How to find stocks likely to make 50% plus move | stockbee


How to find stocks likely to make 50% plus move

The key to finding stock with potential for explosive move is to find stock with explosive earnings. Some of the stocks with explosive earnings have now started to breakout and some have already made big moves of 40% to 50% in a quarter.
What really is explosive earnings. On Members site we are looking at series past examples and trades of past explosive moves and earnings behind them. Two stocks with such explosive earnings we discussed were NTRI and CROX.
Nutrisystem has been around in the market since 2000.Till 2005 no one cared about it. It was a neglected stock. In 2003 new management took over. The new line of food introduced in 2004 was what kicked off the earnings.

20073.0077620 74
This table tells you why NTRI made a explosive move of 2 to 76 in two years. It had explosive earnings and sales growth. From a 20 million company it became a 776 million company in 3 years. That is what is really explosive growth looks like. This is the kind of stock one should look for in EP.

This is what Cliffman was trying to explain in this very good comment. His comment makes a very good point and if you understand the significance of it, you will be able to find such stocks.
Comment posted by Cliffman on 6/16/2009 4:58:00 PM ESTArticle: Pre Market movers
In my studies of historical EP's, i believe that nothing quite has the potential and tradability of a hot consumer discretionary stock particularly when the expansion of that product is mostly a matter of distribution (as opposed to opening physical stores). If the story gains traction then the market opportunity factor can be given a lot of value and that can lead to an incredible move in the stock. They trade at increidble PE's sometimes because it is not seen as a product cycle, it is secular and long lasting. Something like HANS is the ideal example of a success story here. Very simple high margin product, easy to mass produce, with a huge market opportunity. The stock can trade ahead of YEARS of EPS growth instead of just a few good quarters of a product cycle situation.

I always take very seriously anything in consumer discretionary, i have a natural inclination to "like" GMCR's story because i see the similarities to HANS, NTRI, etc. Even if its a CROX it wouldn't be bad, CROX had a very solid EP in '07 that led to a 6 month rally. It turned out bad but it had a great rally on 2 data points (2 EPS reports), the 3rd killed it obviously. Just look at how CROX's rally was framed within the EPS reports and you will see that it was very tradable and not as risky as it looked.

Crocs is often cited by shorts and critics of growth investing as an ideal example of what is wrong with hot momentum stocks. But what they don't understand is that if a growth stock is bought at right level, you can make incredible amount of money.
Crocs IPOed in 2006. Look at the earnings and sales from 2004 to 2007. In three years it went from 14 million to 847 million. That is when it went up from 10 to 75 before crashing. This kind of explosive growth is possible in such consumer products kind of stocks because if a product becomes popular it is very easy to ramp up production and distribution is easy as you just have to push it in exiting distribution channels. That is the point Cliffman was making.
One of the ways to find such stocks is to run a scan in IBD scanner with following conditions:

Screen Criteria Parameters
% Change in Latest Quarter's EPS vs. Same Quarter Prior Year Greater than or equal to:100
Current Total Annual Sales(Mil.) Greater than or equal to: 20.0
%Change Latest Quarter's Sales vs. Same Quarter Prior Year Greater than or equal to: 50
Current 50-Day Average Volume(1000) Greater than or equal to: 50

The entire idea behind the Episodic Pivots method is to find such stocks early in their price growth cycle before they make the big move.

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