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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, May 10, 2018, I bought RUN, for both client and my personal accounts.
Here's why I bought this stock:
+ Earnings surprise: Yesterday, May 9, after the close, the company announced results for the quarter ended March 31. Earnings came in at 25c per diluted share (vs 9c last year and analysts' consensus 16c). Revenue was up 37% to $144.4 million (analysts' consensus $132.7 million).
+ Breakout: The stock is up sharply today on heavy volume, breaking out of a 2-year range to a new all-time high.
+ Volume spike, mostly on the buy side: Today's volume is more than 3x average and is a 12-month record.
+ Excellent and accelerating recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +12%, +26%, +21%, and, most recently, as cited above, +37%.
Recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Jun 17 vs Jun 16: 23c vs 31c Sep 17 vs Sep 16: 25c vs 16c Dec 17 vs Dec 16: 25c vs 27c Mar 18 vs Mar 17: 25c vs 09c
+ Valuation: At 8.9 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 9%, the stock may still be, even after yesterday's price jump, attractively priced.
+ 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 factors:
- Strong but falling earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2018 is $1.07, revised downward from $1.56 90 days ago (and up from 2017 actual earnings of 83c); and the consensus estimate for 2019 is $1.30, revised downward from $1.85 90 days ago.
- The company's industry group ("Energy - Solar") is ranked #39 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, May 10, 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, May 10, 2018, I sold SPY, for both client and my personal accounts.
I sold just enough SPY to pay for RUN. We remain fully invested.
-KD, Thursday, May 10, 2018
* Buy prices shown are net after commissions.
** Current prices are at least 20 minutes old.
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