Anticipating and trading IBD 100 additions | stockbee

5/20/2007

Anticipating and trading IBD 100 additions

If you understand the maths behind the IBD ranking, you can anticipate which stocks will be added and game the additions.
Here is an email I got on Friday 18th at 10:27 A.M., from someone who knows how this works.
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date May 18, 2007 10:27 AM
subject TBSI (Nasdaq) will debut on the IBD100 list tonight at around #20 (float is 9.4 mil)

I hope that you had a good week of trading.


The last time I wrote you was exactly one week ago about TWIN and its expected inclusion into the Investor’s Business Daily “IBD100” later that day. At the time of my email, it was trading at $66. It went as high as $74 on Monday. That was a potential two-day profit of $8.


In any case, today I am writing to you about TBSI (Nasdaq). It’s going to make it onto the IBD100 list for the very first also due to the strong earnings, which were released on May 14. In my opinion, it should debut around #20.


A little more about TBSI: TBS International Limited, an ocean transportation services company, offers shipping solutions through liner, parcel, bulk, and vessel chartering services. Its liner, parcel, and bulk services primarily carry steel products, salt, sugar, grain, fertilizers, chemicals, metal concentrates, aggregates, and general cargo. The company also provides short and long-term time charters that offer its customer an alternative means to contract for ocean transportation of cargoes and make the carrying capacity of entire vessels available to its customers. In addition, it provides frequent regularly scheduled voyages in its network, as well as cargo scheduling, loading, and discharge for its customers. Further, TBS International’s parcel service originates in Peru, Ecuador, or Chile; and carries metal concentrates, beet pulp pellets, and fertilizers to East Asia.


The chart on TBSI is extremely bullish:


http://stockcharts.com/charts/gallery.html?tbsi <- The Point & Figure chart gives it an overall $52.50 target. The short-term chart is also very bullish: http://stockcharts.com/h-sc/ui?c=tbsi,uu[h,a]dhclyymy[pb10!b30!b50!d20,2][vc60][iub14!la12,26,9!lp14,3,3!lf!lc20]



There is no insider selling, they have an extremely low P/E and their comments on the CC call were very positive (Rates to stay strong thru the rest of the year, the value of the fleet is worth at least 25% more than what is on the books. They continue to see a strong market).


What is helping TBSI is also the fact that it’s in a very hot sector. Jefferies (which has been the only analyst) has been raising the target on the stock during the last few weeks:


April 30, 2007 TBSI dry bulk charter rates should stay strong through 2008-Buy@JEFF - Jefferies believes dry bulk shipping fundamentals should stay strong through 2008 and raised TBSI shares to $18 from $14

May 16, 2007 TBS International-TBSI still attractive despite appreciation-Buy@JEFF - Despite the move higher, Jefferies believes TBSI shares are attractively valued given the strengthening dry bulk supply/demand fundamentals and the company's strong balance sheet. Target raised to $25 from $18.


Although I hate listening to analysts, I do think that TBSI has a good shot of reaching the $24-$26 level sometime in the near-term. Looks to me like a lot of money is coming into this stock/sector, and they are definitely not disappointing with their earnings. Getting onto the IBD100 list will not hurt them, and bring further exposure.

I have initiated a position in TBSI and suggest that you do your own due diligence before buying it or any other stock that I talk about.

Best of luck!
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TBSI was ranked number 9 in IBD 100 list.

Related: How to beat the market for $1.25 per week

6 comments:

threadogg said...

Careful as this message was posted on thebulltrader.com blog last week by Michael B. and the infamous John Wu. Since the sector is currently under pressure (just check the dump DRYS took) maybe these pumpers are looking to unload on Monday.

Pradeep Bonde said...

Thanks. I don't think TBSI is a buy here. To play the IBD 100 anticipation game right, you have to get in a week or 10 days in advance. I know couple of people who do that.
I personally prefer buying after a 20 to 65 days weakness, so these kind of plays are not my cup of tea.

leon t said...

pra deep you mention in the article "for those who know how this game is played". can you expound on this.

also, since you mention that you would not enter here, where would you enter. do you mean you'd wait until the stock enters the ibd 100 and then wait until it shows weakness within 20 or 65 days and then enter. what if it doesn't show any weakness?.

what if as it happens so many times, it goes into the ibd 100 and it then is removed?. do you still follow it or has something changed for you.

Pradeep Bonde said...

There is a pop in stocks going in to IBD 100 in some cases. So there is a mini industry which predicts which stocks will go in to it and takes position in anticipation and liquidates when the stocks goes up.

Similarly there are people who identify which stock will have black border in the IBD 100 list, those stocks tend to have 1-3 dollar moves on Monday.

I do not think that it is the best way to play it , but I am aware of it for years. I get lot of emails from some of these sources in anticipation.

TBSI is member of IBD 200 was in 100% plus universe. So anyway it showed up before on scans. If it meets my criteria I buy, I don't change my method based on such emails.

There are many such things traders trade. Current popular one is gaming the Gorilla Traders pick.
End result is the "dumb money" gets coppered.

mrstrader said...

Careful, the next thing you know stockbee will be the next popular site to "game"

James said...

I know you preference (buy cheap), but you must also consider the stock potential. For example, ONT is a very good stock to own but you won't be able to buy it at a discount. I don't want to sell you a stock so do you own research on it if you care. Disclosure: I've bought it recently and I am long on it.