MLR - PMP 8/2/13
Major averages jumped ahead on lower volume. Volume may have been lower as some were sidelined ahead of Friday's jobs report. In economic news, jobless claims and the ISM manufacturing index were better than expected Thursday. The Bureau of Labor Statistics reported 162,000 new non-farm payrolls vs. expectations of 175,000. Futures have come in slightly as a result as the question of a continued weak economy weighs against the need for continued quantitative easing.
Social networking company Linked In (LNKD) is looking to have a buyable gap up at Friday's open after a strong earnings report, and is trading up nearly 10% at the time of this writing. LNKD raised revenue guidance even though its current projections are still below estimates. Institutional sponsorship has increased over the last 7 quarters, industry group rank 15, and earnings and sales continue to jump ahead, with earnings up 138% and sales up 59% in the most recent quarter.
Mercadolibre (MELI) is gapping up premarket after a strong earnings report. Earnings and revenues topped estimates but its next quarter view on revenues came in below expectations. MELI has a tendency to violate its 50-day moving average with regularity and thus poses more risk in buying such a stock. This one will probably not go out as an actionable stock.
IC LED, RF devices, and silicone carbide/gallium nitride manufacturer Cree (CREE) had a pocket pivot to new highs. Earnings have accelerated to 70% and sales to 23% in the most recent quarter. CREE reports earnings on 8/13 after the close. As an example of how to handle such a stock, your risk in buying at Thursday's closing price is nearly 5% if you sell should it trade back under 70 which is back into its sideways consolidation. If you don't mind a greater loss, you could sell if it undercuts the lows of its base at 67, or an 8% risk.
RF and digital processing semiconductor provider NXP Semiconductors (NXPI) had a pocket pivot breakout in Thursday's trade. Institutional sponsorship has increased over the last 6 quarters, ROE is at a very strong 43.5%, and earnings continues to jump ahead, up 58% in the most recent quarter.
Baker manufacturer Flowers Foods (FLO) had a pocket pivot to almost new highs after forming a constructive handle. Earnings are notable strong especially for a defensive company at 63% and sales at 26% in the most recent quarter.
Oil and gas exploration company Bonanza Creek Energy (BCEI) had a pocket pivot. Earnings and sales remain robust, pretax margin continue to grow and is currently at 37.5%, and institutional sponsorship has grown every quarter for a total of 6 quarters since the company went public. While oil stocks often violate their 50-day moving averages because they tend to trade sloppy, BCEI tends to trend above its 50-day moving average once it gets going.
Solar stock Sunpower (SPWR) disappointed investors with its latest earnings report. The solar stocks, while still at a group rank of #1 may be looking to stall here as SPWR is considered the leader. Some of the smaller names are still in strong uptrends such as Canadian Solar (CSIQ) and Sunedison (SUNE). Part of the reason for the group rank of #1 is due to huge prior moves by solar stocks such as SCTY which rocketed from 20 to past 50 in just a few weeks but are now in basing patterns as they consolidate their gains.
For categorization purposes, CREE, NXPI, BCEI, and FLO will be issued in a PPR report and LNKD in a BGU report.
This information is provided by Virtue of Selfish Investing, LLC (VoSI) is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. VoSI reports are intended to alert VoSI members to technical developments in certain securities that may or may not be actionable, only, and are not intended as recommendations. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to VoSI, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Virtue of Selfish Investing, LLC. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2016 Virtue of Selfish Investing, LLC. All rights reserved.