
  5. Electronics and Hydraulics Group - provides single and double acting telescopic and piston rod hydraulic cylinders to manufacturers of dump truck and dump trailers, and other material handling applications, as well as offers switches, electrical connectors, sensors, toroids and relays, inductors and electronic assemblies, fluid sensors, and magnetic components for various industries. 
The company has operations in the United States, Europe, Canada, Australia, Singapore, Mexico, Brazil, Turkey, South Africa, India and China

Financials -- 

The reason the company is showing up on the growth-related report mentioned above is easily seen by looking at the history of revenue and earnings. The following is from Google Finance:


Note the most recent data point where revenue powered higher (14.9% y-o-y and 19% sequentially), earnings increased (22.7% y-o-y and 85% sequentially) and margins improved as well.

Valuation -- 

The market does seem to be discovering this stock but it is not yet over-priced. According to Yahoo Finance, its trailing PE is under 13 but it’s forward PE is barely over 10, PEG is only 0.86, Price-to-Sales is a mere 0.69 and Enterprise Value/EBITDA is a quite reasonable 7.32. Price to Free Cash Flow is 9.28, less than half the industry average.

Return-on-Equity is over 16 which is pretty is decent. Debt-to-Equity is not insignificant at 21 but is still better than the industry average.

The company recently declared its 188th quarterly dividend and offers a yield of 0.70%, not huge but a reassuring sign of a steady company.

The Chart -- 

The stock has taken off over the last couple of weeks as the following chart shows:



Not only has it zoomed above its 50-day MA and its 200-day MA, but it has eclipsed the high set back in July. In addition, those moving averages are now both pointing upward, implying the company is coming out of its tailspin. 

Conclusion --

Standex has good fundamentals, qualifies as a “reasonable value” investment candidate and the chart suggests the recent downturn has come to an end.

The company is benefiting from cost reductions implemented in 2009 and 2010 and from a careful acquisition strategy (four companies purchased in 2011 which increased product, technology, customer and geographic footprint). Though consistently profitable, Standex seems to be growing earnings again and has turned the focus from cost containment to top-line growth. Initiatives include new product introductions, expansion of product offerings through private labeling and sourcing agreements, geographic expansion of sales coverage and the use of new channels of sales, leveraging strategic customer relationships, development of energy efficient products, new applications for existing products and technology and next generation products and services. The company has also been able to raise prices in response to commodity inflation.

Being a small cap, the company doesn’t get a lot of attention in the financial press (though Zacks singled it out earlier this year as a strong buy) but it is clear that investors are really hopping on board lately. After the recent steep price run-up (over 30% in the last couple of weeks!!), buyers might want to wait for a pullback. Watch for it to fall back into the range between the June peak around $35 and the 200-day MA around $32.

Disclosure: no position



Thursday, September 1, 2011

6 value stocks breaking above their trend lines

Here is a quick list of value stocks that are breaking out in a bullish direction over their downward sloping trend lines.

Symbol Name Sector Industry PE Ratio Price
to Sales
Price
to Book
PEG Ratio Enterprise
Value to EBITDA
CPX Complete Production Services, Inc. Energy Oilfield
Services/
Equipment
13.92 1.19 2.46 0.66 5.24
FLL Full House Resorts, Inc. Consumer Services Services-Misc. Amusement & Recreation 8.52 1.13 1.26 0.43 3.07
HELE Helen of Troy Limited Consumer Durables Home
Furnishings
9.47 1.04 1.3 0.84 8.38
HRS Harris Corporation Capital Goods Industrial
Machinery/ Components
8.77 0.84 1.99 0.87 5.18
SUTR Sutor Technology Group Limited Capital Goods Steel/Iron Ore 3.81 0.12 0.27 0.22 4.73
TSTC Telestone Technologies Corp. Consumer Durables Tele-
communications Equipment
2.33 0.53 0.59 0.09 1.41

This list is derived from the Free Stock Screener over at sister site TradingStockAlerts.com. It was set up by simply choosing the Value preset and then selecting a Bullish Reversal in the Simple Trend Reversal drop-down.

All are profitable. All are seeing increasing sales. Basic valuation measures range from reasonable to deep value. Sutor Technology Group and Telestone Technologies, being Chinese micro-cap companies, are heavily out of favor these days, thus the extremely low valuation levels. Sutor is doing well enough that they have announced they are buying back stock. Telestone announced good earnings a couple of weeks ago. Could be something attractive for a brave investor in one of these stocks.

More traditional is Complete Production Services who recently turned in a stellar earnings report. This energy-related company displays solid fundamentals across the board and was listed as a Zacks #1 rank (strong buy) back in the middle of August. With the market and the price of oil recovering in the last week or so, Complete Production Services could attract more buying interest. Keep an eye on this one.

Disclosure: no positions in any stocks mentioned in this post





Disclaimer: This site may include market analysis. All ideas, opinions, and/or forecasts, expressed or implied herein, are for informational purposes only and should not be construed as a recommendation to invest, trade, and/or speculate in the markets. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise.




 
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