The Kenmore Square Top 5

[mrmarket]

Here are my 5 favorite stocks from my most recent data dump...:

AMRC HIIQ ICFI NVEE SIVB

which one do you like? and why?

I will buy one of these very soon!

[BlueWolf]

I did a deeper dive on the final five then I did in my initial scan, and as a result, I no longer like my own finalist, SIVB. For what’s worth, here is my analysis on all five. I have no final, single pick, but I definitely don’t like SIVB and ICFI. Of the remaining three, it’s a toss up for me with all having the same problem: risky entries based on the charts.

The Definite No’s ....

SIVB.
What I Like: When I first scanned it, I liked what I saw. Since 2011, revenue growth has been awesome, with solid, upward movement over the last 10 quarters. Earnings growth has been a bit spotty during the last 10 quarters, but over the last two quarters, it has been spectacular.
What Worries Me: When they reported a blowout quarter in April, the stock gapped up almost 17% and rose from there. When they reported another blow out quarter in late July, however, the stock only gapped up 3% and then faded despite an 11% quarter-to-quarter and 32% year-to-year revenue increase and a 21% quarter-to-quarter and 91% year-to-year EPS increase. Right now, it trades at just under $322 or about $2 higher than where it opened following its last blowout earnings, and yet we would want it to gain an additional 15% to approximately $370. It might drift higher between now and the next earnings report in October, but it’s hard seeing it rising another $48. Even with another blowout earnings, it’s hard to envision such a big increase given the tepid reaction to the last earnings. I think it would need blowout earnings AND tremendous forward guidance to get there.

ICFI
What I like: Chart entry is not bad after recent earnings gap up and gap fill.
What I don’t like: They beat on revenue in last quarter, but missed on earnings. Except for a blowout 2017 4th quarter, revenue and earnings growth have only been so-so over the last 10 quarters. Most of their business comes from the government, hence a government shutdown, which is looming, will greatly impact them.


The Maybe’s ...

AMRC
What I Like: Since a big drop off in 2012 and 2013, revenue has risen steadily since, although earnings did not really follow in a big way until 2017. So far, they have had two blowout quarters in 2018 and raised full year guidance. This is a cyclical, so earnings rise and dip, although the second half of year is usually the big half.
What Worries Me: Chart-wise, I don’t like an entry here as it is extended from it’s moving averages following recent earnings. It gapped up, rose, and then faded and I think it might have more pullback or at least sideways consolidation in it.

HIIQ
What I like: Solid revenue growth, spectacular second quarter, and upgraded fiscal year guidance. Regulatory climate will favor this short term insurer starting October 1.
What I don’t like: Chart-wise, I’m not sure about the entry point here following two big gaps and being extended from its moving averages.

NVEE
What I like: Great revenue and earnings growth. Slightly on cyclical side, but second half of the year is usually the big time.
What I don’t like: Super low volume makes me uneasy. Entry is not great after huge gap up and extension from moving averages.

[Louetta]

Wait till October 1. Too large a percentage of market gains is concentrated in too few stocks. Like a hand full constitute 70% of the S&P's recent gains. Not a good bet.

[wifwif]

Very good points. I also think, currently is no good time for investments. Market timing doesn't convince me. Perhaps a little bit later would be better.

[tiedyed1]

Bluewolf, again, thank you for taking the time to share your thorough summaries!

I was leaning towards NVEE but temporarily tapped the brakes to see how large of a public offering of shares they talking about in the after hours press release yesterday. Down $8.00 (9.00%) at $81/sh as I type and wondering if this may be a good entry level.

ICFI I like as the long term chart and their recent acquisition to further grow the business in a sector that continues to grow just makes sense to me. (While Mr. Market picks are hoped to reach their 15% gain in a couple of months, I am fine with 4-6 months instead of weeks. A government shutdown would just be a short term blip in this chart as it continues its long term path.

HIIQ does indeed look like it can run further - but it is tough for me to buy a stock that popped >40% this week and may or may not be starting to build a new base or go higher. (i.e. outside of the bullish sentiment, what is the next catalyst to give it direction from here, other than upgrades which support the 15% goal we are seeking here? The company talks about aggressive acquisitions and will ride tailwinds... so maybe that is plenty of reason - but after such a jump this past week I would only consider a small position to see where the next leg is).

No favorite out of the top five list stands out to me and watching/considering these three (HIIQ, ICFI and NVEE).

Any other opinions are welcome!!!

[BlueWolf]

Bluewolf, again, thank you for taking the time to share your thorough summaries!

I was leaning towards NVEE but temporarily tapped the brakes to see how large of a public offering of shares they talking about in the after hours press release yesterday. Down $8.00 (9.00%) at $81/sh as I type and wondering if this may be a good entry level.

It certainly looks more appealing here, but after a wild couple of days like this, I want to see what it does. A gappy chart is very hard to read. Let’s see how it finishes today.