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Long and Short Ideas for PatternDNA, April 1st

|Includes:CCF, DDi Corp. (DDIC), DORM, EBIX, GNI, LB-OLD, RTEC, SEB, SPEC

This week we go for 11 stocks from Alan Brochstein. In his screen he is looking for low PE stocks which are flying under the radar, but growing rapidly. He has a preconfigured scan of:

  • Market Cap > $100mm
  • 1yr Sales growth > 20%
  • 1yr EPS growth > 20%
  • Trailing PE < 16
  • Net Debt to Capital < 50%
  • ROIC > 10%
  • 1yr Return Vs. S&P 500 > 0
  • Analysts Covering < 3
A modified Zignals screen could look something like this (offered 31 stocks):

Click to enlarge

Alan's eleven stocks were: DDI (NASDAQ:DDIC), Seaboard (NYSEMKT:SEB), Rudolph Technologies (NASDAQ:RTEC), Great Northern Iron (NYSE:GNI), Chase (NYSEMKT:CCF), Spectrum Control (OTCPK:SPEC), Emagin (NYSEMKT:EMAN), LaBarge (NYSE:LB), Preformed Line Products (PLPX), Ebix (NASDAQ:EBIX), and Dorman Products (NASDAQ:DORM). PatternDNA rated them:

Stock No. of
Patterns
1-day
% Win
2-day
% Win
5-day
% Win
Average Return
Per Trade (> 5 day)
DDIC 115 44 39 47 2.4
SEB 379 43 40 51 2.7
RTEC 65 38 50 53 2.5
GNI 458 53 53 57 4.0
CCF 24 52 53 58 3.5
SPEC 181 37 44 53 2.9
LB 84 41 43 54 3.0
EBIX 277 52 50 51 3.1
DORM 44 40 40 41 2.0
Click to enlarge

A very non-descript set of projections for next week. The only notable was it marked the first week there was no stock which offered a greater than 60% projection of a higher close based on its 5-day trading Pattern.

Of the stronger projections, DDi (DDIC), Rudolph Technologies (RTEC) and Spectrum Control (OTCPK:SPEC) were the only stocks to offer a probability of a lower close; the former on day 2 after the Pattern (i.e. tomorrow), at 61% and the other two on day 1 (i.e. today's close), at 62% and 63% a piece.
 
The Average Return Per Trade (Average Return Per Trade assumes an initial stop of 10%, raised to 5% off the price reached on a 15% gain. Ultimate Profit Target of 25%) was also disappointing. Great Northern Iron offered an Average Return per Trade of 4.0%, but this was off an uninviting 58% winners - winning trades garnering 12.3% on average, losing trades giving up -7.4% on average.

The net projections were also a little bleak. The average probability for a lower close today was 56%. Although today's unemployment figures would suggest this will be one of the 44% of cases where the market will close higher.