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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, Wednesday, April 20, 2016, I bought MXL, for both client and my personal accounts.
MaxLinear, Inc. provides integrated, radio-frequency (RF) and mixed-signal circuits used in communication and video display over broadband networks.
Here's why I bought this stock:
+ News: The company updated its first quarter guidance this morning, narrowing its revenue guidance, raising gross margin guidance, and lowering operating expense guidance.
+ Technical: The stock took a big drop yesterday, and has partially recovered today. I am viewing this as a buying opportunity.
+ Excellent and accelerating recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +9%, +99%, +193%, and, most recently, for the quarter ended Dec 31, +205% to $99.0 million.
+ Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Mar 15 vs Mar 14: 9c vs 10c Jun 15 vs Jun 14: 12c vs 13c Sep 15 vs Sep 14: 40c vs 4c Dec 15 vs Dec 14: 46c vs 5c
+ Strong and rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2016 is $1.56, revised upward from $1.41 90 days ago (and up from 2015 actual earnings of $1.27); and the consensus estimate for 2017 is $1.64, revised upward from $1.41 90 days ago.
+ Valuation: At 10 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 15%, the stock is attractively priced.
+ History of earnings surprises: This company has reported earnings-per-share at least 2c above estimates in three of the past four quarters. Most recently, for the quarter ended Dec 31, they "beat the Street" by 2c.
+ 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 ("Electronics - Semiconductor Fabless") is ranked #51 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, Wednesday, April 20, 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, Wednesday, April 20, 2016, I sold IVV, for both client and my personal accounts.
I sold some IVV in order to pay for MXL. We remain fully invested.
-KD, Wednesday, April 20, 2016
* Buy prices shown are net after commissions.
** Current prices are at least 20 minutes old.
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