14 for 2014 Portfolio

The ‪#‎14for2014‬ mock portfolio is now assembled.

Please keep in mind that this list is a highly speculative collection of growth stocks. DO NOT buy blindly! The purpose of this social media exercise is to buy-and-hold for 365 days to see if this collection of stocks can outperform the S&P 500.

A detailed blog post will be linked later this weekend, explaining why I selected these growth stocks.

  • EPAM EPAM Systems, Inc.
  • HIMX Himax Technologies, Inc.
  • INVN InvenSense, Inc.
  • LNKD LinkedIn Corporation
  • LOCK LifeLock, Inc.
  • NOW ServiceNow, Inc.
  • PRLB Proto Labs, Inc.
  • QIHU Qihoo 360 Technology Co. Ltd.
  • REGN Regeneron Pharmaceuticals, Inc.
  • SCTY SolarCity Corporation
  • SLCA U.S. Silica Holdings, Inc.
  • SPLK Splunk, Inc.
  • TWTR Twitter, Inc.
  • XONE The ExOne Company

2014_01-01_Week 1

Please feel free to view the #13for2013 portfolio results here:
Results: 13 Stocks for 2013 Gain 60%

Results: 13 Stocks for 2013 Gain 60%

I started a mock portfolio on January 1, 2013, for fun, on stocktwits and twitter for the year 2013. I have owned and currently own several names but always clarified that I was not holding all 13 at any one time nor did I own every stock listed throughout the entire year. The purpose of the exercise was to develop a mock portfolio on social media which would be held for all 365 days without buy or sell rules to see if high quality growth stocks could outperform the general market without lifting a finger.

Well, SUCCESS:

As it turns out, the 13 handpicked stocks easily outperformed the major indices with a whopping 60.47% gain vs. a 31.80% gain for the S&P 500. This mock portfolio essentially doubled the average of the S&P 500 for the calendar year 2013.

2013_12-31_13-for-2013 Results

First tweet: #13for2013
10:04 PM – 1 Jan 13
13 Stocks for 2013: $SSYS $DDD $DNKN $RAX $LNKD $KORS $MOV $FLT $INVN $NTSP $SLCA $V $SCCO

Let’s take a look back as to why I selected these 13 stocks so we can use a similar strategy to select 14 stocks for 2014.

DDD – 3D Systems Corp.
The company manufactures and markets 3D printers, print materials, on-demand custom parts services, and 3D authoring solutions for professionals and consumers.

The entire 3D industry started to explode in 2012 and I felt the trend would continue strong into 2013. That thinking was correct as DDD led the portfolio with a 161.26% gain. I believe this industry is still within its infancy with room for further growth and will likely select at least one 3D stock in the 2014 portfolio. Many stocks within the group are extended so be careful with your selections and wait for pullbacks (low risk / high reward). Some analysts believe that this industry is “gimmicky” but I am not completely sold on that notion. The industry is young and the true leaders will take time to establish their position but I do believe 3D printing is here to stay (in one form or another).

2013_12-31_DDD

DNKN – Dunkin’ Brands Group, Inc.
Dunkin Brands Group, Inc., together with its subsidiaries, owns, operates, and franchises quick service restaurants under the Dunkin Donuts and Baskin-Robbins brands worldwide. The company has approximately 10,800 Dunkin’ Donuts restaurants; and approximately 7,000 Baskin-Robbins restaurants.

I liked the stock and still own shares today because those 10,800 stores are mostly concentrated in the north east. The company still has room for expansion which was my thought last year as the west coast is wide open, as well as international markets. This is a $60-$100 type stock over the long term based on Dunkin’s strong brand and loyal following. Even better, the stock pays a dividend. Bullish on this stock long term.

2013_12-31_DNKN

FLT – FleetCor Technologies, Inc.
FleetCor Technologies, Inc. provides fuel cards and workforce payment products and services to businesses, commercial fleets, oil companies, petroleum marketers, and government entities in North America, Latin America, and Europe. It sells a range of customized fleet and lodging payment programs; and offers various card products to purchase fuel, lodging, and related products and services at participating locations.

It’s a generic description from Yahoo Finance but that’s what caught my attention as this is such a great concept in a huge industry. The stock has had a heck of a two year run but can be considered for additional buys anywhere above the 200-d ma in the future. I am big supporter and buyer of “payment” solutions going forward (whether it is specialized in an industry or in general such as a credit card). I maintain my bullish outlook on this stock and the industry.

2013_12-31_FLT

INVN – InvenSense, Inc.
InvenSense, Inc. designs, develops, markets, and sells micro-electro-mechanical system (MEMS) gyroscopes for motion tracking devices in consumer electronics. The company delivers motion interface solutions based on its multi-axis gyroscope technology that target smartphones and tablets, console and portable video gaming devices, digital still and video cameras, smart televisions, 3D mice, navigation devices, toys, and health and fitness accessories.

The key terms here are “wearables” and “sensors”. Just about everything we will use in the future will contain sensors to some degree so that is why I have been extremely bullish on INVN since 2012. It’s hasn’t worked out as smoothly as I wanted since my first purchase in 2012 but it has been profitable over the long term. The past year has been more profitable but it has also been extremely volatile. The stock made a strong late year push but needs to deliver consistent earnings to reduce the volatility. If it can do that, I can see this stock trading above $30 per share in 2014. I am still bullish on INVN going into 2014 and hold shares today (the entire industry is just beginning to explode).

2013_12-31_INVN

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Stock Screens & Scans for Traders & Investors

As a part time trader & investor, I strictly use end of day data for my screens and scans as I don’t have the luxury of watching the tape all day long (nor do I want to). With that said, I do receive text alerts if a buy signal is made or if a sell signal has been violated. Using my smart phone or tablet, I can and do trade during business hours (when absolutely necessary) but it’s not imperative.

I encourage investors and traders in all time frames to evaluate stocks for investment using both fundamental and technical analysis. A day trader and even a swing trader can get away with avoiding fundamental analysis but I highly recommend both methods of analysis for intermediate and longer term trend traders and investors. Both tools are equally important in making serious decisions with your hard earned CASH!

Let’s start with a list of the key fundamentals that I require to be filtered within my mechanical screeners (please note that you should use your screener of choice):

Simple Fundamental Screener Criteria:
The criteria listed in this section can be used together or arranged in a variety of ways to generate multiple screens containing all possible opportunities. Get a feel for specific screens and determine which are the most successful during certain market conditions.

Most Important Fundamentals:

  • Increasing Earnings (current, past: quarterly, yearly and future estimates)
  • Increasing Sales (current, past: quarterly, yearly and future estimates)
  • Increasing Net Income (current, past: quarterly, yearly)
  • Increasing Institutional Sponsorship
  • Increasing and strong Relative Strength ratings vs. general market

Most Important Price Data:

  • Stocks making New Highs
  • Stocks within 15% of New Highs
  • Stocks trading slightly above or within 5% of the 50-d ma
  • Stocks within 10% of the 200-day moving average (in weaker markets)

Less Important Metrics:

  • Increasing Return on Equity (ROE)
  • Price / Earnings Growth (PEG) – less than 1 is preferable
  • Accumulation/Distribution ratio (up days vs. down days)
  • Up / Down Volume over past several months

Fundamental screeners will scan thousands of stocks narrowing down the universe to a couple dozen to a few hundred each night or weekend. The more bullish the market, the larger the list of stocks will be and vice versa for weak markets. From here, the savvy investor turns to technical analysis to identify “when” and “where” to place a new position for the ideal risk-to-reward ratio.

General Market Metrics & Technical Analysis:

  • Determine if overall market is in a specific trend (up, down or sideways). Use multiple moving averages to quickly determine the trend.
  • Evaluate sister stocks or stocks within the same industry group (strength travels in groups so the probability of success rises when buying into a strong industry).
  • Study the one year weekly chart (preferably candlesticks)
  • Study the six month daily chart (preferably candlesticks)
  • Look for increasing accumulation days (stock up on above average volume)
  • Evaluate the Point & Figure chart for clean support and resistance levels
  • Look for basic chart patterns such as flat bases, cup bases, saucer bases, triangle breakouts, obvious trends along a moving average, etc…
  • Properly forming bases
  • Pivot points
  • Breakout areas
  • Extended stocks
  • Stocks pulling back to key support lines
  • Favorable risk-to-reward setups
  • Check volume action when bases are formed

Market Breadth – Using Screens
It is extremely important to pay attention to the quantity of stocks making your screeners from time to time. The length of the list alone will tell you how healthy or how weak the market currently is, without even checking another factor.

For example, a standard screen of mine searching quality stocks making new highs should be full of candidates during a fresh up-trending market. The list should be full of candidates as long as the trend continues. As soon as this list starts to thin out on a daily and weekly basis, become cautious that the breadth is weakening.

Example of my most successful screens:
When scanning these screens, I will view the stocks in descending order starting with the day’s largest price percentage change and occasionally starting with the day’s largest volume change versus 50-day average.

1. Quality Stocks that are trading within 15% of 52-week Highs

  • Current price is within 15% of the 52-Week High
  • Earnings increasing qtr-over-qtr and year-over-year
  • Relative Price Strength greater than 80% of the general market
  • Current 50-Day Average Volume is at least 100k shares per day
  • % Increase in Volume (Current Day) vs. 50-Day Average Volume: Volume 50% larger than the 50-d average

2. Quality Stocks making New 52-week Highs:

  • Current price is trading at a new 52-Week High
  • Earnings increasing qtr-over-qtr and year-over-year
  • Relative Price Strength greater than 80% of the general market
  • Current 50-Day Average Volume is at least 100k shares per day
  • % Increase in Volume (Current Day) vs. 50-Day Average Volume: Volume 15% larger than the 50-d average

3. Institutional Sponsorship Increasing

  • % of the number of Institutions for Current Quarter vs. Prior Quarter have increased by 10%
  • % of the number of shares owned by Institutions for Current Quarter vs. Prior Quarter have increased by 5%
  • Earnings increasing qtr-over-qtr and year-over-year
  • Relative Price Strength greater than 50% of the general market
  • Current 50-Day Average Volume is at least 100k shares per day

4. Quality Stocks with a new IPO’s within the past two Years

  • Current price is greater than or equal to $10 per share
  • Earnings increasing qtr-over-qtr and year-over-year
  • Relative Price Strength greater than 80% of the general market
  • Market Capitalization is greater than or equal to $100M
  • Current 50-Day Average Volume is at least 50k shares per day
  • % Increase in Volume (Current Day) vs. 50-Day Average Volume: Volume 50% larger than the 50-d average
  • IPO Date within past 5 years (sometimes use 3 years)

Although I run these screens at least once per week, one or two will come into favor while others fall out of favor depending on the market environment or situation. Over time, the strength and weakness of certain screens will also give you a hint as to what the overall market is doing (another breadth signal).

For example, a screen that locates quality stocks making new 52-weeks highs is best used when a market is forming a new up-trend and the overall movement is still fairly fresh. This screen is less important near the end of a strong up-trend because at this point, many of the stocks making new highs are exhausted. The trader will see more failed breakout attempts, reversals and late stage bases so the odds are no longer in favor of this screen.

In strong up-trending markets, one cannot expect to buy every stock that makes the screens so it comes down to developing a risk-to-reward calculation to grab shares in the equities that show the greatest upside.

Lastly, it’s important to understand that no investor is perfect and losses are part of the game when it comes to investing and trading. Most traders will have as many winners as they do losers (using successful screeners) so having sell rules is critical for sustainable success. Learn to cut losses short while letting winners run, no questions asked.

By cutting losses, you account will not blow-up and you will be around to trade another day, especially when your screens are screaming buy!

13 Stocks for 2013 – 2nd Half Portfolio

The original #13for2013 will remain but due to the popularity on twitter and stocktwits, I have decided to put together a new list of names, 13 to be exact, for the 2nd half of 2013. I’m a bit hesitant to develop a new list half way through a year, without using any buy rules, sell rules or the typical money management techniques that I would employ for actual positions but this is the social web, so let’s do it.

The market may be headed for an extended correction due to the weakening NH-NL ratio and also due to the great run it had during the first six months of the year but you never know (trends last a lot longer than anyone can imagine). In addition, the stocks that I have decided to put together are all young, growth companies that can be extremely volatile at times so please proceed with caution and perform your own due diligence. Several of the names listed below are definitely extended from proper buy-points but this is for fun, so what the hell.

Ultimately, I will be looking to place positions in several of these stocks over the next 6 months or longer because I love their products or services and believe that they are in the beginning stages of a prolonged run over the next several years.

For example, I love the idea of gyroscopes and their potential for handheld devices, wearable technology and industrial capabilities. INVN is my top play in this category.

3D technology fascinates me. Some say it’s a bubble but I believe the industry is just scratching the surface. Now, with that said, the stocks in this industry appear to be extended but I am including three candidates on the 2nd half list: XONE, PRLB and DDD (SSYS remains on the original #13for2013 list).

Data, big data and instant data analysis: this category appears to be all the rage these days so why not jump on the train. SPLK is extended from a proper buy-point but “why not”, let’s see if it continues to run higher with strong and increasing institutional support.

Fracking – love it or hate, good or bad, it’s most likely here to stay and may provide the necessary natural resources for centuries to come. Silica is used as fracturing sand in connection with oil and natural gas recovery so SLCA covers this base. OAS is engaged in the exploration and production of oil and gas in the northern US so I have decided to include them on the list as the chart may be gaining some slight momentum.

I own Visa (love the business model) and have for years so why not pick up on two younger companies engaged in a similar business, such as VNTV and XOOM. Whether making an electronic transaction or sending money via the web (to a foreign country), this industry will continue to profit and expand (paper money is a thing of the past). And with all the online & electronic transactions taking place, why not protect your identity and insure yourself from fraud with LOCK.

These are some of the reasons as to why I put this 2nd half list together. The stocks on this list will probably perform well beyond the market if we took a look a few years down the road but for this exercise, we only have 6 months so let’s see how they turn out. The first six months was a huge success so why not repeat that performance with some great companies and even better technologies/ products/ services!

2013_06-30_Week 01

Portfolio Prices on June 30, 2013:

$INVN – 15.38
$SLCA – 20.78
$LOCK – 11.71
$NOW – 40.39
$SPLK – 46.36
$DDD – 43.90
$KORS – 62.02
$PRLB – 64.97
$XONE – 61.72
$REGN – 224.88
$XOOM – 22.92
$OAS – 38.87
$VNTV – 27.60

2013_06-30_DDD

2013_06-30_INVN

2013_06-30_KORS

2013_06-30_LOCK

2013_06-30_NOW

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13 Stocks for 2013 Mid-Year Results

In the blink of an eye, 26 weeks have flashed by and we’re already at the mid-year point. At the start of the year, I posted a partially owned, partially mock-portfolio that I said I would throw out there on the “twitter-world” and let it ride. No new buys, no sells and no rules – just ride the ups and down on 13 stocks that I felt were poised for big things in the 2013.

Here are the results at the end of Week #26 for my #13for2013 portfolio:

2013_06-29_Week 26

  • 11 of the 13 stocks show a gain
  • Collectively the group of 13 stocks is up 18%
  • The 11 positive stocks are up an average of 28.54%
  • 9 of the 13 stocks have current gains above 20%
  • Comparatively, the Dow, S&P, and NASDAQ are all up between 12% and 14% so this mock buy-and-hold portfolio easily beat the market averages
  • Several of the stocks hit performance highs much greater than their current levels, for example, FLT and LNKD peaked above 60% while SLCA peaked above 50%.
  • Two stocks bombed out with RAX a total bust, currently down 49%.

All-in-all, it’s a solid portfolio of stocks as we stand here today. Take a look at the performance snapshot and daily (year-to-date) charts below. Several of these stocks will make my 2nd Half #13for2103 portfolio, because I believe their upside still has more to come.

Disclosure: as of today, I own shares in INVN, DNKN and V.

Portfolio Prices on January 1, 2013:
$DDD – 35.57
$DNKN – 33.18
$FLT – 53.65
$INVN – 11.11
$KORS – 51.03
$LNKD – 114.82
$MOV – 30.68
$NTSP – 11.82
$RAX – 74.27
$SCCO – 37.86
$SLCA – 16.73
$SSYS – 80.15
$V – 151.58

Charts:

2013_06-28_DDD

2013_06-28_DNKN

2013_06-28_FLT

2013_06-28_INVN

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