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Market Stance: BULLISH (since March 20, 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, Wednesday, March 21, 2018, I bought SRI, for both client and my personal accounts.
Here's why I bought this stock:
+ Breakout: Yesterday, the stock was up sharply on heavy volume, breaking out of a 2-month range to a new all-time high.
+ Volume spike, mostly on the buy side: Yesterday's volume was more than 8x average, and set a 12-month record.
+ This morning, the stock price was down just slightly. I chose to view this as a buying opportunity.
+ Excellent recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +26%, +12%, +17%, and, most recently, for the quarter ended Dec 31, +20% to $207.4 million.
+ Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Mar 17 vs Mar 16: 38c vs 31c Jun 17 vs Jun 16: 42c vs 41c Sep 17 vs Sep 16: 36c vs 36c Dec 17 vs Dec 16: 42c vs 34c
+ Strong and rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2018 is $2.01, revised upward from $1.54 90 days ago (and up from 2017 actual earnings of $1.57); and the consensus estimate for 2019 is $2.16, revised upward from $1.65 90 days ago.
+ History of earnings surprises: This company has reported earnings-per-share at least 3c above estimates in each of the past five quarters. Most recently, for the quarter ended Dec 31, they "beat the Street" by 3c.
+ The company's industry group ("Electronic - Parts") is ranked #75 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.
I chose to buy the stock in spite of the following negative factor:
- Valuation: At 13 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 0.3%, the stock is, by my usual metric, overpriced. (But I have a suspicion that that projected growth rate may be too low.)
-KD, Wednesday, March 21, 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, Wednesday, March 21, 2018, I sold SPY, for both client and my personal accounts.
I sold just enough SPY to pay for SRI. We remain fully invested.
-KD, Wednesday, March 21, 2018
* Buy prices shown are net after commissions.
** Current prices are at least 20 minutes old.
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