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Archives for April 2008

Master Stock is Priceless

April 30, 2008 by 1 Comment

Once upon a time, I asked: Is Mastercard Priceless

Longer term trend investors can establish a position now at the 50-d moving average or at least start to initiate a position by accumulating shares. Look for a confirmation on a move to the up-side above the trading range I have highlighted in blue on the weekly chart.

Bottom Line: MA is rated a buy in my book and I am grabbing shares today.
*This blog post is not a recommendation to buy this or any other stock. Please do your own due diligence and buy and sell at your own risk!

One month later, Mastercard was already Paying Off

First quarter earnings rose 70% boosted by higher gross dollar volume and a 19% jump in the number of transactions processed. The Purchase, N.Y., issuer of credit and debit cards and provider of a transaction authorization network reported first-quarter earnings of $214.9 million, or $1.57 a share, up from $126.7 million, or 94 cents a share, a year earlier. MasterCard said net revenue for the quarter rose 24% to $915.1 million from $738.5 million a year ago. Analysts surveyed by Thomson Financial expected, on average, earnings of $1.16 a share on revenue of $842 million.

Six months later, Mastercard was Charging Ahead

Mastercard (MA) looks like it’s heading for $200 and beyond after the recent numbers presented to Wall Street. Some analysts are cutting their ratings but what do they know. Listen to those talking heads and you will go broke. But hey, they’re experts!

How about those experts? Well, the stock is up 155% since the original blog post on 4/2/07 at $107.28 and it has never violated the 200-d m.a. on the weekly chart (weekly closing price). Mastercard has been a wonderful holding in my portfolio and I was delighted to see the earnings release today. Both MA and Visa lit up my screens when I returned home from work. Other holdings didn’t fare as well but these are the days I love (could this joy be a contrary indicator?). Visa is now above $80 per share with a 6%+ gain today on above average volume.

Take a look at some of the other posts highlighting Mastercard over the past 12 months. I featured Mastercard on the blog 17 times in 2007 and another half-dozen times already in 2008.

MA: 17 Times, 112% peak gain (debut on 4/2/07 at $107.28; current price $209.48)

Portfolio Snapshot: Growth

Where’s the Smart Money Going?

Highest Rated IPO’s

Cash Back from Mastercard and Baidu

Profit with these Stocks

VISA (V) set to Launch

Anticipating the VISA IPO

Take a look at Mastercard versus American Express, as viewed by investors:
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Filed Under: Stocks

Young Stocks Moving on Volume

April 29, 2008 by 6 Comments

A screen I run often searches for stocks that have debuted on the market with an IPO within the past two years. I prefer trading in young innovative stocks that can make strong moves based on powerful earnings and revenue increases.

Today’s group contains stocks that are very familiar to this blog as they continue to appear on almost every type of screen I run.

Why?

They have been the leaders of the market over the past 1-2 years at one point or another. I can’t say that I would buy shares in all of the issues listed below but they are on a watch list. Momentum trading has been very profitable over the past 6-8 weeks as we can see in stocks such as CLR and SD.

Continental Resources is up more than 100% since it’s low in January of this year. It’s moved from $24.44 to $47 in one month on huge volume versus the average. The stock is certainly extended but that’s what I thought when it debuted on the blog on January 7, 2008 at $26.57

CLR – Continental Resources Inc., $26.57
This is the first appearance of the stock on this blog as it has had a nice run from $15 to $28 in four months. The stock is extended but trending higher. An ideal entry is above the 50-d m.a. Set up a favorable risk-to-reward trade before entering.

Titan Machinery and Visa Inc reported solid numbers but their stocks went in opposite directions based on the guidance they gave moving forward.

Young Stocks up on Higher Volume
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Filed Under: Daily Stock Screens, IPO, Stocks

Stocks Building Bases

April 28, 2008 by 1 Comment

We start the week by studying stocks that are currently building bases. I decided to specifically narrow the list down to stocks that are building cup shaped bases. Each stock presented today contains respectable fundamental characteristics such as strong earnings and revenue. Many, if not all of the stocks below have been covered within the past 6-12 months on the blog. A few of the stocks listed are building their first major bases since their spectacular up-trends in 2007.

Each stock has gained support along the 200-d (40-week) moving average while building their current base. The market has been moving higher but many pundits are calling this positive move a “head-fake” or slight pause in the main trend which is down (in their opinion). I couldn’t tell you if they are correct but buying stocks while they make new highs during a suspect market can be costly if it reverses. I prefer to buy stocks making new highs during an obvious up-trend. In any event, let’s go over a few technical rules for stocks building cup or saucer shaped bases.

On the weekly charts:

  • Look for more up-weeks than down-weeks while the stock is building the base.
  • Make sure that the volume is higher during the up-weeks than the down weeks.
  • Volume should be below average or lighter during the down-weeks than they are during up-weeks.
  • Stocks tend to make 3-5 bases during a long run over a few years. Be careful with stocks making late stage bases (4th base or later); they are more vulnerable to failure as most of the “smart money” (institutions) have rotated their cash into new stocks.
  • Sell if a stock breaks out from a base on above average volume but suddenly reverses below the pivot point (ideal entry) that same day or a few days later.
  • Beware of stocks trying to make news highs on above average volume but fail to end the day in the upper half of its daily range. This may be a reversal and a possible red flag.

Read an article I posted last January on How to Calculate a Stock’s Pivot Point:

How to Look for a Cup with Handle (chart #1):

Look for relatively quiet volume as the stock builds the left side of the cup. Volume at the base of the cup should be slightly higher than the left side as support is coming into the stock. The right side of the base should have above average volume with more up-days than down days. The handle will be the last part of the formation and should slope slightly downward with lower volume than the right side of the base. The pivot point will be slightly higher than the highest point of the right side of the base. All breakouts should occur on volume 100% greater than average daily volume although IBD does say that breakouts above 50% do qualify.

How to Look for a Saucer with Handle (chart #2):

Look for relatively quiet volume as the stock builds the left side of the saucer. A saucer looks similar to the cup-with-handle but the dip from the high to the low is smaller and usually longer in duration. Volume at the base of the saucer should be slightly higher than the left side as support is coming into the stock. At this point, the base may almost qualify as a flat base. The right side of the base should have above average volume with more up-days than down days but this does not have to be as prominent as the cup-with-handle. The handle will be the last part of the formation and should slope slightly downward with lower volume than the right side of the base. The pivot point will be slightly higher than the highest point of the right side of the base. All breakouts should occur on volume 100% greater than average daily volume.

All stocks and charts are listed in alphabetical order:

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Filed Under: Daily Stock Screens, Stocks, Technical Analysis

Portfolio Snapshot: Growth

April 25, 2008 by 12 Comments

I am going to disclose the holdings in my growth portfolio because I have been receiving questions as to what I am currently investing in (during the so-called bear environment). Readers ask what I actually own and want to know why I present stocks that I do not own.

So, to answer some of these questions and requests:

  • I will disclose my growth portfolio which consists of stocks that I anticipate will provide a rate of return greater than the general market averages and 90% of all listed stocks. I have owned shares in a couple of these stocks for a lengthy period of time. However, I will note that the size of the positions in MA, JASO and EDU have changed just as the market environment has changed. I have both added-to and sold-out of shares over the past 6-12 months.
  • This blog is treated as an educational and equity research site. I am providing a portion of my own research in public while trying to help others based on the knowledge I have accumulated in the market. I research and study hundreds of stocks every week but I only buy a handful over the course of a year.

Anyway, the six stocks below are all currently positions in an account I consider my growth portfolio (stocks can be held from a few weeks to a year). This account buys young innovative growth stocks that have the potential to provide returns greater than the vast majority of the equity market. It’s a long portfolio. I have other portfolios that buy options, ETF’s, value plays and short from time to time but this portfolio most closely resembles my research and writing style on chrisperruna.com.

If you are wondering about this year’s losing trades (closed trades), most of them were sold prior to leaving for Mexico in late March (and I had several across the portfolios).

I am disclosing the positions because I am reevaluating the holdings while looking for new potential buys. Visa is the latest purchase and is up over 16% since accumulating my first batch of shares. I would like to buy additional shares in Visa once I determine how to reallocate the funds within the portfolio. Some new faces are popping up on my research scans and may be worthy of consideration versus the longer holdings and rebound plays.

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Filed Under: Portfolio, Stocks

Intrepid Potash, Inc (IPI)

April 24, 2008 by 5 Comments

Can Intrepid Potash (IPI) follow in the footsteps of Potash Corp. Saskatch, Inc. (POT)?

If you don’t know by now, POT is up 552% over the past two years, 230% over the past 12 months and 43% year to date; all while the S&P 500 is down 2.25% year-to-date, an amazing accomplishment in this market environment (see chart below).

Intrepid Potash Inc, a producer of crop nutrients, raised $960 million with an initial public offering that priced shares above expectations in the $27 to $29 range. The IPO price came in at $32, $3 above the top of the range expected by underwriters. The original estimate was for 24 million shares to be priced between $24 and $26 per share (30 million shares were offered at $32).

Intrepid Mining, the parent company of Intrepid Potash claims to be the largest potash producer in the U.S. I missed the HUGE up-trend in POT but IPI may give this industry one last run before the trend is over. Markets are not efficient so the greed of crowds may take this IPO higher due to the recent performance of POT. Risks will be associated as a quick sell-off could be a huge possibility if things don’t go the way investors expect.

As you can see from the charts, IPI priced at $32 per share but jumped as much as 50% during the trading debut. The stock reached a high of $53.50 today but closed down 2.6% at $49.09.

Tate from Self Investors notes:

“As far as the fundamentals, they look solid but nothing extraordinary. My take on this is that this IPO comes at a time when the agriculture stocks appear to be near a major top with perhaps one more last climax run left in them. Does this IPO signal the top? Just maybe. Like all IPO’s I’ll let it trade for at least two weeks and only enter on a breakout from a bullish pattern.”

I tend to agree with his analysis for the most part. I will not hesitate to jump on a trend if IPI starts to run higher because crowds are persistent and I don’t like to fight them.

Filed Under: 2008 Stock of Day, IPO, Stocks
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