Even ‘Boring ‘ Stocks Can Make 150% Moves — Look At These

  • January 5, 2004
  • Rob Hanna

The
New Year sure got off to a bang the last few days. The easy
money has been on the long side. Breadth is strong. Leading stocks are acting
well. New breakouts are occurring each day with many of them powering higher.
While some sectors (like retail) are struggling the overall health of the market
appears quite good right now. The long side is where my focus is and will remain
until I see some warning signs.

In speaking with some people
recently, I realized that traders sometimes mistake “growth” investing
for “tech” investing. They think that the high-flying returns are
all found in the sexy industries. If it’s not wireless, software, medical
technology, Internet, or the like, then many “growth” investors
won’t look at them.

Even “boring”
industry groups have good, fast growing companies. And even the boring industries
attract fast money once in a while. Let’s look at a few winners from last
year as examples:

It’s been said that
nobody has ever made money investing in airlines. After Airtran

(
AAI |
Quote |
Chart |
News |
PowerRating) broke out of a base around $7.00 in March, it ran up over 150% in
the next 7 months before rolling over. Even if you can’t make money investing
in an airline, you can make money trading one.


image src=”https://tradingmarkets.com/media/2004/Hanna/rob3.gif” width=”654″ height=”398″ />


image src=”https://tradingmarkets.com/media/2004/Hanna/rob12.gif” width=”714″ height=”397″ />

John
B. Sanfillippo
(
JBS |
Quote |
Chart |
News |
PowerRating) sells peanuts and snack foods. Doesn’t
sound like your typical growth investment to me. When it broke out in early
September, its Earnings and Relative Strength rankings were already high.

Up over 150% and still climbing…

image src=”https://tradingmarkets.com/media/2004/Hanna/rob4.gif” width=”725″ height=”429″ />


image src=”https://tradingmarkets.com/media/2004/Hanna/rob13.gif” width=”714″ height=”398″ />

Commercial Capital
Bancorp
(
CCBI |
Quote |
Chart |
News |
PowerRating), a Savings and Loan (yawn) broke out of
a first-stage base a little above $6.00 in March.

It’s now trading around
$21.00.


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image src=”https://tradingmarkets.com/media/2004/Hanna/rob6.gif” width=”714″ height=”396″ />

American
Vanguard
(
AVD |
Quote |
Chart |
News |
PowerRating) makes pesticides for crops. Don’t know
what the growth story is there, but when it moved out of its base in July earnings
had increased significantly and the relative strength was solid.

It’s about doubled
since then.


image src=”https://tradingmarkets.com/media/2004/Hanna/rob7.gif” width=”725″ height=”429″ />


image src=”https://tradingmarkets.com/media/2004/Hanna/rob8.gif” width=”715″ height=”392″ />

Newmont
Mining
(
NEM |
Quote |
Chart |
News |
PowerRating) is a gold stock. Did anyone ever think of buying
a gold stock three or four years ago?
(
NEM |
Quote |
Chart |
News |
PowerRating) broke out of a base around $34.50
towards the end of July.

It’s up over 40% since then.


image src=”https://tradingmarkets.com/media/2004/Hanna/rob9.gif” width=”725″ height=”429″ />


image src=”https://tradingmarkets.com/media/2004/Hanna/rob10.gif” width=”716″ height=”397″ />

So, next time you think about
passing on a trade because the widgets the company sells aren’t leading-edge
enough for you…maybe take a closer look. If earnings are growing rapidly,
fundamentals line up, and relative strength is high, sometimes even boring widget-makers
can attract big investment capital.

Best of luck with your trading,

Rob
Hanna

robhanna@rcn.com