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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, Thursday, January 18, 2018, I bought ESIO, for both client and my personal accounts.
Here's why I bought this stock:
+ News: Yesterday, Jan 17, after the close, the company announced preliminary results for the quarter ended Dec 30. Revenue will be between $106 and $111 million (analysts were estimating $85 million). Earnings should "exceed the guided range provided November 1".
+ Market reaction: The stock is up sharply this morning on extremely heavy volume.
+ Dramatic turnaround in recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: -22%, -3%, +52%, and, most recently, for the quarter ended Sep 30, +139% to $71.0 million.
+ Dramatic turnaround in recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Dec 16 vs Dec 15: (23c) vs 1c Mar 17 vs Mar 16: 9c vs 11c Jun 17 vs Jun 16: 38c vs 9c Sep 17 vs Sep 16: 39c vs (24c)
+ Strong and rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for FY 18 (ends March 31) is $1.83, revised upward from $0.73 90 days ago (and up from FY 17 actual loss of (29c)); and the consensus estimate for FY 19 is $1.44, revised upward from $0.82 90 days ago.
Valuation: At 18 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 12%, the stock is, by my usual metric, may not be a bargain, but is at least priced within reason.
+ History of earnings surprises: This company has reported earnings-per-share at least 3c above estimates in each of the past four quarters. Most recently, for the quarter ended Sep 30, they "beat the Street" by 12c.
+ 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 ("Elec - Semiconductor Eqp") is ranked #87 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, January 18, 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, Thursday, January 18, 2018, I sold IVV, for both client and my personal accounts.
I sold just enough IVV to pay for ESIO. We remain fully invested.
-KD, Thursday, January 18, 2018
* Buy prices shown are net after commissions.
** Current prices are at least 20 minutes old.
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