CETX

I got into this stock just about a week ago. AND IT IS HUGE. Up 26% in a week.

What i saw prior to entry

Fundamentals

Company reported a 0.23 EPS vs 0.07 EPS on a YOY basis, beating estimates (0.15) by 0.08 or 53%. Tripling of EPS is HUGE.

 

 

Sustainable increase in earnings growth from acquisitions

“This past year we were able to complete two strategic acquisitions that allowed our revenues to increase 65%. Out net income also increased 76% mainly due to the increased income from the acquired operations. “

Low Annualized PE run rate < 10.

This is a stock with great growth that is cheap at the same time. An intersection of deep value and momentum as Jesse would say.

 

65 Day Consolidation. This stock was not rallying up to earnings. And Thus when Earning surprise came in, it was probably not priced in. It also had mostly low volume during this consolidation, being out of the public eye.

I wanted to take advanage of the post earnings announcement drift phenomenon. I entered at 5.3, And had Stops at 5.

I went in big. This had all the makings of a great stock, 

From the weekly chart, we can see subtle hints of accumulation.

1. Big Black Volume Bars compared to small red bars.
2. Tight closes in the base on very low volume** This is a really important clue
3. Volume was also big in premarket on the day of my entry

Base not as tight as i would like it as a whole, but this is a low market cap stock after all.

Now the Stock is at 6.75 currently. I am holding it for afew more weeks and will sell when it breaches the 10dma.

 

 

Superstock Study – WLDN

I was invested in other stocks and i missed this absolute gem. I shall use this as a case study of a true superstock.

WLDN

Revenue Increase – Total contract revenue for the second quarter of 2016, increased 16.3% to $58.9 million, from $36.8 million for the second quarter of 2015.

Catalyst – “Genesys Engineering, the firm we acquired in March 2016, contributed $15.5 million in contract revenue for the second quarter of 2016”

EARNINGS WINNER Net income for the second quarter of 2016 was $3.2 million or $0.37 per diluted share compared to net income of $1.6 million or $0.20 per diluted share for the second quarter of 2015. Now a doubling of earnings is quite significant, also such a simple headline attracts investors.

Sustainability – “We expect the positive trends to continue. As I mentioned earlier, we had some significant programs that we will be ramping up in the beginning of 2017 which should enable us to continue delivering strong year-over-year growth in revenue and earnings.”

“There is increasing evidence to suggest that overall spending on microgrids will increase significantly in the coming years and we are well positioned to capitalize on this emerging market opportunity.”

Easy earnings comparison and Earnings Momentum

As you can see the latest earnings had been a breakout quarter out of the range in the past 2 years.

Insider buying

No Options

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Technicals

Tight Base on Low Volume.

This low volume boring activity weeds out short term traders and is essential in the future move this stock makes. The low volume is a result of neglect by the market. However when a game changing catalyst, such as earnings in this case arises, it surprises the market and creates a very explosive move. This is a phenomenon that happens and repeats itself. New leaders emerge after months or even years of neglect.

This stock also had a low float of 7.79M. It takes lesser buying power to move the stock higher. Jesse stine says that “The best performing stocks generally have floats under 10 million shares. In my experience, the biggest movers had floats of 4 to 8 million.”.

Volume Expansion

All good superstocks have volume expansion. This increase in volume is a direct reflection of a substantial increase in stock accumulation by deeppocketed smart money institutional investors. Average volume before breakout was around 10k. Breakout volume was 269k, 27 times more than the average volume.  It should be abundantly clear from the volume pattern that the investment community is showing much more interest in the stock.

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Entry would have been right at the open, or pre market at 11.10

Since the stock adhered to 10dma more than a month, i would likely sell on a close below the 10dma at around 17, A really easy 55% gain in a really short period of time. These sort of low float earners are magical in compounding ur account.

Position traders can hold for a longer gain by using a breach of the 50dma, but i have a smaller account and prefer to swing trade in and out of stocks.