These stocks have started a new upward trend. Great profits can be made if you invest in certain stocks or sectors when a new long term uptrend has begun. I prefer fundamental analysis when looking at stocks to buy, but I always want to see how a stock looks based on many factors, including what the 50 and 200 day moving averages are, and what the relative strength index is before deciding to buy. When evaluating this data, you can find stocks that appear to be starting what might be a significant new uptrend. It is wise for investors to be aware of how a stock looks in terms of the charts, as this can give you an edge over using just fundamental analysis.
These shares have reasonable valuations, and (most have) strong balance sheets. Some might just be good for a trade, while others might be interesting longer-term plays. You can also see that these stocks have a 50 day moving average that is higher than the 200 day average and this signals a new uptrend. Here are the stocks trending higher:
Bebe Stores, Inc. (NASDAQ:BEBE) is trading around $6.49. Bebe is a specialty retailer, based in California. These shares have traded in a range between $5.36 to $7.58 in the last 52 weeks. The 50 day moving average is $6.37 and the 200 day moving average is $6.19. BEBE is estimated to break even in 2011 and make 14 cents per share for 2012. Clothing retailers have been rebounding as gas prices have been falling and Bebe has been participating in the uptrend. However, with only minimal earnings expectations for the next couple of years, I would take advantage of this uptrend and rotate into stocks with more earnings power.
Airgas, Inc. (ARG) is trading around $67.96. Airgas distributes medical, industrial and other gases, and is based in Pennsylvania. These shares have traded in a range between $59.26 to $71.28 in the last 52 weeks. The 50 day moving average is $66.64 and the 200 day moving average is $65.31. ARG is estimated to earn $3.89 per share in 2011 and $4.60 per share for 2012. The book value is reported to be $20.97. This company pays a dividend of $1.16 per share which is equivalent to a 1.7% dividend yield. With a very reasonable PE ratio and a dividend, this stock looks like a solid investment, however, I would wait for pullbacks to $66 per share or less before considering a purchase.
GTX, Inc. (NASDAQ:GTXI) shares are trading at $5.67. GTXI is a biopharmaceutical company based in Tennessee. These shares have traded in a range between $1.90 to $6.26 in the last 52 weeks. The 50 day moving average is $4 and the 200 day moving average is $3.21. Earnings estimates for GTXI are for a loss of 73 cents per share in 2011 and a loss of 73 cents for 2012. Book value is stated at $1 per share. One director recently purchased about 15,000 shares at $3.83 per share. This transaction is valued at about $57,000. You can see the insider buying here. These shares have had a major run, and are overbought now. I think it makes sense to take some profits and/or wait for a significant pull back before starting another position in this stock.
Hot Topic, Inc., (NASDAQ:HOTT) is trading around $7.50. Hot Topic is a specialty retailer and is based in California. These shares have traded in a range between $4.58 to $8.03 in the last 52 weeks. The 50 day moving average is $6.48 and the 200 day moving average is $5.81. Earnings estimates are 9 cents for 2011 and 19 cents for 2012. The book value is stated at $4.87. There has been repeated and substantial buying by two directors at this company. You can see the insider buying here. This company pays a dividend of 28 cents per share which is equivalent to a 4.3% dividend yield. After a big run, these shares look too expensive. The PE ratio is high and with the dividend currently higher than the earnings per share estimates, this company may decide to cut the dividend which would cause some investors to sell. I would take profits on this stock.
Insmed, Inc., (NASDAQ:INSM) shares are trading at $10.36. Insmed is a biotechnology company, and is based in New Jersey. These shares have traded in a range between $4.69 to $9.79 in the last 52 weeks. The 50 day moving average is $7.86 and the 200 day moving average is $6.81. Earnings estimates are expected be negative for 2011. You can see repeated insider buying here. The book value is currently at $12.26. This company has lots of cash and a strong balance sheet. This company recently received approval for a phase 3 study which you can read about here. These shares have made a huge move up, and appear overbought. I would take at least some profits and wait for pullbacks before making another investment here.
Zep, Inc., (NYSE:ZEP) is trading around $17.60. Zep produces and markets cleaning products and is based in Georgia. These shares have traded in a 52 week range between $15.43 to $20.95. The 50 day moving average is $17.84 and the 200 day moving average is $17.87. Earnings estimates for ZEP are at $1.13 per share for 2011 and $1.36 for 2012. The book value is reported to be $6.27. This company pays a dividend of 16 cents per share which is equivalent to a .9% dividend yield. This company makes cleaning products that sell whether the economy is weak or strong and that is one reason why investors are willing to pay about 15 times earnings for these shares. This stock looks like a solid buy on any dips to $17 or less.
The data is sourced from Yahoo Finance and Stockcharts.com. The information and data is believed to be accurate, but no guarantees or representations are made. Rougemont is not a registered investment advisor and does not provide specific investment advice. The information contained herein is for informational purposes.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.