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Joshua Hayes
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Joshua "MauiTrader" Hayes is CEO, President and founder of Big Wave Trading Inc., a Maui, Hawaii-based stock market advisory service. Hayes is a well-respected stock trader who combines fundamentals, technicals, psychology and money management to trade professionally for his personal,... More
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  • It's An Akamai (Smart) Choice To Look at Akamai Technologies  4 comments
    Aug 12, 2010 10:10 PM | about stocks: AKAM, ARUN, FFIV, LOGM, RAX, SWS

    Narrowing down the best stocks, a key component in finding market leaders, is finding big growth in fundamentals.  Huge sales and earnings per share growth are pieces to the puzzle, but not everything.  Not only does a stock need the growth it needs to be in a leading industry.  The biggest winning stocks of all time all have come from a leading industry.  A leading industry currently is the Internet-Network Solutions. 

    We are in a virtual world and part of this world is the internet and delivering services means you need solutions to provide for your customers.  Akamai Technologies Inc (NASDAQ:AKAM) is a top stock in the group assisting its customers in delivering content and applications over the internet.  It is a top stock for its ability to churn out growth and not to mention institutional support.

    Over the past three quarters earnings growth has been as follows:  5, 13, and 17%.  Acceleration in earnings growth is a big positive, but it goes for sales growth too.  Over the past four quarters sales grew from 5, 12, 14, and 20%.  These aren’t explosive numbers, but the 284 funds who own the stock are betting on continued acceleration in fundamental growth. 

    We can even point out a return on equity of 16% and cash flow at two dollars a share adding to the fundamental picture, but the added benefit is the chart.  AKAM has gone onto form a double bottom base, a first stage base.  A normal double bottom base looks like a big “W” where the second leg down takes out the first leg down.  The midpoint of the “W” should form in the upper half of the pattern, but being a first stage base can cough up great returns. 

    AKAM second leg down has volume much higher than the first leg which is a flaw, but if volume accompanies a breakout the flaw can be overlooked.  The proper buy point is 46.09, but we’ll need to see volume 50% higher than its 50dma to trigger a buy signal.  Your cut loss would be if the stock closed below its 50 day moving average.

    Disclosure: No Positions
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Comments (4)
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  • dharby
    , contributor
    Comments (6) | Send Message
    the action in AKAM looks similar to NFLX
    15 Aug 2010, 09:38 AM Reply Like
  • Joshua Hayes
    , contributor
    Comments (359) | Send Message
    Author’s reply » Yes it does. One of the few leading stocks still holding up.
    17 Aug 2010, 12:29 AM Reply Like
  • Market Speculator
    , contributor
    Comments (46) | Send Message
    Yes, AKAM continues to act well
    18 Aug 2010, 01:46 PM Reply Like
  • Hedgephone
    , contributor
    Comments (1421) | Send Message
    I enjoy reading your views on stocks... Mine are a bit different but really you aren't advocating for anything different that what Livermore did... I am guessing you would be short many of the same market leaders when the markets turn bearish as you are now correct? That's how Livermore did it and it works. Take ENER or AMSC or CRM these plays worked and in CRM's case are still working better than anything else on the way up, but when the air gets let out of the tires they fall fast and hard and in some cases market leadership stocks like Crox never return to 10% of their previous levels... I actually use this strategy in finding shorts. I thought the markets would roll over so I was in some NFLX and CRM puts that hurt me a bit today, although I am hedged... any short ideas (nothing against those two just that they are leaders and the best Livermore trades for the short side if we can't break out over 11000 or the MA's... All the best
    2 Sep 2010, 03:31 AM Reply Like
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