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Bull of the Day: Comtech (CMTL)

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The hardest thing to do after a session like we saw yesterday is pick a Bull of the Day. With the major market averages all breaking down below or near the 200-day moving average, it’s a very precarious situation. I stick to my guns during periods like this and that means leaning on earnings. Earnings trends take long to develop and reverse. The exact opposite is true of prices when can change on a whim. Finding divergence between strong earnings trends and a weak share price is a great way to find winners in the stock market. At least if you are patient enough to wait it out.

Today’s Bull of the Day is one such stock, Comtech Telecommunications (CMTL - Free Report) . Comtech Telecommunications Corp. designs, develops, produces, and markets products, systems, and services for communications solutions. The company's Commercial Solutions segment offers ground-based equipment, including single channel per carrier modems and solid-state amplifiers that facilitate the transmission of voice, video, and data over satellite links; and traveling wave tube amplifiers, such as high power narrow-band amplifiers used to amplify signals from satellite earth stations, as well as safety and security technologies.

The stock is currently a Zacks Rank #1 (Strong Buy). The reason for the positive rank is the string of recent positive earnings estimate revisions for the current year. Over the last thirty days, four analysts have increased their estimates for the current year. The bullish sentiment has pushed up its Zacks Consensus Estimate from 76 cents to 96 cents for the current year. That’s a jump of over 26% and the major reason for the bullish rank.

It’s been enough to help CMTL rally from under $24 in March of this year to over $36 following its last earnings report. Since then, shares have dipped a bit, coming down close to the 200-day moving average. That 200-day sits down at $30.24 while the stock closed at $32.09, down 2.85% during Thursday’s selloff.

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