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Market Stance: BULLISH (since April 10, 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, Thursday, April 12, 2018, I bought VNOM, for both client and my personal accounts.
Here's why I bought this stock:
+ Technical: One week ago, on April 5, the stock broke out of a 10-week range to a new 3-year high. We are buying today at a price above the April 5 close, but below the April 5 intraday high.
+ Volume spike, mostly on the buy side: Yesterday's volume was more than 3x average, and set an 8-month high.
+ Triple-digit recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +137%, +115%, +113%, and, most recently, for the quarter ended Dec 31, +112% to $59.2 million.
+ Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Mar 17 vs Mar 16: 22c vs 3c Jun 17 vs Jun 16: 23c vs 9c Sep 17 vs Sep 16: 24c vs 12c Dec 17 vs Dec 16: 37c vs 19c
+ Strong and rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2018 is $1.39, revised upward from $1.30 90 days ago (and up from 2017 actual earnings of $1.07); and the consensus estimate for 2019 is $1.58, revised upward from $1.55 90 days ago.
+ Valuation: At 17 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 23%, the stock is, by my usual metric, attractively priced.
+ History of earnings surprises: This company has reported earnings-per-share at least a penny above estimates in each of the past five quarters. Most recently, for the quarter ended Dec 31, they "beat the Street" by 7c.
+ The company's industry group ("Oil & Gas - US Exploration & Production") is ranked #46 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, Thursday, April 12, 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, April 12, 2018, I sold SPY, for both client and my personal accounts.
I sold just enough SPY to pay for VNOM. We remain fully invested.
-KD, Thursday, April 12, 2018
* Buy prices shown are net after commissions.
** Current prices are at least 20 minutes old.
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