Growth Stocks Tell A Story
The averages are holding on to slight gains
over the past few days in an attempt to close well for the quarter. The
shortened holiday week has brought very light volume to the NYSE and Nasdaq as
there have been no significant signs of accumulation or distribution this entire
week.
Even though the averages have not told much of a story this week, a few
growth stocks have. JDA Software
(
JDAS |
Quote |
Chart |
News |
PowerRating),
Christopher Banks
(
CHBS |
Quote |
Chart |
News |
PowerRating), Verisity
(
VRST |
Quote |
Chart |
News |
PowerRating) and Direct Focus
(
DFXI |
Quote |
Chart |
News |
PowerRating) all
went through their buy points. Another positive I have seen about this week has
been the emergence of more potential growth candidates setting up.
1.
(
JDAS |
Quote |
Chart |
News |
PowerRating) went through its pivot of 29.79 on heavy trade yesterday. The
company sports solid earnings growth for the two most recent quarters, although
it would have been nice to see positive growth for the quarter ending 6/30/2001.
ROE is a little light and that may limit the potential move of this as a
long-term performer, on the other hand, stranger things have happened.
2.
(
CHBS |
Quote |
Chart |
News |
PowerRating) broke through a potential pivot point on volume that barely
came in heavy enough to be considered a breakout. The company’s fundamentals
are very solid as ROE comes in at a hefty 48%, the growth rate is 73% and cash
flow is 20%+ above current-year earnings. Keep an eye on this stock to see if
yesterday’s breakout will push it through the high of 35.76, or if the stock
will pull back near the high and form another handle and another pivot point.
3.
(
VRST |
Quote |
Chart |
News |
PowerRating) punched through its pivot of 21.09 on heavy trade this
morning. The stock actually rallied over 3 dollars in five minutes from 19.76 to
22.92 on volume barely shy of its 50-day average. These mere 5 minutes produced
volume of over 145-thousand shares, vs. average daily volume of 180,800 shares!
Needless to say, buying this at or near the pivot was most likely a daunting
task. The company has produced 4 recent quarters of triple-digit growth. Since
the business has recently turned profitable, ROE is non-existent, but the
earnings growth alone shows that this company is on the right track.
Avant
(
AVNT |
Quote |
Chart |
News |
PowerRating) hails from the same
group as VRST: Computer graphics. The stock has been setting up in multi-month
base. The only problem that I can immediately spot with this base is the V-shape
it takes on.
Whether or not these breakouts succeed is a function of the market.
(
ROOM |
Quote |
Chart |
News |
PowerRating)
reminded us that playing growth could still be a tricky game as we saw the stock
give back three weeks of gains in only one day. The question is simply: Is the
market ready to provide stocks with sustained buying? The answer will obviously
come over the next few days, weeks or months. As more and more stocks set up and
break out, the case for growth will be proven. And, if not, then we will await
the right time, in cash.
Have a great Easter weekend,