A handful of Big Cap 20 stocks are near buy points.
Being near the price of an entry, though, is no guarantee the stock
will reach that price and clear it in strong volume. That's why a
disciplined investor will always wait for the breakout.
Comcast (CMCSA),
the No. 1 U.S. cable TV provider, is starting its fifth week of a
potential flat base. On the weekly chart, though, the stock is only a
day away from the five-week minimum.
If the flat base is completed, the buy point would be 30.51. A
breakout in volume at least 40% above average would be required to
validate the buy point.
Comcast is in the Telecom Services-Cable Satellite industry group,
which was No. 41 of 197 groups, as of Monday's IBD. However, there's
another way to look at this stock — as an indirect housing play.
An increase in housing naturally boosts cable sales. At Comcast's
earnings call in February, CEO Brian Roberts said, "We don't see housing
growth at the moment, but someday, that's going to happen."
Earnings rose 18%, 18% and 21% in the past three years. The Street expects 19% growth this year.
Return on equity was 9.6% last year, up for a sixth straight year.
However, that's well below the 17% minimum associated with elite stocks.
Visa (V)
recently bounced off its 50-day line. Daily volume was below average,
but the weekly volume was up about 10% from the previous week.
The move arguably sets a secondary buy zone up to the previous high plus 10 cents, or 123.78. The stock remains in the buy zone.
The world's No. 1 credit card processor grew earnings 28% or better
in each of the past six fiscal years ended in September. Revenue growth
ranged from 10% to 46% in the same period.
Analysts expect 20% EPS growth this year and 11% revenue growth.
Two medical sector stocks also are basing.
Alexion Pharmaceuticals (ALXN) is in the sixth week of a flat base. The potential buy point is 95.11.
The biopharmaceutical company has enjoyed a steep run-up since
mid-2009. Earnings increased 92%, 45% and 55% in the past three years.
Revenue leapt 49%, 40% and 45% in the same period.
The Street expects 30% EPS growth this year on a revenue pop of 39%.
Valeant Pharmaceuticals (VRX)
sketched a flat base within a larger consolidation. The flat base could
be seen as a handle in the bigger base. The buy point remains 55.90 in
both cases.
The drugmaker edged over the entry recently in meek volume. It's now back under the buy point.
EPS rose 24%, 17% and 38% in the past three years. Revenue grew 8%, 44% and 109% in the same period.
Wednesday, May 2, 2012
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