Characteristics and Similarties of Winning Stock Picks That BEAT
When it comes to winning stock picks it pays to be consistent, so we will use BEAT as an example. What we are pointing out are the characteristics and similarities that we look for in winning stock picks. Investors Business Daily goes into more detail.
Since we are interested in BEAT, we also want to see the S&P500 and Healthcare sector both showing relative strength. Pass.
BioTelemetry, Inc. provides cardiac and mobile blood glucose monitoring (BGM), centralized medical imaging, and original equipment manufacturing services for the healthcare and clinical research industries. It operates in three segments: Healthcare, Research, and Technology.
BEAT Earnings +121%
Earnings and sales increasing is one of the first filters. We want to own stocks that consistently beat earnigns by a wide margin. BEAT passes this test, with earnings for the past three quarters of +144%, +100%, and +121%.
The second filter we like to use is sponsorship. Are funds buying? If they are, we want to ride their coat tails. Volume falls into this same mindset. Institutions need to buy in large blocks, so volume should be above average. MarketSmith conveniently shows that BEAT was trading in above-average volume as it turned from the October lows and funds were buying. Management’s conviction is obvious as well with 8% ownership. Most companies average 2%.
Sponsorship is a plus!
RS Line – Relative Strength Versus the S&P 500
As a stock turns from support or as it rises we want to check for relative strength. Since the market was selling off, relative strength tells us our winning stock picks like BEAT have a higher probability of moving higher once the market turns bullish.
RS Line pass!
MarketSmith Check List
One of the nice features of MarketSmith is the ease of finding this critical data. An additional feature is the “Checklist” tab on the right side of the chart above.
Warren Buffett, Benjamin Graham, Peter Lynch, Marty Zweig and James O’Shaughnessy screen for different criteria.
BEAT passes William O’Neil’s screen on every metric. Earnings, sales, RS rating, advance decline, in addition to current earnings and sales all pass with flying colors.
Now that BEAT passes our tests, we want to look for a flag or consolidation for a potential entry point. The stock is a bit extended in the current move. If BEAT continues to trend we should get a chance to add the stock to our portfolio.
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