Green Light: 3 Leaders With Greatest Upside Potential

Do you want to know which top three stocks insiders are currently accumulating? Read the article and you’ll find some golden nuggets.

Investing in the stock market can feel like trying to find a good coffee shop in a new city—you want the best without wasting time or money. Today, I’ve brewed up a selection of stocks that are primed and ready for investment. Let’s dive into the details of these promising picks.

Market Overview

The current stock market scenario offers a dynamic landscape for investors, featuring both potential risks and opportunities. Let’s dive into some of the critical elements shaping the market today.

Current Market Temperament

Exposure ranges from 40% to 60%, indicating a moderate level of engagement from major players. What does this mean? Investors are somewhat cautious but still active, balancing between risk and opportunity.

And the S&P 500? It’s holding above key moving averages, which generally suggests strength. However, there’s a twist: the EMA-21 is not above the SMA-50. This alignment can signal that while the market isn’t weak, it’s not exceptionally strong either.

Volatility and Stability

The same pattern appears in the NASDAQ 100 index, known for its volatility. The index shows similar characteristics to the S&P 500 with the EMA-21 trailing below the SMA-50. Why does this matter? It hints that the market is somewhat fragile—investors should tread carefully.

And here’s a silver lining: the SMA-50 is above the SMA-200. This is good news as it suggests underlying stability, despite short-term fluctuations.

A Look at Opportunities

Despite these mixed signals, the market is bustling with activity. Several stocks are either breaking out of their bases or are on the verge of doing so. This indicates that for the eagle-eyed investor, there are plenty of opportunities to capitalize on.

So, what’s next in our journey through the market’s currents? Moving on, we’ll zoom into specific stocks showing significant breakout potential. Stay tuned, and you might just spot your next big investment.

Did I mention that some of these opportunities are like hidden treasures? Well, more on that in the upcoming section. Stay sharp!

watchlist for the week

Archrock (AROC)

Why Archrock? It’s like the quiet achiever of the stock world right now, holding a solid stance within its industry.

• Next EPS Date: NA
• Industry Rank: 38/197
• Stage: 1
• Base Type: Flat base
• Base Depth: 12%
• Up/Down Ratio: 1.6
• EPS Trend: Up
• RS Rating: 95
• RS Trend: Up
• Institutional Ownership Trend: Up
• Pros:
  • Strong upward trends in key performance metrics.
  • Stock is well-positioned above key averages, making this a safe bet for now.
  • No upcoming earnings surprises to rock the boat.
• Cons:
  • Could be ranked higher, honestly, but aren’t we all a work in progress?

And what’s the bottom line here? With a stable outlook and solid metrics, AROC could be a low-drama addition to your portfolio. Maximum Position Size: 10%, Buying Price: $20.59, Stop-Loss: $19.34, Profit Target: $24.34, Risk: 6.07%.

Shake Shack CI A (SHAK)

Got an appetite for something a bit more dynamic? Shake Shack might just be your next favorite flavor.

• Next EPS Date: NA
• Industry Rank: 12/197
• Stage: 2
• Base Type: Cup with handle
• Base Depth: 16%
• Up/Down Ratio: 1.1
• EPS Trend: Up
• RS Rating: 94
• RS Trend: Up
• Institutional Ownership Trend: Up
• Pros:
  • High industry ranking signals strong potential.
• Cons:
  • The stock isn’t breaking out just yet—like waiting for a table at a trendy brunch spot.

And the takeaway? Shake Shack offers a solid setup with a sprinkle of waiting game. If you’re patient, the payoff could be delicious. Maximum Position Size: 5%, Buying Price: $105.24, Stop-Loss: $99.98, Profit Target: $121.03, Risk: 5.00%.

PulteGroup (PHM)

Looking for something with a clear upward trajectory? PulteGroup is currently staging a market performance that’s hard to ignore.

• Next EPS Date: NA
• Industry Rank: 78/197
• Stage: 3
• Base Type: Cup with handle
• Base Depth: 14%
• Up/Down Ratio: 1.3
• EPS Trend: Neutral
• RS Rating: 91
• RS Trend: Up
• Institutional Ownership Trend: Up
• Pros:
  • The moderate base depth indicates stability and potential for growth.
• Cons:
  • A bit lonely on its industry rank and showing signs of entering a sell phase soon.

What should you consider? If you’re into well-timed entries, PHM’s breakout could be a rewarding move. Maximum Position Size: 5%, Buying Price: $121.18, Stop-Loss: $115.12, Profit Target: $139.36, Risk: 5.00%.

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

Archrock (AROC)

• Next EPS Date: NA
• Industry Rank: 38/197
• Stage: 1
• Base Type: Flat base
• Base Depth: 12%
• Up/Down Ratio: 1.6
• EPS Trend: Up
• RS Rating: 95
• RS Trend: Up
• Institutional Ownership Trend: Up
• Pros:
  1. Important metrics such as RS trend, institutional ownership trend, and EPS trend are trending upwards, enhancing buying confidence.
  2. Current stock price is stable within a flat base above key moving averages, making it a relatively safe buying opportunity with a recommended stop-loss below these averages.
  3. Recent earnings were well-received, with no upcoming earnings in the near future.
• Cons:
  1. An industry rank of 38 out of 197 could be improved; it suggests potential for underperformance.
• Comments: Consider scaling into a position up to 10% of a portfolio, buying incrementally as price action confirms strength.
• CAN SLIM/SEPA Comments: The stock falls slightly short of CAN SLIM criteria due to earnings growth just below 20%.
• Maximum Position Size: 10%
• Maximum Favorable Buying Price: $20.59
• Stop-Loss: $19.34
• Profit Target: $24.34
• Position Risk: 6.07%

Shake Shack CI A (SHAK)

• Next EPS Date: NA
• Industry Rank: 12/197
• Stage: 2
• Base Type: Cup with handle
• Base Depth: 16%
• Up/Down Ratio: 1.1
• EPS Trend: Up
• RS Rating: 94
• RS Trend: Up
• Institutional Ownership Trend: Up
• Pros:
  1. A strong industry rank of 12 out of 197 adds to the investment appeal.
• Cons:
  1. The stock price is not currently breaking out from the base; it’s been a while since the last base formation.
• Comments: Starting with a small position and increasing it upon a breakout could be wise.
• CAN SLIM/SEPA Comments: Not fully compliant with CAN SLIM due to approximately 15% sales growth, below the 20% criterion.
• Maximum Position Size: 5%
• Maximum Favorable Buying Price: $105.24
• Stop-Loss: $99.98
• Profit Target: $121.03
• Position Risk: 5.00%

Pulte Group (PHM)

• Next EPS Date: NA
• Industry Rank: 78/197
• Stage: 3
• Base Type: Cup with handle
• Base Depth: 14%
• Up/Down Ratio: 1.3
• EPS Trend: Neutral
• RS Rating: 91
• RS Trend: Up
• Institutional Ownership Trend: Up
• Pros:
  1. A shallow base depth of 14% indicates a strong bullish signal.
• Cons:
  1. A lower industry rank of 78 out of 197 suggests the company might be isolated within its sector.
  2. The stock is in its 3rd base stage, possibly indicating that an uptrend is well recognized and could prompt institutional selling.
  3. Last reported earnings were lower than expected.
• Comments: A small initial investment is advisable when the stock breaks out of its base, with possibly tighter stop-loss settings due to the outlined concerns.
• CAN SLIM/SEPA Comments: Does not meet CAN SLIM criteria due to insufficient earnings and sales growth. However, the stock’s base formation is being accurately executed. Pivot price: $121.08
• Maximum Position Size: 5%
• Maximum Favorable Buying Price: $121.18
• Stop-Loss: $115.12
• Profit Target: $139.36
• Position Risk: 5.00%

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.

Pivot price is the optimal buy point of a stock is defined as the moment it transitions from a stable basing area or chart pattern and begins to achieve new highs in price.

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.

Wrapping It Up

As we’ve seen today, each of these stocks offers something unique, from stability and solid trends to potential breakout stars. So, why not consider adding them to your watchlist? Who knows, one of these could be the hero of your portfolio.

And remember, in the world of investing, being in the right place at the right time is everything—just like snagging the last piece of pizza at the party. So, why wait for the leftovers? Dive into these stocks now and you might just be the one enjoying the feast tomorrow. Happy investing!

By the way: If you have any ideas or questions, please don’t hesitate to fill out the form here, and I’ll get back to you.