We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
When you are in a risk on market, the riskiest plays tend to pay off the most. That is not to say you should fully leverage your portfolio into super risky positions, but there needs to be an increased tolerance for risk as the market rewards that risk.
Some investors believe that is all about loading up on the F.A.N.G.S. stocks (please note that the ‘S’ belongs to Snap Inc (SNAP - Free Report) ). Others think it is about getting aggressive with options. Both could be right, but the strategy that I am employing is looking for small cap stocks that have low prices as more investors come off the sidelines and look for something “cheap.”
I have been watching a small stock over the last few days that has a Zacks Rank #1 (Strong Buy) and a growth style score of “A.” PC Tel Inc fits the bill with a risk on environment.
The company has posted 3 straight beats of the Zacks Consensus Estimate and the most recent report saw a solid beat on the topline as well. The beats weren’t small ones as they came in for 50% positive earnings surprise, 200% positive earnings surprise and a 400% positive earnings surprise respectively.
I saw some big volume spikes on this stock on Friday, but somehow the stock didn’t really move on those spikes. I labeled that volume on the chart below with the number 1. Instead, the stock slowly climbed on Monday and Tuesday and continued to do so Wednesday morning.
The number2 on the chart shows a quick burst of volume on a somewhat thinly traded stock and that pushed the stock to a new 52 week high of $6.43.
The number 3 on the chart shows the stock moving to red after hitting that new high on relatively smaller volume. This marks the first time this stock traded below the break-even line over the last few days.
Wireless Solutions
PC Tel provides performance critical telecom solutions. It designs and develops software-based radios for wireless network optimization and other antenna solutions.
Estimates
The reason this stock has become a Zacks Rank #1 (Strong Buy) is due to the positive earnings estimate revisions that the stock has seen of late. The Zacks Consensus Estimate for 2017 stood at $0.08 since October of 2016 but recently jumped higher to $0.10.
The 2018 number also moved from $0.17 to $0.18. That one penny move may not seem like a lot but it implies earnings growth rate of 80%.
Sales have remained consistent over the last few quarters, consistently growing. The last four quarters have seen revenue growth from $21M to $24M to $25M to $27M in the most recently reported quarter. That consistent type of sequential revenue growth is just what you want to see.
Valuation
With a market cap of around $105M, we see that price to sales is right around 1.1x and that is well below the 3.7x industry average. The more conservative measure of price to book sports a 1.4x multiple which is well below the 2.4 industry average. Most investors, however, will point to the forward PE of 62x and how that compares to 19x for the industry average.
The idea of why this company trades at such a big multiple of earnings is that earnings are very small… for now. As the company grows more the multiple will come down to more reasonable levels.
Key Idea
In this "risk on" market some players made a sizeable bet on 3/24 as volume blistered to more than 140K shares on a stock that normally trades around 50K shares. The next two days saw volume over 100K as more accumulation was taking place. Today, the stock spiked to a new high but has since traded back lower giving investors willing to take a chance an excellent entry point.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
A Low Price Stock Seeing Big Accumulation
When you are in a risk on market, the riskiest plays tend to pay off the most. That is not to say you should fully leverage your portfolio into super risky positions, but there needs to be an increased tolerance for risk as the market rewards that risk.
Some investors believe that is all about loading up on the F.A.N.G.S. stocks (please note that the ‘S’ belongs to Snap Inc (SNAP - Free Report) ). Others think it is about getting aggressive with options. Both could be right, but the strategy that I am employing is looking for small cap stocks that have low prices as more investors come off the sidelines and look for something “cheap.”
Follow Brian Bolan on Twitter: @BBolan1
On My Radar
I have been watching a small stock over the last few days that has a Zacks Rank #1 (Strong Buy) and a growth style score of “A.” PC Tel Inc fits the bill with a risk on environment.
The company has posted 3 straight beats of the Zacks Consensus Estimate and the most recent report saw a solid beat on the topline as well. The beats weren’t small ones as they came in for 50% positive earnings surprise, 200% positive earnings surprise and a 400% positive earnings surprise respectively.
I saw some big volume spikes on this stock on Friday, but somehow the stock didn’t really move on those spikes. I labeled that volume on the chart below with the number 1. Instead, the stock slowly climbed on Monday and Tuesday and continued to do so Wednesday morning.
The number2 on the chart shows a quick burst of volume on a somewhat thinly traded stock and that pushed the stock to a new 52 week high of $6.43.
The number 3 on the chart shows the stock moving to red after hitting that new high on relatively smaller volume. This marks the first time this stock traded below the break-even line over the last few days.
Wireless Solutions
PC Tel provides performance critical telecom solutions. It designs and develops software-based radios for wireless network optimization and other antenna solutions.
Estimates
The reason this stock has become a Zacks Rank #1 (Strong Buy) is due to the positive earnings estimate revisions that the stock has seen of late. The Zacks Consensus Estimate for 2017 stood at $0.08 since October of 2016 but recently jumped higher to $0.10.
The 2018 number also moved from $0.17 to $0.18. That one penny move may not seem like a lot but it implies earnings growth rate of 80%.
Sales have remained consistent over the last few quarters, consistently growing. The last four quarters have seen revenue growth from $21M to $24M to $25M to $27M in the most recently reported quarter. That consistent type of sequential revenue growth is just what you want to see.
Valuation
With a market cap of around $105M, we see that price to sales is right around 1.1x and that is well below the 3.7x industry average. The more conservative measure of price to book sports a 1.4x multiple which is well below the 2.4 industry average. Most investors, however, will point to the forward PE of 62x and how that compares to 19x for the industry average.
The idea of why this company trades at such a big multiple of earnings is that earnings are very small… for now. As the company grows more the multiple will come down to more reasonable levels.
Key Idea
In this "risk on" market some players made a sizeable bet on 3/24 as volume blistered to more than 140K shares on a stock that normally trades around 50K shares. The next two days saw volume over 100K as more accumulation was taking place. Today, the stock spiked to a new high but has since traded back lower giving investors willing to take a chance an excellent entry point.