The Techno-Fundamental Edge

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Company Name	Symbol	%Change
SONIC FOUNDR	SOFO	4.40%
SUPPORTCOM I	SPRT	3.75%
UNISYS CORP	UIS	3.31%
SHORETEL INC	SHOR	3.22%
GREEN MOUNTA	GMCR	3.13%

Company Name

Symbol

%Change

4.40%

3.75%

3.31%

3.22%

3.13%

Zacks Rank	Definition	Annualized Return
#1	Strong Buy	26.6%
#2	Buy	18.71%
#3	Hold	10.12%
#4	Sell	4.32%
#5	Strong Sell	2.16%
S&P	500	9.93%

Cook`s Kitchen

by Kevin Cook

October 31, 2011 | Comments : 0 Recommended this article: (0)

MRK LULU CMI BIDU ABT

When you actively trade stocks, you want to have an "edge" that gives you extra confidence in your ideas. For many self-directed investors, this involves combining pieces of vital information into a composite picture of the stock.

One of the most common, big-picture combinations is what I call "techno-fundamental," where a buying rationale is established based both on company business attributes and the stock's price chart. And the more reasons from both the fundamental and the technical camps the better.

Here's how a recent list stacked up for me when I looked at Abbott Labs (ABT - Analyst Report):

Fundamental

Stable pharma company with large device/diagnostic business

11x forward P/E with 3.5% dividend yield

Announces split into 2 companies to unlock value: R&D pharma and medical products

Medical products division, which includes generics, devices, diagnostics, and nutritional segments will generate 40% of sales from high-growth emerging markets

Technical

ABT was already on my watch list to buy on dips to $45-47 for the past year simply to trade the range on a solid, sleepy blue-chip between $46 and $53

Price break-out above $54 to 18-month highs on company split news

Price action above $54 since news very positive (not just a reaction, confirms Wall Street is positive on company move to unlock value)

These factors may not be enough to make you rush out and buy Abbott now, but at least one big pharma name might have a place in your portfolio.

Consider Merck (MRK - Analyst Report) with a sub-10 forward multiple, a 4.3% yield, insider buying, and a breakout above a base below $33.

And here are some other "techno-fundamental" profiles I've done recently that proved very profitable, with names like Baidu (BIDU - Snapshot Report), Onyx Pharmaceuticals (ONXX), Cummins (CMI - Analyst Report) and Lululemon Athletica (LULU - Snapshot Report) attracting strong buying interest in October...