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By Leo Fasciocco -- TTD
Ticker Tape Digest presents its daily breakout and Short Selling report. It contains Breakout Stocks and Stocks under Significant Accumulation.Data is from tape action for the day. These stocks are most suitable for aggressive investors seeking ideal entry points for leading stocks.
These stocks will do very well during bull markets and strong market rallies.
TTD also presents Stocks To Sell or Sell Short.These issues are suitable for aggressive investors willing to take short positionsboth as trades or for longer-term plays. These stocks will do very well during bear markets or market corrections
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Total Buy Breakouts so far today - 27
Stocks Screened- 8,200
Bull side - Break out list expands sharply today as Nasdaq market rallies strongly. Blue Chip index flat. Bulls be selective, and watchful for follow through action in breakouts.
Long-Term Environment for bulls: Favorable.
Market Status (Daily) - NYSE Bullish, Nasdaq Bullish
Market Status (Weekly) - NYSE Bullish, Nasdaq Bearish
AIR, based in Wood Dale, Il., provides products and services for the maintenance of aircraft. Annual revenues: $897 million. AIR moves higher today to clear its seven-week flat base and make an eight-year high. TTD has been bullish on AIR having featured the stock recently. So far today, AIR is trading 413,900 shares, near the pace of its average daily volume of 465,000 shares.
The tape action in AIR has been very good the past several sessions.
TTD's clip covers the big blocks traded the past few sessions. Those in blue are bullish having gone off at a price above the asked. One can see three giant sized blocks trading bullishly on February 1.
TTD sees that as the underlying bullish accumulation that help set the stock up for today's breakout.
AIR provides a wide range of products and services for the aviation industry. The company's aviation supply chain unit, which accounts for about half of sales, buys and sells a variety of engine and airframe parts and components and offers inventory management services.
AIR's other units make containers, pallets, and in-plane cargo loading and handling systems. They also do maintenance, repair, and overhaul (MRO) of commercial and military aircraft and components. AIR's customers include airlines, business aircraft operators, aviation OEMs, and military organizations. The U.S. government accounts for 33% of sales.
A look at TTD's daily chart shows that AIR attempted a breakout six sessions ago. The stock then pulled back. However, it has now cleared the base convincingly. Technically, the stock is acting strong.
AIR's TTD momentum indicator is strongly bullish (see top of the chart). The accumulation - distribution line. The action of the AD line is very impressive and shows that the stock is now under extremely good accumulation.
It is important to note too that AIR's stock is near a new all-time high (see TTD's long-term chart). A push through that peak would clear the stock of any overhead resistance and give it a clear path to move higher.
The aerospace industry is doing well. Boeing (BA) stock is moving higher. Obviously, AIR is linked to that bullishness.
AIR's net for the fiscal year ending May 2007 should climb 49% to $1.41 a share from 95 cents a year ago. The stock sells with a price-earnings ratio of 21 based on fiscal 2007 net.
Next fiscal year, AIR's net should advance 35% to $1.92 a share. So, the stock's p/e ratio is well below the projected earnings growth rate. That makes it in this case a good value-growth play.
Net for the upcoming fiscal third quarter ending February 28 should rise 33% to 36 cents a share from 27 cents a year ago. The highest estimate on the Street is at 36 cents a share. AIR tends to top the consensus Street estimate by 2 to 6 cents a share. So, TTD sees good chances for an upside earnings surprise.
AIR's sales are growing at a 24% clip. The company said it is continuing to capture business from customers looking to reduce costs and improve efficiencies.
Strategy Opinion: AIR looks very good on this breakout and TTD suggests a full position. We are targeting the stock for a move to 38 within the next few months. A protective stop can be placed near 28. TTD rates AIR a very good intermediate-term play because of its favorable earnings outlook.
Sponsorship: Very Good. The largest fund holder is Federated Kaufmann Fund with a 1.8% stake. It has kept its position steady. The largest buyer lately was BlackRock Global SmallCap Fund which purchased 224,000 shares. It is now the second largest fund holder with a 1.4% stake.
Insider Activity: Neutral. Not much action this year. Currently, four analysts follow the stock, 3 have a buy, up sharply from just one three months ago.
| TTD's Breakout Profile
Rating AAR Corp. (AIR) |
| TTD Check List | Bullish | Bearish | Neutral |
| Near 52-week High | YES | ||
| Volume | YES | ||
| Tick Volume | YES | ||
| Price Trend - Daily | YES | ||
| Price Trend - Long Term | YES | ||
| Price Daily Spread | YES | ||
| Base Structure | YES | ||
| Base - A-D | YES | ||
| Earnings-Quarterly | YES | ||
| Earnings-Long Term | YES | ||
| Earnings Outlook | YES | ||
| Industry Group | YES | ||
| Prior Breakout Success | YES | ||
| Fund Sponsorship | YES | ||
| Total Score | 14 | 0 | 0 |
(The “breakout List” gives all stocks breaking out of a base of five weeks or more. These stocks have a good chance to trend higher. However, a stop should be used to avoid those that do not work.
(Trading strategy: One should buy breakout stocks at breakpoint by using market order or stop buy)
Ticker Tape Digest’s Daily List of “Stocks To Sell or Sell Short” ranks stocks well timed to be sold immediately based on daily trading. The list can be used as an alert to reduce current long-term positions.
Shorts from tape action so far today - 5
Stocks Screened - 8,200
Long-Term Environment for bears: Unfavorable.
Bear Side - Only a few breakdown plays today as Nasdaq market rallies strongly. Bears be selective.
(Trading strategy: These stocks can be sold short, or if held should be sold. If a stock is sold short, a protective stop buy should be placed. Short plays work best when the stock market is in a down trend.)
MEDI, based in Gaithersburg, Md. makes medical product treating pneumonia. Annual revenues: $1.2 billion. Today, MEDI reports lower than expected earnings. The news triggers a breakdown in the stock and a TTD short play. The stock is off about 3 points. Volume is running at 15.8 million shares, five times its normal daily volume of 2.7 million shares.
TTD's clip of the tape shows a big block of 52,000 shares crossing the tape early in the morning on a down tick to $30.83 from the prior trade at $30.88. The move set the tone for the bearish action in the stock.
MEDI's flagship product, injectable Synagis, helps prevent respiratory syncytial virus (RSV), a major cause of pneumonia and bronchiolitis in infants.
The company also sells RespiGam, also for RSV, and Ethyol, which reduces damage caused by some chemotherapy agents.
FluMist is MEDI's nasal spray flu vaccine. Products in development include vaccines for cervical cancer culprit human papillomavirus (with GlaxoSmithKline), Epstein Barr, and certain types of cancer.
Today, MEDI reported lower than expected net due to disappointing sales of Synagis. The company had a fourth quarter profit of 50 cents a share compared with a loss on 9 cents a year ago. The Street was expecting a profit of 54 cents a share. Revenues also came in below expectations.
TTD's daily chart shows the gap drop in the stock on big volume today. The stock cuts right through key support at 32. The stock's accumulation - distribution line, which had been acting well has now rolled over. The action in the stock would indicate that the news was a bearish surprise. TTD is looking for MEDI to decline to 25 within the next few months. TTD views MEDI as a trading short.
TTD columnist Leo Fasciocco has covered the stock market for over 20 years. His articles appear in many publications. He is also a speaker at the Intershow conferences. He has been on television and radio. He is author of many educational articles about stock investing and the book “Guide To High-Performance Investing.”
For information to subscribe to the Ticker Tape Digest Services call: B. J. Owen at 1-480-926-1680. Distributed by Corona Publishing Enterprises. Ticker Tape Digest Inc. P.O. Box 2044 Chandler, Az. 85244-2044. TTD “Professional Report” is available on the World Wide Web: $100 per month. Password needed. “TTD Professional“ Faxed is $200 per month. The TTD Daily Report is $39.95. Credit cards accepted.
(The information contained has been prepared from data deemed reliable but there is no guarantee of complete accuracy. Ticker Tape Digest Inc. is not affiliated with any broker, dealer or investment advisor. Nothing in this publication constitutes an offer, recommendation or solicitation to buy or sell any securities. Further research is advised. This report is copyrighted and no redistribution is permitted with out permission. Some of the charts are from Telescan, Insight Trading, First Alert and other sources.)