Times are tough, but there are still some golden nuggets you can find! We’ve made finding them easier for you. Read on!
When it comes to investing, timing can be everything. I’ve scoured the market for companies that are not just surviving the fluctuating market but are also at compelling buying points. Here’s a look at four companies that might just make the savvy shopper in you grin.
Core & Main (cnm): A Robust Contender
- Maximum Buying Price: $58.40
- Ideal Position Size: 5% of your portfolio
- Stop-Loss: $55.89
Core & Main, a standout in its field, is under heavy accumulation by top market players. Its last base, a cup with handle, is a strong indicator of stability with a mere 17% depth. And the stock is outperforming 97% of its peers! What’s not to like about that? But wait, there’s more. The next earnings date is comfortably over a month away, reducing short-term risk. So, is it the right time to buy? Definitely, especially with a stop-loss not too far below your entry point.
Sprouts Farmers Market (sfm): Fresh off the Vine
- Maximum Buying Price: $68.03
- Ideal Position Size: 10% of your portfolio
- Stop-Loss: $63.27
Next up is Sprouts Farmers Market, which has just broken out of a flat base, signaling potential growth. The stock shows strong accumulation and outshines 96% of the market. However, its industry rank is lower at 131 out of 197. Does this mix of strong performance and lower industry ranking pose a risk? Perhaps, but the strong market performance suggests resilience. And let’s not forget, placing a stop-loss at a modest 3 to 5% below the purchase price keeps things snug and secure.
SPX Technologies (spxc): Quietly Confident
- Maximum Buying Price: $122.63
- Ideal Position Size: 5% of your portfolio
- Stop-Loss: $116.67
SPX Technologies is another gem with a strong upward trajectory, thanks to its solid base and minimal selling pressure. With an industry rank of 30 out of 197 and a recent base indicating potential, it’s a tempting option. But, the earnings and sales growth aren’t quite up to par with CAN SLIM criteria. Is this a deal-breaker? Not necessarily, if you’re willing to take a calculated risk after the next earnings release.
JP Morgan Chase (jpm): The Steady Hand
- Maximum Buying Price: $194.00
- Ideal Position Size: 8% of your portfolio
- Stop-Loss: $188.62
And last but not least, JP Morgan Chase, a titan in its domain, has shown incredible stability. The stock recently emerged from a cup base with minimal depth—a positive sign. It also has the support of the EMA-21 and SMA-50 lines. But with a neutral RS trend, should you tread carefully? Absolutely, yet the firm’s proven track record and recent stability could justify a slightly larger position.
Market: Play It Safe for now!
explanations for the drawing
The upward purple arrow shows where I bought the stock. The downward purple arrow shows where I sold it.
Green Line 21-day exponential moving average line (see EMA 21 below)
Red Line 50-day simple moving average line (see SMA 50 below)
Black Line 200-day simple moving average line (see SMA 200 below)
overview
The stock market is still not in its best shape. SPY, the ETF that tracks the S&P 500 index, is trading below its 50-day moving average (SMA-50). And the 21-day exponential moving average for this index is below SMA-50 too. What does this mean? The uptrend isn’t quite solid, and there are some additional risks involved.
It would be a much better time to buy stocks once the market indexes are above their key moving averages and the shorter-range moving averages are above the longer-range ones. So, when is the right time to dive back in? Hold that thought!
This all means that we shouldn’t invest too heavily right now—maybe up to 40% of the portfolio at most. Also, if we decided to invest, we should keep our stop-losses very tight—3 to 5% below the purchasing price, with profit targets maybe up to 15% above the purchasing price at most.
That being said, SPY has found its support somewhere at the 490 level and seems to be recovering. Could this be the early signs of a turnaround? Stick around to find out if the recovery is for real or just a false hope.
GENERAL stock REQUIREMENTS
Choosing the right stocks isn’t a game of chance; it’s a deliberate strategy. This time, with a plethora of options at my fingertips, I could afford to be pickier. So, what were the non-negotiables?
First off, industry leadership was paramount. I zeroed in on stocks from the top echelons—specifically, the TOP 10 out of 197 industries. Why? Because these represent the crème de la crème, the TOP 5% leading the charge. It’s not just about being good; it’s about being outstanding.
Next, the foundation matters. I looked for stocks with base depths signaling strength without overextension—ideally, between 10-20%, stretching up to 35% for those in a cup pattern. It’s a balance between stability and potential, ensuring our picks have solid ground beneath them.
Moreover, the up/down ratio needed to be above 1.0, a clear indicator of upward momentum. Similarly, the trend in institutional ownership couldn’t just be stable; it had to be climbing. These are the signs that savvy investors are not just watching but actively betting on these stocks.
The RS line and rating were the final seals of approval. An uptrend in the RS line and a rating of at least 85 out of 100 ensures we’re backing winners, not just participants.
By setting these stringent criteria, we’re not casting a wide net; we’re spearfishing for the best. In a sea of choices, we’re not looking for just any fish; we’re after the prize catches that promise not just to survive but to thrive.
details at a glance
Core & Main (CNM)
- Next EPS Date: 4 June
- Industry Rank: 8/197
- Stage: 2
- Base Type: Cup with handle
- Base Depth, %: 17
- Up/Down Ratio: 1.9
- EPS Trend: Neutral
- RS Rating: 97
- RS Trend: Up
- Institutional Ownership Trend: Up
- Pros:
- Stock is under accumulation by institutions and by the overall market.
- The last price base was a cup with handle with a depth of just 17%. Anything below 35% depth is good. 17% is a very strong sign.
- Earnings date is more than a month away at the time of this writing. This gives enough room to build profit with relatively low volatility.
- The stock is outperforming 97% of the stocks in the market.
- The stock is in a leading industry (industry rank 8/197). Anything in the TOP 10 is very good.
- Cons:
- The price of the stock has come far from the last base—it has almost doubled. This increases the risk of a correction.
- Earnings and sales growth don’t fit the CAN SLIM criteria. This means that fundamentals should be better.
- Comments: Taking a 5% position close to the EMA-21 line and placing the stop-loss 3 to 5% below the purchasing price would make sense. Since the price trend is not old and the stock is under accumulation, it seems that there is room for the upside.
- CAN SLIM/SEPA Comments: This is not a CAN SLIM stock and it is not breaking out of a base right now. This means there might be some additional risks.
- Maximum Position Size of a Portfolio, %: 5
- Maximum Favorable Buying Price: $58.40
- Stop-loss: $55.89
- Position Risk, %: 4.30
Sprouts Farmers Market (SFM)
- Next EPS Date: 1 May
- Industry Rank: 131/197
- Stage: 2
- Base Type: Flat base
- Base Depth, %: 8
- Up/Down Ratio: 2.8
- EPS Trend: Neutral
- RS Rating: 96
- RS Trend: Up
- Institutional Ownership Trend: Neutral
- Pros:
- Stock is under very strong accumulation by the market. This gives an indication of upcoming price appreciation.
- Stock outperforms 96% of the overall stocks in the market which makes it one of the leaders.
- The price has just broken out of the base and is in the buy zone right now.
- The base the price just broke out of was not deep which means that there is not much selling pressure for the stock. The fact that the Up/Down ratio is 2.8 is another confirmation of this fact.
- Cons:
- Industry rank is very low (131/197). This means that the stock is somewhat of a loner in its industry. Other stocks in the same industry don’t do that well. This adds some risk because often the industry unicorns get tired.
- Earnings release is in a few days. This could add some risk. It would probably be better to buy after the earnings release if the conditions still match.
- Fundamentals should be stronger and don’t fit the CAN SLIM criteria. Earnings and sales growth should be stronger.
- Comments: Since the stock is in the buy zone, it would make sense to take a position because risks are smaller. That being said, AFTER the earnings release.
- CAN SLIM/SEPA Comments: Stock has almost a CAN SLIM persona.
- Maximum Position Size of a Portfolio, %: 10
- Maximum Favorable Buying Price: $68.03
- Stop-loss: $63.27
- Position Risk, %: 7
SPX Technologies (SPXC)
- Next EPS Date: 2 May
- Industry Rank: 30/197
- Stage: 2
- Base Type: Cup with handle
- Base Depth, %: 17
- Up/Down Ratio: 1.5
- EPS Trend: Neutral
- RS Rating: 94
- RS Trend: Up
- Institutional Ownership Trend: Neutral
- Pros:
- Stock is outperforming 94% of the overall market.
- The last price base (cup with handle) had low depth which indicates small selling pressure. This in turn indicates good potential for the upside.
- Cons:
- Earnings and sales growth don’t fit the CAN SLIM criteria. Fundamentals should be stronger.
- The last price base was a long time ago. The stock is not breaking out of the base right now.
- Industry rank is 30/197. It’s not bad but it would be much better if it was in TOP 20.
- Institutions don’t seem to be that interested in the stock right now – ownership trend is neutral.
- Comments: Taking a small position (5% or less) AFTER THE EARNINGS RELEASE would make sense. This, of course, means that conditions need to remain favorable.
- CAN SLIM/SEPA Comments: This is not a CAN SLIM stock and it is not breaking out of a base right now. This means there might be some additional risks.
- Maximum Position Size of a Portfolio, %: 5
- Maximum Favorable Buying Price: $122.63
- Stop-loss: $116.67
- Position Risk, %: 4.86
JP Morgan Chase (JPM)
- Next EPS Date: NA
- Industry Rank: 25/197
- Stage: 1
- Base Type: Cup
- Base Depth, %: 15
- Up/Down Ratio: 1.6
- EPS Trend: Up
- RS Rating: 88
- RS Trend: Neutral
- Institutional Ownership Trend: Neutral
- Pros:
- The stock has stable price action. It almost always has had it.
- Such a big company outperforms 88% of the market – that is a good sign of stability.
- Earnings have just been released, so this volatility is also out of the way for a while.
- The last base was a cup pattern with the depth of 15%. Anything under 35% is very good – there seems to be no selling pressure right now.
- The stock price is at the EMA-21 line and the SMA-50 line is also close. This means that right now is probably a good time to place a low risk trade.
- Cons:
- RS trend should be stronger. Right now it’s neutral.
- It would be better if institutions were more interested in the stock.
- Industry rank is 25 out of 197 – it would be better if it was in the TOP 20.
- EPS and sales growth don’t fit the CAN SLIM criteria. Fundamentals should be stronger.
- Comments: Taking a 5 to 8% position and placing a stop-loss below the EMA-21 or SMA-50 line would make sense.
- CAN SLIM/SEPA Comments: This is not a CAN SLIM stock right now, and it’s not breaking out of a base. But the brand is old and stock has been stable for years.
- Maximum Position Size of a Portfolio, %: 8
- Maximum Favorable Buying Price: $194.00
- Stop-loss: $188.62
- Position Risk, %: 2.77
TERMS AND DEFINITIONS
EMA 21 Calculates the 21-period exponential moving average, highlighting short-term trends.
SMA 50 Averages the price over 50 periods, showing medium-term trends without overemphasizing recent data.
SMA 200 Averages the price over 200 periods, revealing long-term trends by treating all data equally.
Industry Rank Investor’s Business Daily’s system that ranks industries 1 to 197 based on performance. It guides us in CAN SLIM TRADING towards leading sectors.
U/D Ratio Measures stocks closing up versus down. A ratio above 1.0 indicates bullish sentiment, important in CAN SLIM TRADING.
RS Rating Ranks a stock’s performance on a 1 to 99 scale. I look for at least 85, showing strong momentum and growth potential.
RS Line Compares stock price to the market, plotted as a ratio. We seek an uptrend, indicating outperformance and strong momentum.
Volatility Measures how much a security’s price fluctuates over time. High volatility means large price changes, indicating risk and potential reward.
Institutional Ownership Trend indicates whether the stock is under accumulation or distribution by the institutions.
EPS (Earnings Per Share): A financial metric calculated by dividing a company’s net profit by the number of its outstanding shares. It indicates the amount of profit attributed to each share of stock, serving as a key indicator of a company’s profitability.
stages of the bases
STAGE 1: BASING OR BOTTOMING STAGE
Definition: A period following a stock’s decline where it starts moving sideways, forming a base. This stage signifies the easing of downward pressure and the beginning of stabilization, indicating that the stock is not in an uptrend yet but is preparing for potential future growth.
STAGE 2: ADVANCING OR UPTREND STAGE
Definition: The phase in which a stock breaks out of its base on significant volume, indicating a strong buying interest and the initiation of a new uptrend. This stage is considered the most opportune time for investors to purchase the stock, as it is expected to achieve substantial gains.
STAGE 3: TOP OR PEAKING STAGE
Definition: A stage characterized by the stock beginning to exhibit signs of losing momentum after its upward movement. The stock may start to move sideways with increased volatility compared to Stage 1. This suggests the stock might be reaching its peak, and the existing uptrend could be weakening.
STAGE 4: DECLINING OR DOWNTREND STAGE
Definition: This final stage occurs when the stock breaks down from its Stage 3 pattern and enters into a downtrend, marked by a sequence of lower lows and lower highs. It signifies that selling pressure has surpassed buying interest, usually serving as a signal for investors to sell the stock to mitigate further losses.
Locking in Your Strategy
Now that we’ve gone through the details, you might wonder, what’s the catch? There’s always a bit of risk when entering the market, especially when picking your moments for companies like these. But with tight stop-losses and strategic position sizing, you could navigate these waters more safely.
What’s coming up next? Stick around as we dive deeper into market trends and other investment opportunities that might catch your eye. After all, why not let your money work as hard as you do?
