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Market Stance: BULLISH (since February 22, 2016)
* 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, Thursday, March 10, 2016, I bought UEIC, for both client and my personal accounts.
Universal Electronics Inc. markets pre-programmed universal wireless controls and A/V accessories to enhance home entertainment systems.
Here's why I bought this stock:
+ News: This morning, before the open, the company announced a new warrants agreement with Comcast.
+ Market reaction: The stock is up sharply on very heavy volume. It is close to breaking out of a 12-month range to a new all-time high.
+ Volume spike, mostly on the buy side: Volume so far is some 7 times the daily average, and has already set a 12-month record.
+ Improving recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +2%, +1%, +9%, and, most recently, for the quarter ended Dec 31, +17% to $162.1 million.
Recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Mar 15 vs Mar 14: 46c vs 40c Jun 15 vs Jun 14: 67c vs 66c Sep 15 vs Sep 14: 78c vs 80c Dec 15 vs Dec 14: 91c vs 70c
+ Strong earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2016 is $3.35, revised upward from $3.33 90 days ago (and up from 2015 actual earnings of $2.79); and the consensus estimate for 2017 is $3.80.
+ Valuation: At 17 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 15%, the stock may still be, even after today's price jump, attractively priced.
+ For the most recent quarter, ended Dec 31, earnings "beat the Street" by 6c.
+ The stock's 200-day moving average is rising, indicating a long-term uptrend.
I chose to buy the stock in spite of the following negative factor:
- The company's industry group ("Consumer Products - Electronic") is ranked #186 for relative strength out of 197 industry groups tracked by Investor's Business Daily. This ranking changes daily, and it has been generally falling over recent weeks and months.
-KD, Thursday, March 10, 2016
* Buy and sell prices shown are net after commissions and fees. This means that the gain/loss shown is also net after transaction expenses.
Today, Thursday, March 10, 2016, I sold FN, for both client and my personal accounts.
I still like FN, but I sold today for purely short-term technical reasons. It is trading below my stop loss price of $27.35.
-KD, Thursday, March 10, 2016
* Buy prices shown are net after commissions.
** Current prices are at least 20 minutes old.
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