IBI..A Case study.. Example of optimum criteria being met for a short term/position trade, and/or Earnings Play.
I have been knocking myself over the head for having missed it. IBI was basically in a strong uptrend since end of October. You have had 2 major uptrends in this one and the volume patterns are picture perfect as well.
When I look for a trade, or an earnings plays or a short term hold different criteria have different 'weights'.. IBI was an earnings play, an alternate one actually. There are 4 major indicator groups I use to determine if a stock is a 'candidate".. You have your Valuation Criteria as minimum requirements: that means you want to have the basic stock is not so overvalued it would never fit as an earnings play.. Here we have our Price-to-Cash Flow Ratio, Price-to-Book Value Ratio ,Price-to-Capital,Price-to-Sales Ratio and most important your P/E ratio. IBI sailed through in these categories.
Secondly you have your Performance Indicators: Those are similar to the Relative Strength rank in Investor's Business Daily. ERG has a huge role in this category.. Here again IBI sailed through with an ERG of 80 and an EPS rank of 87. I look at the entire year for the performance rank and have a stronger 'weight' for the last 6-8 weeks..
Thirdly you have your Earnings Indicators.. probably the most important of them all. Here we have estimated EPS growth, EPS % change for last 4-5 quarters, next quarter, fiscal year, Correlation Coefficient, velocity, acceleration etc, change in sales, revenue etc... whatever you want. IBI sailed through this one as well. From a 14% growth last quarter to an estimated 49% change next quarter, you have a stock that is showing earnings velocity going forward at an excellent rate.
If that is not enough get a 'bonus'... IBI had it's earnings estimate 'raised' in the last 30 days.
Fourth, you have the technical indicators.. I put them together to come up with a technical rank that is similarly computed as the relative strength rank in Investor's Business Daily. IBI scored about 90% in the relative strength rank and an amazing 84% in the technical ranking.. That is very rare for my stocks because they are pretty stringent criteria.
Usually there is a great disparity between the Technical Ranking and the Relative Strength.. GTW is an example.. here is a powerhouse of a stock just a few short weeks ago and now it's technical rank (according to my averages) is only about 59 whereas it's performance rank is about 90.
Usually when both the performance rank and the technical rank are matched and over 80, you have a strongly uptrending stock. that is the case with IBI. and that is why I like it. Why then did i miss it? Mostly because I was 'involved' with CACOA at the time and the indominitable internets were too enticing to pass up... |
