The U.S. equity market had another volatile week and stocks have struggled to attain new highs. Investors with exposure to gold and bonds have done well this month and I've reiterated a relative momentum ETF strategy that has capitalized on this trend by investing in GLD, IEF, TIP, and PCY.
U.S. stocks reaching new 52 week highs have all but disappeared. Each week I post a "Stocks to Watch This Week" list. The list is comprised of stocks hitting 52 week highs on Friday, on a minimum of 2 times relative volume, minimum average volume 50,000 shares, and closing the day on Friday higher than they opened.
Last week's list had two names, First Cash Financial Services (FCFS) and Mistras Group (MG). Both were down this past week. First Cash remains on my radar but closed last week near the bottom of its upward channel and 50 day moving average so this next week it will be important to watch closely:
(Click to enlarge)
Chart courtesy of Finviz
This week we have 2 names on the list. STAAR Surgical (STAA) rocketed higher this week on no material news. However, during the previous week the company posted better than expected results and bumped guidance. The company is a leading developer, manufacturer and marketer of minimally invasive ophthalmic products. They reported revenue growth for the quarter of 19%, or $2.6 million, to $16.3 million. Net income was $.02 per share versus a loss of $.05 the previous year's quarter. The company increased guidance and expected gross margins to 66.5% for the full year and expects profitability in all four quarters.
Clearly, STAAR has caught someone's attention as volume has increased since earnings and the share price has trended upwards. Given that the company has a market cap of $247 million, volatility should be expected in the underlying share price. It looks overbought at current levels but a consolidation from $6-$6.50 could present a buying opportunity.
Susser Holdings (SUSS) operates convenience stores and distributes motor fuels in Texas, New Mexico, Oklahoma, and Louisiana. The company operates through two segments, Retail and Wholesale. Like STAAR, the company hit a 52 week high on Friday on no material news. Earnings were reported August 10th and the market evidently took a liking to what they heard.
The company reported that adjusted EBITDA rose 36.1% from the second quarter of last year to $60.9 million. Gross profit was $158.9 million, which was up 18.7% from the second quarter of 2010.
Revenues totaled $1.4 billion – a 35.1% increase from a year ago – which is the result of a 42.3% increase in combined fuel revenues and an 8.7% increase in overall merchandise sales. Net earnings were $23.7 million, or $1.36 per diluted share in the latest quarter, versus a net loss of $1.9 million, or $0.11 per diluted share, in the same quarter last year.
The company raised guidance FY 2011 sales growth and currently trades at a PEG ratio of .94 and forward P/E of 15.77. The company has a heavy debt burden but has been able to refinance some of its debt and anticipates ramping up new store construction in 2012 and 2013.
Stocks that are bucking the trend by trading higher while the overall equity market drifts lower are ones to watch. They may not be "immediate" buys or perhaps their trend is even ready to reverse. However, by looking for positive price trends, especially when driven by a company's earnings growth and quarterly report, we can create a list of stocks to watch.
Disclaimer: No current positions in stocks mentioned. Please note that Scott's Investments is not a financial adviser. Please consult your own investment adviser and do your own due diligence before making any investment decisions. Please read the full disclaimer at the bottom of Scott's Investments.