It’s time again for another rousing rendition of the breakout stock highlights report… and it’s a good one so hold on to your britches. Ok, well maybe not that good. There are many high quality breakouts over the past few weeks and I’ll highlight just a few in this report but that doesn’t mean it’s time to bet the farm on these plays. I’m still advocating a cautious approach up at these levels especially considering we have important data and announcements coming up tomorrow morning (inflation PPI, housing starts) and Wednesday (rate decision). That said, here’s the breakdown of the past couple weeks.
In the two week period there were a total of 37 breakouts tracked in my database (actually 3 are included in the top rankings but not shown in the screenshot I’ve provided for you below because they were added or their pivot points adjusted after the screenshot was taken). These 3 are highly rated and worth looking into further – Highland Hospitality (HIH), currently the highest rated stock in the database with a score of 55 out of 60; BlackRock (BLK) and MEMC Electronic Materials (WFR) both with overall ranking of 52 out of 60. All three are outstanding companies with nice looking charts.
Got off track there a bit.. back to the data. Of the 37 breakouts, 25 have finished the period with a gain, 7 with a loss and 5 with no gain. All in all, a very successful couple of weeks for breakouts. Only 2 stocks finished the period with a loss greater than 8% – Agnico Eagle Mines (AEM) and Himax Technologies (HIMX). Himax Technologies (HIMX) however, continues to hold up well and could still stage another breakout. The big winner and one of the top breakout stocks in the database for several weeks now is US Global Investors (GROW) with a whopping 29% return following its breakout on September 1st.
:::::> As always, here’s a screenshot of the database that shows some of the top breakouts
I’d like to highlight a few of the charts of top breakout stocks showing good technical action and not too extended from a proper buy range. Starting it off is Comtech Group (COGO) which first broke out on September 11th with very good volume above 12.90. Notice the dry up in volume at the bottom of the base, the surge in the right side, followed by another dry up in the handle, followed by another surge in buy volume at the breakout.. all classic signs of building demand for a stock. The action of the past 3 days however have been slightly negative and probably indicate the stock needs some time to consolidate recent gains.
Next up is International Securities Exchange (ISE) which has benefited from a surge in the brokers/exchanges group. I have this company as the highest rated in this industry and although its carved out a somewhat steep base (correcting around 40%), the positives can’t be ignored. The stock showed good institutional support at its 200 day moving average on 3 occasions this summer and it’s beginning to show good demand. I’d probably want to see it confirm it’s breakout by getting above today’s high with volume at least 50% greater than average. However, another lower volume decline to around 44 may offer a better entry. Should the stock test its all time highs, I’d be tempted to lock in some profit given the severity of the correction. That’s just me though. I’m never disappointed in taking a profit too early.. unless of course I’m referring to TASR a couple of years ago when I locked in a quick 50% gain only to watch the stock get away from me.. and uh.. yeah I’d rather not talk about that one.
Over the past few weeks maybe you’ve noticed the parabolic move in Copa Holdings (CPA), the Panamanian airliner that’s risen 50% in just the last month alone. The growth in this airliner, capitalizing on the Panama boom is mighty impressive, but the growth in GOL Intelligent (GOL) airlines, the Brazilian airliner is staggering. Its earnings growth has been nearly doubling in each of the past few years and isn’t yet showing any signs of slowing down. Looking at the chart, you see a good bounce off the 200 day moving average while carving out the second leg down of its somewhat asymmetrical double bottom base. This is the first time its touched the moving average in almost a year. It bounced off that area back in October 2005 as well as April 2005. So, the uptrend marches on with a recent breakout above the middle peak in the W shaped base above 36.50. The stock has stalled a bit, but has some support around 35.. certainly worth watching. It’s the highest rated airliner in the database.
Last, but not least is a favorite of mine – Perficient Systems (PRFT). A small, fast growing company off the radar of most investors with an outstanding looking chart. After carving out a bullish looking shallow base, it broke out to multi year highs with a very good pick up in trading volume. Its been consolidating those recent gains and still looks outstanding. Something I’ve discussed in these reports many times before is the how a stock offers multiple entries. The first entry was provided on a breakout above the short handle with near record volume on September 8th. The stock provided a second entry point the very next day as it took out multi year highs above 14.47. Now the stock is offering yet another chance as it pulls back to what should be a strong area of support around 14.
Note: For purposes of full disclosure I do currently have long positions in PRFT and WFR.
