Taking A Breather
The averages have been
consolidating on lighter trade this week and taking a breather from
the recent gains they have posted.
The big question that still remains is when is
growth going to start being more pronounced? Several technology groups have
moved into the top quartile of the industry groups. Computer-related stocks and
Internet sectors are worth watching as these two groups have began to outperform
the market.
PEC Solutions
(
PECS |
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Network Security/Solutions group and has been building on its Nov. 14 breakout
over the past few days. This is the kind of stock to keep an eye on as it sports
stellar fundamental criteria, ranging from its 47% growth rate to its 22% ROE.
Kronos Inc.
(
KRON |
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of an almost two-year-long base yesterday. The break through its pivot of 53.15
came on news that the company expected its Q1 results to exceed analysts’
expectations. This company is part of the Computer-Integrated System group.
Global Imaging Systems
(
GISX |
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PowerRating) attempted a
break through its buy point of 19.75 yesterday on good volume and was able to
close well. But today’s action in the stock has been very choppy, as it has
whipsawed back and forth.
Growth has not yet produced a large crop of
prospects for us to feast on. As the market stays under accumulation and allows
strong companies to build solid bases, we should see more names appearing in the
future (sooner rather than later). Direct Focus
(
DFXI |
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PowerRating) comes from the
leading Leisure group and is representative of the quality we’d like to see
more of. This company is located about 15 miles from me and most of us have seen
their infomercials on Bowflex. Apparently they continue to sell a lot. A growth
rate of 145% and an ROE of 57% means they have been utilizing their capital base
well.
Affiliated Computer
(
ACS |
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PowerRating) comes from the
Computer Services group and has been on an ascent since the breakout of a base
in October of 2000. It is up today on positive news and looks to be under solid
accumulation.
Take a quick look at a weekly chart of Storage
Technology
(
STK |
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PowerRating) to see this stock setting up in a base extending back into
1999. Fundamentals leave a lot to be desired, but I thought I’d mention this
one because its situation is similar to KRON as it attempts to get earnings back
on track and is growing at a fast pace following the weak economy.
Stocks have been breaking out successfully as
many have stated. The dilemma lies within the fact that the breakouts do not
continue. Most stocks have made a solid move out of their bases only to fall
back below the buy point over the next couple of days. As the economy improves
and earnings increase, these growth companies will be much better bets for the
large institutions that accumulate them. In the meantime, be patient and keep a
watchful eye for this to occur.
Good trading,