Saturday, May 8, 2010

Potential Rocket...APKT!

After last week's carnage in the stock markets my long watch list has been whittled down to three stocks: APKT; NFLX; and LSCC.

LSCC appears to be more of a turn around candidate. It does not really seem to have a hot new product or positioned in a hot new industry poised for above average growth in the near future. However, what has been really instructive is its ability to buck the recent sell-off in the overall markets on the back of a recent earnings surprise that triggered a huge positive price reaction in its market. So despite these other short comings I still believe it has sufficient fuel to out perform the markets when ever they turn around and start moving higher again.

NFLX is the quintessential CANSLIM stock. I do not have copy of the latest IBD newsletter. However, I would not be surprised if NFLX was ranked right at the top if not at the top.

C = 25% YoY Q1 revenue growth and 59% YoY Q1 earnings growth;

A = 50% EPS growth 2009/2008, 36% EPS growth 2008/2007 and 36% EPS growth 2007/2006;

N = Netflix has shifted away from DVD distribution to the more in "vogue" streaming over the internet and price closed just 17% off all time highs;

S = 50 mil shared outstanding and shares have been bought back every year for the past four years;

L = Has the most well recognised brand name of video rental companies along side block buster which is now on the decline; has shown innovation in shifting away from rentals to subscription streaming; 3, 6 and 12 month relative strenghts are above 90;

I = Insiders hold about 27% of shares outstanding. NFLX also shows strong institutional support by holding well above its 50 day MA despite the recent nasty sell off in the markets;

M = Markets are currently in a correction. NFLX is holding up very well and appears to be forming the left side of a base.

I am waiting for NFLX to complete the formation of a proper base most likely a cup-with-handle and a change in the trend from a correction to confirmed uptrend. The white line in the chart shows the pivot buy point @ $110.00.

The third and my most favorite stock is APKT. It satisfies every CANSLIM requirement just like NFLX. However, unlike NFLX, it has IPOed with in the past 4 years, its current and projected earnings and revenue growth rates are much better and despite the recent carnage in the markets APKT has closed well above its 20 day MA. Here is the chart:

So these are the stocks as well as any others that I manage to find before the correction ends that I will be looking at for position trades in the next up trend.

No comments:

Post a Comment