Wednesday, October 10, 2012

Acitve Stock Screening: October 9th

This screen was last run in August, but even during this short period there were a number of changes in qualifying stocks. Dropping from the top-8, as ranked by Market Cap, was CF Industries and Randgold Resources.  Vertex Pharmaceuticals jumped into sixth spot as Lululemon Athletica crept in to fill out the last spot

The Active Stock Screen used the following parameters:

• % Chg EPS; Q to last yr Q of 25% or more
• % Chg EPS; YTD to last YTD of 25% or more
• % Chg Revenue; YTD to last YTD of 25% or more
• Return on Average Equity of 17% or more
• 5-yr Revenue Growth Rate of 15% or more
• Market Cap of at least $50M
• Net Profit Margin of 18% or More
• Current price above $12
• Average 10-day volume above 250,000 shares

And it generated the following results:

While Baidu tops the list on fundamentals, on price it has been struggling. Technology stocks were hit hard over two days of heavy selling, as sectors dependent on strong economic conditions saw big outflows.  For Baidu, this has seen the stock drop sharply towards $100 support; $100 support was defended last October and July, and is a key psychological level, but it could struggle to hold for a third time given broader selling pressures. The stock has also struggled to make it back to resistance, with each successive swing high becoming lower and lower. Concerns around monetization of its mobile offerings are more of a long term issue, and analyst rating cuts only add to the panic. But the current sell is governed more by broader economic impacts on the technology sector, rather than stock specific issues.  A Zignals Alert set for a price cross below $100 would be a good time to take a second look at Baidu, and gauge whether there is an opportunity for a support buy, or if it's time to head for the exits.

Zignals Chart Image

Priceline suffered a sharp drop just three days after it featured here. Disappointing guidance was blamed for the sell off, but the company had just reported a 20% increase in revenue, with a net income of $7.85 which was ahead of analyst estimates of $7.36 a share.  While a guidance of $11.78 per share in net income may be viewed as disappointing, it's significantly ahead of the $9.95 reported for the comparable quarter last year. Historically too, Priceline is in the habit of coming in ahead of expectations. Stock price has recovered somewhat, but it's now in an area where 'weak' bag holders may decide enough is enough. A drift below $600 would probably see sideline money come in to support it.  Despite all this, the stock retained its second spot in the scan (as ranked by Market Cap).

Zignals Chart Image

HDFC Bank manged to buck the trend of the previous two stocks by actually moving higher.  The stock handily cleared $36-36.50 resistance at the second time of asking, helped by an earnings report which showed 30% rise in profit from the prior-year quarter. Deposits were also up 22%. However, the company also reported a 26% rise in costs for the same period. But overall, the news was deemed positive enough to support the breakout.  For a stock which is news-lite, there should be enough momentum to see it get to its next earnings release.

Zignals Chart Image


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