Off To the Races: My Quickly Evolving Watch List

After running several different screens for stocks and trolling for those I may have missed in screens, I’ve developed a lengthy watch list. The list does not include stocks that are extended from break outs, of which there are a few. I will later post a list of high quality stocks that are off to the races and should be followed in case they pull back to their 50 day moving average, which would offer a secondary buy point.


Many stocks have come out of the wood work with their recent earnings reports. Not too many high quality stocks were available only a few months ago. With the world economy improving, we’re seeing it in the bottom line of stock exchange listed stocks. One particular statistic that has been lacking of late is the recent sales growth number. So very few stocks exhibited 25% or higher sales growth in the most recent quarter, let alone in the past three quarters.

While still anemic, we are seeing this figure more often. In fact, all the stocks listed below except one have over 25% EPS and sales growth in the most recent quarter. The one exception is VIT, a Chinese tech outsourcing firm that grew its earnings only 21% last Q and sales 44%. However, it is projected to have 45% sales growth next Q and 40% EPS growth.

In healthy bull markets in stronger economic climates, I would certainly insist on seeing three quarters in a row of 25% EPS and sales growth year over year (and accelerating at that), but in the situation we find ourselves in, that’s a tall order. So, while I favor stocks that do have this quality, I will accept a stock that does not so long as the current quarter shows 25% EPS and sales growth or very close to it, and it must show projected EPS and sales growth over 25% for the next quarter. Typically, if I do jump in on a stock like this, I want it to have much higher than 25% growth ahead of it – I’d look first for those triple digit growers and favor them.

For now, the idea is I can accept that even some of the better companies hit a slow patch in the down economy, but the exceptional stocks should begin showing tremendous growth going forward. I favor growth: the higher the better.

Of the stocks listed below, I’ve done recent comprehensive research packages on ATHR, CTRP, FIRE, GMCR, LULU, PCLN and VIT. I focused in on these stocks because they were closer to breaking out than the others for the most part. I will next focus on MRVL, NTAP, POWI, RUE, SXCI and WCRX because they are the next closest (a couple have already broken out, so I’ll need to move fast). Keeping up with the market is a difficult challenge as it moves quickly, and I never like to buy a stock without fully investigating it.

The list below describes the type of consolidation the stocks are going through and the buy point (BP). I will only own a few stocks at a time, so whittling the choices down isn't always easy. At the moment I prefer GMCR, PCLN and ATHR, but have my doubts about ATHR, and am eyeing a few others like RUE, FIRE & DBRN.  I have brief notes on each for my quick reference, but my actual research packages are full of information and notes. The buy points of the stocks can easily change as the consolidation continues. For example, MRVL is in a cup formation, but it could also have formed a handle. If it shot above the high of the handle on over 50% volume, I’d consider buying it. The cup with handle is the most powerful formation.

I only buy a stock on a break out if the volume on the day of trading is 50% or higher than the average daily volume. LULU did not break out on 50% or higher volume, therefore, I did not pull the trigger on it. It could go on to form a high handle, but I’m doubting that at the moment.

My watch list (changes daily):
AAPL BP: $215.69 Broke Out Cup, near buy point

AMZN BP: $146.01 Basing - cup

ASIA BP: $32.55 Basing – cup. RS only 73, needs accumulation.

ATHR BP: $37.93 Broke Out Cup with high handle, near buy point. Keep an eye on: hovering for days around its buy point.

CTRP BP: $39.92 eased above, then reversed; improper action. Might remove from hot list.

DBRN BP: $26.81 Broke Out Cup, within 4% of BP.

FIRE BP: $28.10; could form handle with $27.29 BP

GMCR BP: $86.95 Broke Out Flat Base, near buy point

HITK BP: $29.99 Basing – cup. Needs accumulation; projections beyond next Q weak

LFT BP: $41.87 Basing – cup. RS line only 65 for now. Needs more accumulation. Chinese stock, smoother than many other Chinese stock charts out there.

LULU BP: $33.05 Eased above buy point on average volume; improper action. Will remove from watch list unless it starts forming high handle Wednesday.

MELI BP: $55.85 Basing – cup. Base needs a lot of work.

MRVL BP: $21.86 Basing – cup. Is that a handle forming? If so, BP: $20.93 and could blast off any day.

NTAP BP: $35.09 Basing – cup. RS only 76 and consolidation needs more accumulation.

PCLN BP: $235.90 Broke Out Cup with high handle, still near buy point. Keep eye on.

POWI BP: $37.25 Broke Out Cup. Still near BP, but only 70RS rating.

RUE BP: $31.62 Broke Out Double Bottom base. Big daily swings, only 58RS rating, quite low. Brand new stock.

SXCI BP: $56.30 Broke Out Cup all in one move. Over 6% extended, but pulled out past two days, may offer chance to buy with another dip.

VIT BP: $21.93 Broke Out “V” Shaped Cup. 6.7% over BP, but has gone up 12 days in a row: could easily pull back and offer chance to buy if desired. Chinese.

WCRX BP: $29.34 Basing – cup. Prefer seeing more accumulation.