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Market Stance: BULLISH (since March 5, 2018)
* 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, Tuesday, March 13, 2018, I bought NVEE, for both client and my personal accounts.
Here's why I bought this stock:
+ Earnings surprise: Last Thursday, March 8, after the close, the company announced results for the quarter ended Dec 31. Earnings came in at 71c per diluted share (vs 41c last year and analysts' consensus 63c). Revenue was up 49% to $94.0 million.
+ Market reaction: The next day, Friday, the stock price jumped 18.6% on extremely heavy volume.
+ Volume spike, mostly on the buy side: Friday's volume was more than 4x average, and was a 12-month record.
+ This morning, the stock is up again, after some profit-taking yesterday. I view yesterday's dip as a buying opportunity. Our buy price today is slightly below Friday's close.
+ Excellent recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +43%, +50%, +52%, and, most recently, as cited above, +49%.
+ Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Mar 17 vs Mar 16: 39c vs 32c Jun 17 vs Jun 16: 58c vs 38c Sep 17 vs Sep 16: 75c vs 41c Dec 17 vs Dec 16: 71c vs 41c
+ Strong and rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2018 is $2.96, revised upward from $2.81 90 days ago (and up from 2017 actual earnings of $2.41); and the consensus estimate for 2019 is $3.60, revised upward from $3.30 90 days ago.
+ Valuation: At 15 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 20%, the stock may still be, even after Friday's price jump, attractively priced.
+ History of earnings surprises: This company has reported earnings-per-share at least 3c above estimates in each of the past four quarters, including the just-reported quarter cited above, which "beat the Street" by 8c.
+ The company's industry group ("Commercial Services - Consulting") is ranked #97 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, Tuesday, March 13, 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, Tuesday, March 13, 2018, I sold SPY, for both client and my personal accounts.
I sold just enough SPY to pay for NVEE. We remain fully invested.
-KD, Tuesday, March 13, 2018
* Buy prices shown are net after commissions.
** Current prices are at least 20 minutes old.
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