Sometimes, slow and steady really do win the race.
EBay (EBAY) is among the top big-cap stock winners this year, trudging steadily up its 10-week moving average to a gain of as much as 75% this year.
Stocks that join (featured every Tuesday) typically move more slowly than their high-growth counterparts. It can take them a long time to form a base, but they tend to be less volatile. That's because their high market capitalization — at least $15 billion, according to IBD's definition — makes them less sensitive to high-volume trading.
Meanwhile, growth stocks offer the possibility of strong returns during a market uptrend. In many respects, EBay has offered investors the best of both worlds — steady capital gains without as much risk.
EBay satisfies the N requirement of IBD's method for choosing the best high-growth stocks. The N stands for newness — new company, new management, new products.
EBay is no longer just an auction website but a full-fledged retailer that allows consumers to comparison-shop online and make purchases electronically via PayPal, which eBay purchased in 2002.
EBay's base showed tight trading following a series of wild, high-volume swings during much of 2011. But it settled down late that year and in early 2012.
The stock's first base of the year offered an early entry on Feb. 2, 2012, when it cleared a 32.55 cup-with-handle . (1) But weak made it risky to buy at that time. The main came a couple weeks later. (2) A daily chart shows strong volume kicking in on Feb. 15 to 17.
As the stock approached its buy point, its Relative Strength line started to rise and its Accumulation-Distribution rating stood at B, indicating growing demand for shares.
EBay's fundamentals were also bullish. Profit in the three quarters leading up to the breakout grew at a solid double-digit pace as EBay continued to rebound from a series of earnings declines during the 2008-09 recession. Revenue growth was also strong leading up to and through the breakout.
EBay's rating at the time was a respectable 84, and it enjoyed an of A, indicating superior , profit margins and return on equity.
The stock then formed a three-weeks-tight pattern with a 36.90 entry in the week ended March 9, (3) offering shareholders a chance to add to their positions.
For much of the year, EBay continued to trade in mostly tight fashion while hewing close to its 10-week line. The stock is currently just below a 50.08 early entry in a . It's testing support at its 10-week line.