IBD Leaderboard Candidate CarGurus CARG – Signals Potential Breakout
Cargurus (CARG), Inc. is trading in the sweet spot for most IPO investors, producing signals of a potential breakout. This IBD Leaderboard candidate has shown bullish price action lately. The innovative services that are driving strong earnings and sales growth are being noticed by investors. In addition, CARG shares many of the CAN SLIM traits that most of the biggest market winners display prior to forging higher.
CarGurus, Inc. (CARG)
RS Line strength is one of my personal favorite Investors Business Daily signals. As this line rises it identifies strength in CARG vs. the S&P 500, a major criterion for my style of investing. RS line is climbing to 97 as CARG signals a potential breakout.
Sales and earnings summary in the left panel are significant as well. With a 3-year growth rate of 130% and the latest earnings report highlighting it’s exceptional growth of 30% for the quarter, we can move on to planning our strategy.
- CARG is trading in the buy zone after a breakout from a short cup-with-handle base on Monday.
- The stock is trading around resistance just above 55.
- This candidate has been a solid performer since its coming public in late 2017. The company operates an online auto marketplace for buyers and sellers of used and new vehicles.
- The company is scheduled to report earnings on 11/13/2018.
Investors Business Daily notes that a cup-with-handle base should be a minimum of seven weeks, so the fact that CARG is currently showing strength again with just over six weeks in this short base, we’d still consider this trade. CARG is still mirroring the characteristics of past market winners before “they” went on to big price moves.
ROKU – Leaderboard
Roku’s IPO produced similar appeal last year and the stock printed a very similar pattern before breaking out of its 8-month cup-with-handle base. The stock has gained 46.68% from the August trigger and buy zone.
While these stocks may not currently be near a potential buy zone, they make the William J. O’Neil Stock Screen, created by MarketSmith. This screen, among many others, finds the next winning stocks picks, then alerts traders via email and on-screen pop-up messages when the candidates break out.
We’ve written several articles in a series devoted to a review of the MarketSmith service for your consideration.
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