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Market Stance: BULLISH (since December 1, 2010)
* An average of managed accounts, net after all commissions and fees.
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* Buy prices shown are net after commissions and fees.
Today, Monday, January 10, 2011, I bought MOLXA, for both client and my personal accounts.
Molex Inc. makes electronic connectors, interconnection systems, terminals, planar cables, cable assemblies, and backplanes.
Here's why I bought this stock:
+ Breakout attempt today: The stock is up 3.4% on heavy volume as I write this, during the final hour of today's trading session. If this gain holds at the close, it will be a 15-month trading range to a new 2-year high.
+ I find this chart pattern particularly bullish, because the stock has touched but then retreated from the $20 resistance area four times over the past 16 months. That makes today's breakout all the more significant from this technician's point of view.
+ Volume spike, mostly on the buy side: As I write this, today's volume is more than 3.5 times the daily average.
+ Excellent recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +9%, +50%, +48%, and, most recently, for the quarter ended Sep 30, +33% to $897.7 million.
+ Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Dec 09 vs Dec 08: 24c vs 20c Mar 10 vs Mar 09: 29c vs (14c) Jun 10 vs Jun 09: 39c vs (9c) Sep 10 vs Sep 09: 46c vs 18c
I see no analyst estimates or earnings surprise history for this little-known stock.
+ Valuation: At 15 times trailing 12-month earnings, the stock seems attractively priced.
+ The company's industry group ("Electronic Parts") is ranked #38 for relative strength out of 197 industry groups tracked by Investor's Business Daily. This ranking changes daily, and it has been generally rising over recent weeks and months.
+ The stock's 200-day moving average is rising, indicating a long-term uptrend.
-KD, Monday, January 10, 2011
* Buy prices shown are net after commissions.
** Current prices are at least 20 minutes old.
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