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Sector Leaders, IPO Aftermarket Point You To The Big Movers

When investing in stocks, you should always buy the best merchandise available. You want to be in stocks that have the potential for big moves up.

While there are many places in IBD to get ideas, investors should always check out the Sector Leaders and the IPO Aftermarket (today on A6). Both can point you to potential big winners.

With the revamp of IBD's stock research tables in 2008, IBD made it easier to identify which sectors are leading the market. At the top of some sector columns, you'll find Sector Leaders.

Not every sector will have Sector Leaders. But when they're there, Sector Leaders are the stocks that investors should focus on. These are the ones with robust fundamentals and price performance.

In early January, data management software maker CommVault Systems (CVLT) made the cut as a Sector Leader, as did 3D Systems (DDD)and SodaStream International (SODA).

LinkedIn (LKND) was featured as a Sector Leader in the April 15 edition. The stock is testing its 10-week moving average now.

IBD recently added the charts of the Sector Leaders (see page B9 in today's IBD) for easy reference. Be sure you check these for developing bases in strong market uptrends. Also check out the table showing how Sector Leaders have fared for the year and since the market bottom in March 2009.

Like schools of fish, stocks tend to move in groups. It's key to pay attention to the best stock from each sector.

For potential big movers, investors should also examine the IPO Aftermarket, which is located on the top of the New America Page each day. This feature tracks the performance of new issues.

IPOs are more volatile, but they can be huge winners. Instead of jumping in when they first come to market, investors should wait for a base to form.

Five Below (FIVE) was a recent new issue featured in the Jan. 3 edition of IPO Aftermarket. The stock had nearly doubled from its offering price.

The stock cleared a 37.95 in a cup-with-handle base Feb. 5 in heavy trading. Shares rose 13% by late March before pulling back.