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  • 5 Falling Wedge Chart Patterns Worth A Closer Look 0 comments
    Aug 2, 2010 8:12 PM | about stocks: ASNA, MFW, PRU, TWGP, XRTX

    For this list, we're combining some fundamental analysis with technical analysis.

    We're only focusing on stocks with falling wedge patterns. The wedge is a very popular reversal chart pattern. The pattern consists of two trend lines that are in the same direction (both falling or both rising), with one trend line steeper than the other. A Wedge usually breaks in the opposite direction of its trend.

    A falling wedge is sometimes seen to be a bullish signal. The upper trend line of a falling Wedge should have a sharper slope than the lower trend line.

    Psychologically speaking, this shows that the selling interest is waning, as sellers have trouble pushing the price down further each time the security is under pressure.

    On the fundamental analysis side, we'll focus on falling wedge stocks with the following characteristics:

    • Price / Free Cash Flows below 15
    • Positive EPS growth over past 5 years
    • Positive sales growth over past 5 years
    • To control the quality of the list, we only focus on stocks with market caps north of $300M
    Here is the complete list. To provide some perspective, we'll focus on EPS growth, sales growth, P/FCF and short float.

    1. Dress Barn Inc. (DBRN): Apparel Stores Industry. Market cap of $2.00B, with a Price / Free Cash Flow ratio at 10.71. Over the past 5 years, the company's EPS has grown by 16.59%, and sales have grown by 14.63%. Short float at 9.27%, which implies a short ratio of 5.11 days.



    2. M&F Worldwide Corp. (NYSE:MFW): Business Services Industry. Market cap of $549.55M, with a Price / Free Cash Flow ratio at 2.14. Over the past 5 years, the company's EPS has grown by 37.54%, and sales have grown by 80.99%. Short float at 4.26%, which implies a short ratio of 5.12 days.



    3. Prudential Financial, Inc. (NYSE:PRU)
    : Life Insurance Industry. Market cap of $27.21B, with a Price / Free Cash Flow ratio at 9.37. Over the past 5 years, the company's EPS has grown by 16.19%, and sales have grown by 3.07%. Short float at 1.12%, which implies a short ratio of 1.12 days.



    4. Tower Group Inc. (NASDAQ:TWGP): Property & Casualty Insurance Industry. Market cap of $975.42M, with a Price / Free Cash Flow ratio at 6.33. Over the past 5 years, the company's EPS has grown by 42.29%, and sales have grown by 55.63%. Short float at 7.9%, which implies a short ratio of 10.04 days.



    5. Xyratex Ltd. (NASDAQ:XRTX): Data Storage Devices Industry. Market cap of $400.34M, with a Price / Free Cash Flow ratio at 13.73. Over the past 5 years, the company's EPS has grown by 4.37%, and sales have grown by 13.59%. Short float at 6.46%, which implies a short ratio of 2.44 days.




    Disclosure: No positions
    Stocks: ASNA, MFW, PRU, TWGP, XRTX
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