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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, Monday, May 14, 2018, I bought TTD, for both client and my personal accounts.
Here's why I bought this stock:
+ Huge earnings surprise: Last Thursday, May 10, after the close, the company announced results for the quarter ended March 31. Earnings came in at 34c per diluted share (vs 18c last year and analysts' consensus 10c). Revenue was up 61% to $85.7 million (analysts' consensus $73.2 million).
+ Breakout: The next day, Friday, the stock jumped +43% one extremely heavy volume, breaking out of a 7-month range to a new all-time high.
+ Volume spike, mostly on the buy side: Friday's volume was about 17 times average, the heaviest one-day trading volume this stock has ever seen.
+ Excellent and now accelerating recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +54%, +50%, +42%, and, most recently, as cited above, +61%.
+ Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Jun 17 vs Jun 16: 52c vs 21c Sep 17 vs Sep 16: 35c vs 24c Dec 17 vs Dec 16: 54c vs 33c Mar 18 vs Mar 17: 34c vs 18c
Valuation: At 35 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 23.5%, the stock is, 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 7c above estimates in each of the past six quarters, including the just-reported quarter cited above, which "beat the Street" by 24c.
+ The company's industry group ("Commercial Services - Advertising") is ranked #47 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:
- Strong but falling earnings-per-share estimates for next year: According to recent data from First Call, the consensus earnings estimate for 2018 is $1,69, revised upward from $1.67 90 days ago (but up from 2017 actual earnings of $1.60); and the consensus estimate for 2019 is $2.19, revised downward from $2.24 90 days ago.
-KD, Monday, May 14, 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, Monday, May 14, 2018, I sold SPY, for both client and my personal accounts.
I sold just enough SPY to pay for TTD. We remain fully invested.
-KD, Monday, May 14, 2018
* Buy prices shown are net after commissions.
** Current prices are at least 20 minutes old.
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