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IBD Leaderboard – Stocks Cut and Added This Week
In Part One of our IBD Leaderboard Review, we examined the “Leaders List” and how it helps our workflow. In this post, we’ll examine the stocks that were cut and stocks that were added as the markets pulled back. It is the latter action that intrigues us, as we look for stocks that were added to the Leaderboard List in addition to stocks that showed relative strength last week.
Leaderboard List – Stocks Added
Eight stocks were removed last week, while two were added to the Leaderboard List. Considering the weakness in “growth stocks” last weeks, it is no surprise that most of the stocks that were removed hail from the growth category. Energy and health care were the two groups where we saw additions.
Callon Petroleum (CPE) – Stocks Added
Callon caught our attention early in the week, as did CVX, XOM and a few other large-cap value stocks from the energy sector. Oil and Gas Exploration, Production and Equipment industry groups are all doing well as the sector trades just shy of 52-week highs.
Callon is an independent energy company focused on the acquisition, development, exploration, and operation of oil and gas properties in the Permian Basin in West Texas.
The first thing we look for is price action above the moving averages. We also want RS line (82) climbing while the stock forms or breaks out of a sound base. Callon Petroleum (CPE) is forming a cup as buyers continue to pour into the stock. We also anticipate a handle might form near 14.75.
Considering the price of crude, and the bullish trend, smaller companies like Callon stand to reap the benefits. Sales and earning sshould continue to grow.
Note the data points in the left panel as well. Most show green signals. Pay particular attention to the excellent scores in sales and earnings. We want to own stocks that are growing thru increased sales and earnings. Callon reported 2nd quarter earnings on August 6. In that report, management announced the acquisition of significant acreage in the Delaware Basin, improvements in production and enhanced EBITDA performance going forward. In effect, fundamentals look sound. For more on 2nd quarter earnings see here:
Finally, the volume traded is increasing, a sign of institutional interest.
Energy Stocks
The SPDR Energy Sector XLY and many of the stocks therein are showing relative strength. This helps support the bullish trend that we’ve seen in Dow components CVX and XOM. We anticipate Callon Petroleum (CPE) will trend higher with the leaders in this group.
Healthequity, Inc. (HQY) is from the healthcare sector. While it was added on 10/05 we will wait for a bounce off the 50d next week. The stock is currently pulling back from 52-week highs.
Check back next weekend when we’ll expand our review of IBD Leaderboard features.
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Happy Trading,
Vinny
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