Mako Surgical, Rosetta Resources: Good Volume Clues

Includes: MAKO, ROSE
by: Cabot

I still think it’s a bit too early to really dig into growth stocks and find those names that have either resisted the downturn or got hit but snapped back with power. The reason is that nearly every growth stock has some serious damage on its chart, which will take time to repair. Thus, while it’s nice to see some things snap back, even the most resilient names likely need a few weeks to consolidate.

However, one thing I do like to look for is unique, extraordinary volume clues to tell me that, at the very least, some big institutions are swallowing up some shares of a favored growth name.

Two that I noticed last week with such volume clues were MAKO Surgical (NASDAQ:MAKO) and Rosetta Resources (NASDAQ:ROSE). (I recently had to sell the latter because of a loss.)

MAKO Surgical is a classic growth stock, though it’s very small (just $58 million in revenue during the past year!). But it’s developed a robotic surgical system used for knee and (by the end of the year) hip resurfacing and replacement. The firm isn’t profitable, but it’s been growing revenues at an 80% clip.

The company reported great earnings (August 8) and that resulted in the stock leaping more than 30% on its heaviest volume ever; for the week, shares vaulted 32% on the biggest weekly volume total ever. The chart is very wide-and-loose, so I can’t say it’s a screaming buy, but it’s certainly one to watch.

Rosetta Resources is a stock I was forced out of recently because we bought it too high, had a loss and the market was weakening. But, interestingly, the stock found support around its 200-day moving average last week on a weekly volume total of 15.8 million shares–nearly twice as large as any week in the stock’s history!

The story here revolves around the Eagle Ford Shale, where Rosetta is rapidly expanding production. Sales and earnings are just starting to lift off, and earnings estimates are strong, though of course, they can move around with the price of oil and natural gas.

Again, ROSE doesn’t look like a great buy here–its chart needs some time to calm down and round out. But given the volume clue, it’s worth watching to see how its base-building effort progresses.

Disclosure: None.