As many of you know, technical analysts are agnostics about businesses but religious about charts. It doesn't matter if the company makes pencils or peanut butter, if the chart looks good, they're in.
Per his website biography, Harry Boxer has more than 40 years of technical analysis experience, which he brought to Breakout as short-term trading ideas.
Before I go through them, there are two things I want to say: First, his five picks are up an average of 72% over the past 3 months versus a 1% decline for the S&P 500. They are clearly momentum plays that have come a long way in a little time. And second, since I sit next to the proprietor and CEO of Macke's Purple Crayon Inc., I had him take a look at the charts too and he was unmoved by all but one of them, feeling most had a parabolic feel.
So without further delay, the Boxer picks. The first three of which he calls "comfort stocks."
SodaStream (SODA): It went public last November at $20 a share and has never seen a day below $25. It's up 90% year-to-date and 35% in 3 months. According to Factset data, there are three "hold" and three "buy" ratings on the stock, an average price target of $55 (which is about 10% below the current price) and on a relative strength basis is very close to being overbought.
Boxer cites "rapidly increasing earnings, strong institutional interest and a fantastic chart" and says "it wouldn't surprise me if it got to $100." Clearly he believes the uptrend is nowhere near done.
"If you look at the chart, SODA has been moving up in stairstep levels and had moved up steadily in a nice channel. But that channel is now accelerating," Boxer says and analyst upgrades and price target increase are likely.
Krispy Kreme Doughnuts (KKD): Boxer thinks the stock could benefit from the planned IPO of Dunkin' Donuts which could reportedly price as early as next week. For Krispy Kreme's part, Boxer says "the chart looks great." For the record, it is up 42% in 3 months and 187% in the past year.
Boxer says the company's turnaround and strong earnings growth last quarter "triggered the price/volume surge" which briefly pushed KKD above $10 for the first time in 4 years. Boxer says he "sees the stock in the mid teens."
Coffee Holding Co. (JVA): It is now an $80 million market cap company from Staten Island that sells wholesale and private label coffee. Shares have risen 150% in 3 months and 300% year-to-date.
Boxer says the stock "has a very powerful chart pattern, my favorite type of chart," adding that "it could explode up into the high teens or low 20's." And he ikes that it is heavily shorted too. I show that there is about 12% of its float held short.
Service Source International (SREV): This is a cloud computing play that just came public on March 21st at $10 a share and has gained about 85% since.
Although a technical analyst, Boxer cites "strong management and fundamentals" first, then points to the stocks momentum, which has pushed it to "new post-IPO highs" and is enroute to "the high 20's or low 30's" in the short-term.
Cardiovascular Systems (CSII): It's Boxer's final pick, and the only chart Macke said looks good. Boxer says the stock "broke out, pulled back, and is consolidating now" and looks like it's breaking out again. He sees it in the high teens or low 20's soon.
Please do your own research and come to your own judgment and also feel free to express yourself in the comments section below.
- S&P 500
- chart pattern
- Krispy Kreme Doughnuts
- Cardiovascular Systems
- peanut butter