This earnings quarter has produced another bunch of purchase candidates. Given the weakness in the indices up until the past week, those potential purchases have been on hold from my perspective. Now that the large-range trade has set up and the longer-term trends remain higher, it's time to consider some of the earnings highflyers that look to go higher still.
(NASDAQ:FB) is probably the most noteworthy of the candidates. Ever since it began to show that it could indeed monetize its huge user base, the stock has continue to climb higher and higher. Institutions are still underinvested, and that provides an unending stream of buyers on every dip. Technically it broke out again on the last earnings report, jumping two swing point highs and extending away from them. A gift buy now would be a retrace into the earnings breakout bar.
Another highflyer includes Netflix
(NASDAQ:NFLX), which continues to convert nonbelievers as its revenue and growth rates remain in double-digit territory year-over-year. Note these are not low PE stocks. Getting a low PE stock that is a highflyer is an oxymoron for the most part.
With Netflix, the stock continues to stair-step higher, and with a large short interest, that's unlikely to stop until they have mostly been squeezed out of those short positions. It has broken out on the weekly
time frames as well.
For those of you not interested in higher PE stocks, here's another highflyer that won't scorch your buying interest. The PE isn't off the chart like those above, and that's probably because the stock seems out of the reach of most buyers with a $1,200+ price tag. But quarter after quarter, Priceline
(NASDAQ:PCLN) continues to deliver double-digit growth in both the top and bottom lines.
In a stock like PCLN, you just have to catch a retrace back to the latest breakout area and step in for a few shares. You will be amazed at how 20 shares can actually turn into some real money in a short period of time with a stock like this one. Note Priceline has broken out on the longer-term time frames as well
In summary, there are always companies that outperform the market; finding ways to grow their top and bottom lines. These three are just a sampling of what's out there. They have a high probability of success if bought on the retraces and offer reasonable reward-to-risk as well. In a market that sometimes seems so overvalued, finding trades and potential core positions isn't easy, but isn't impossible either.
Editor's note: L.A. Little is a professional trader, author, and money manager who has written several books and contributed material to many financial sites in addition to authoring his own: Technical Analysis Today. He brings a unique perspective to technical analysis, incorporating his extensive engineering and modeling skills when analyzing the markets.
No positions in stocks mentioned.