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Market Stance: BULLISH (since December 8, 2017)
* 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, Friday, January 5, 2018, I bought UCTT, for both client and my personal accounts.
Here's why I bought this stock:
+ Technical buy signal: This stock is in a long-term uptrend, but it has been weak since peaking in mid-October. It was up sharply on heavy volume on both Dec 29 and Jan 2. Volume on Jan 2 set a 12-month record. But the price is still well off its October highs. I view this as a technical buy signal. Our buy price today is in-between the Dec 29 and the Jan 2 closing prices.
+ Excellent recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +69%, +82%, +76%, and, most recently, for the quarter ended Sep 30, +66% to $242.6 million.
+ Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Dec 16 vs Dec 15: 36c vs (1c) Mar 17 vs Mar 16: 47c vs (1c) Jun 17 vs Jun 16: 62c vs 10c Sep 17 vs Sep 16: 62c vs 17c
+ Strong and rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2017 is $2.32, revised upward from $2.29 90 days ago (and up from 2016 actual earnings of 63c); and the consensus estimate for 2018 is $2.54, revised upward from $2.41 90 days ago.
+ Valuation: At 9 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 20%, the stock is, by my usual metric, attractively priced.
+ History of earnings surprises: This company has reported earnings-per-share at least 2c above estimates in five of the past six quarters.
+ 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 factors:
- Most recently, for the quarter ended Sep 30, earnings came in 2c per share shy of estimates.
- The company's industry group ("Elec - Semiconductor Equip") is ranked #53 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, Friday, January 5, 2018
* 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, Friday, January 5, 2018, I sold IVV, for both client and my personal accounts.
I sold just enough IVV to pay for UCTT. We remain fully invested.
-KD, Friday, January 5, 2018
* Buy prices shown are net after commissions.
** Current prices are at least 20 minutes old.
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