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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, Wednesday, May 9, 2018, I bought ZBRA, for both client and my personal accounts.
This stock is a component of the S&P 500 Midcap Index.
Here's why I bought this stock:
+ Earnings surprise: Yesterday, May 8, before the open, the company announced results for the quarter ended March 31. Earnings came in at $2.56 per diluted share (vs $1.37 last year and analysts' consensus $2.05). Revenue was up 13% to $977.0 million (analysts' consensus $935.6 million).
+ Breakout: Also yesterday, the stock jumped +11% on very heavy volume.
+ Volume spike, mostly on the buy side: Yesterday's trading volume was more than 3 times average, and set a 12-month record.
+ Accelerating recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +2%, +3%, +9%, and, most recently, as cited above, +13%.
+ Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Jun 17 vs Jun 16: $1.51 vs $1.17 Sep 17 vs Sep 16: $1.87 vs $1.43 Dec 17 vs Dec 16: $2.33 vs $1.93 Mar 18 vs Mar 17: $2.56 vs $1.37
+ Strong and rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2018 is $9.26, revised upward from $7.80 90 days ago (and up from 2017 actual earnings of $7.05); and the consensus estimate for 2019 is $9.85, revised upward from $8.36 90 days ago.
Valuation: At 15.6 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 10%, the stock, 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 six quarters, including the just-reported quarter cited above, which "beat the Street" by 51c.
+ The company's industry group ("Elec - Misc Products") is ranked #81 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, Wednesday, May 9, 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, May 9, 2018, I sold SPY, for both client and my personal accounts.
I sold just enough SPY to pay for ZBRA. We remain fully invested.
-KD, Wednesday, May 9, 2018
* Buy prices shown are net after commissions.
** Current prices are at least 20 minutes old.
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