Straight from the state that has give our Republic more presidents than any other, I present Transdigm Group Inc. (TDG), which makes components for the aerospace industry.
The Cleveland based TDG, despite having a less than a poetic sounding name, presents a chart that is a work of art. Alright, maybe no Picasso, but perhaps a Remington?
Just as important, TDG has some pretty solid fundamentals. It has delivered three quarters in a row of EPS growth over 50% and sales growth of 39% or more. Funds have stepped up their support, with the number of funds owning shares in the stock rising from 414 to 451 in the most recent quarter, according to Investor’s Business Daily.
The stock has a top notch EPS rating, Composite Rating (one of IBD’s proprietary measurements) and SMR rating (a combination of factors to help determine the return on equity and margins among other factors) and analysts estimate 50% earnings growth this year.
Now the technicals. The stock chart shows that TDG had a long run up, breaking out of a later stage base recently but on volume less than the 50% higher volume you’d like to see. The base failed, leading to the current base. More importantly, the current base undercut the previous, making this base a first stage base, which offers a higher chance of success.
TDG broke out of the current (recent rather) base ($136.44 buy point) last Friday on 83% higher volume and currently sits just below that, but it is showing tight action, a positive sign. The arrows on the chart show the break out day and the corresponding volume.
As always do your homework. I haven’t bought this mostly because I have already taken positions in two other stocks I like.
If this market goes higher, I would be surprised if TDG does not participate in a nice way.
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