From Cabot Wealth Advisory 3/7/16 Sign up for Cabot Wealth Advisory—it’s free!
With the major indexes completing their third straight week in the black and the intermediate-term trend up, we believe you can slowly put money to work on the market’s leading stocks.
And here’s one we recommended in last week’s Cabot Top Ten Trader.
Why the Strength
Stamps.com is thriving by bringing all the functions of the U.S. Postal Service right into small businesses, enterprises and home offices. The company’s services allow users to print shipping information onto packages, pay for postage and insurance, create customized stamps and design themed mailings. The company made huge strides in 2015, growing revenue by 45% and increasing earnings from $2.47 per share in 2014 to $4.43 in 2015. The company’s latest quarterly report on February 25 featured a whopping 118% boost in earnings on 67% revenue growth with a 40% after-tax profit margin. Investors heartily approved. But then, investors have been enthusiastically driving Stamps.com’s stock higher since October 2014. The concept of using a printer and an Internet connection to handle all mailing and shipping functions is clearly winning approval from both users and investors. Estimates are for the company to increase earnings by 10% in 2016 and 15% in 2017. The company also has a $20 million share buyback program that’s the equivalent of about 1.25% of its shares. This is a story with great fundamentals.
STMP came to life in 2011 after years of flatlining. But the current enthusiasm for the stock dates to the fourth quarter of 2014, when it began a series of quarterly-earnings-based rallies on positive volume. With major corrections in August and September 2015 and January and the first half of February 2016, the stock has been volatile. But the stock’s gap up from 96 to 117 last Friday came on twice average volume, and kicked the stock to its highest level since Tech Bubble days in 2000. STMP is holding onto all of last Friday’s gains, but a little patience should present an opportunity to get in on a dip of a few points. Use a fairly loose stop at 107 to allow for current volatility.
Every Monday, Cabot Top Ten Trader steers you to 10 hot stocks with great potential to soar in the weeks ahead. As an example, Stamps.com (STMP) is up 2.5% in the five days since it was recommended. If this seems like the type of concise analysis on leading stocks that you need to ride the market as it continues its climb higher, I suggest you check out Cabot Top Ten Trader now. For more details, click here.
| Stamps.com (STMP)
1990 East Grand Avenue
El Segundo, California 90245
|Index Membership: N/A
Industry: Application Software
Full Time Employees: N/A