METRIS COMPANIES, INC. (NYSE: MXT)
I submit that METRIS COMPANIES, INC. (NYSE: MXT) is a buy, based on C-A-N-S-L-I-M principles. My evaluation is as follows:
1. C = CURRENT QUARTERLY EARNINGS PER SHARE -- MXT's current quarterly earnings per share are up a major percentage over the same quarter last year. The quarter ended 3/31/99 is up 54% over the same quarter last year.
2. A = ANNUAL EARNINGS INCREASES: LOOK FOR MEANINGFUL GROWTH -- MXT's annual compounded growth rate of earnings is 130%.
3. N = NEW PRODUCTS, NEW MANAGEMENT, NEW HIGHS: BUYING AT THE RIGHT TIME -- MXT is an information-based direct marketer of consumer credit products and extended services plans. In June, 1999, MXT acquired $1.2 billion in consumer credit card receivables from General Electric Capital Corp. MXT is emerging from a three week price consolidation pattern and is within 3% of a new high. On June 14, MXT broke out of a flat-base price structure on 300% normal volume.
4. S = SUPPLY AND DEMAND: SMALL CAPITALIZATION PLUS BIG VOLUME DEMAND -- MXT has 38.4 million shares outstanding and the floating supply of stock is 4.6 million. MXT management owns 5% of the total outstanding shares. According to Daily Graphs (an Investors Business Daily service), MXT has an B rating for accumulation/distribution, meaning that MXT is under accumulation.
5. L = LEADER OR LAGGARD: WHICH IS YOUR STOCK? -- According to Daily Graphs, MXT is a leader in the Financial Services-Misc. Industry Group with a relative strength of 93 (out of 100) and an earnings per share rating of 98 (out of 100). The Financial Services-Misc. Industry Group has a group relative strength rating of 79 (out of 100). This group's relative strength is accelerating. Last week the group's relative strength was 68 and three months ago its relative strength was 22.
6. I = INSTITUTIONAL SPONSORSHIP: A LITTLE GOES A LONG WAY -- According to Daily Graphs, 68% of MNMD's floating supply of stock (68% of 4.6 million shares) is owned by banks.
7. M = MARKET DIRECTION: HOW TO DETERMINE IT -- All major indexes (DOW, COMPQ, SPX, NDX, etc.) are at or near their all time highs. All major indexes have broken out above price consolidation patterns. This is a BULL MARKET.
TECHNICAL ANALYSIS--
1. BREAKOUT FROM BASE BUILDING ZONE -- On July 14, price broke above a three week flat-base price structure. NOTE: Sound base-building periods are usually six to seven weeks in duration. MXT's three week base building period could foreshadow a failure of the break out. Therefore, any new positions in MXT should be monitored closely.
2. MACD BUY SIGNAL -- On June 10, MACD crossed over its signal line slightly above the zero reference line. MACD is heading higher indicating strength in MXT.
3. STOCHASTIC BUY TIMING SIGNAL -- Stochastic is in the mid range and heading up, indicating upward strength. |
