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Nine Potential Breakout Stocks

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Alan Brochstein identifies nine stocks that may be close to breaking out of consolidation patterns
  • Stocks from the Russell 3000 index, with market cap > $500mm
  • 1 month price return >3% (better than the market – some momentum)
  • 3 month price return >8% (better than the market – some momentum)
  • 3 month price return <20% (let’s not chase)
  • 12 month price return > 0% (absolute momentum)
  • 12 month price return < 20% (let’s not chase)
  • 5 year price return > 0% (S&P 500 is down 12%, so this is a great LT momentum indicator)
  • Price < 2X 52 week low (let’s not chase)
  • Price within 10% of 52 week high (this is what we are trying to eclipse)
  • PE < 1.4X 10-year median PE ratio (low or fair valuation)
  • PE/LT Growth Rate < 1.4X (low or fair valuation)
  • 2012 EPS estimate change stable for past three months (positive fundamentals)
  • Cinemark (CNK):  The death of the movie theater has been greatly exaggerated – 3.5% dividend yield too
  • Disney (DIS):  While at an all-time high, the valuation appears quite reasonable with earnings projected to grow 15% or more over the next 18 months
  • Montpelier Re (MRH) looks like a value stock with its single-digit PE and a 0.8X Price to Tangible Book Value and it also yields 2.1%.
  • Travelers (TRV) is much better known and also yields a generous 2.9% while trading at 1.2X TBV, recently clearing an all-time high though trading just 3% above its year-ago price
  • Cooper Companies (COO), known mostly for its contact lenses but also has a women’s health business, is breaking out to an all-time high, with analysts forecasting double-digit growth over the next two years
  • PPG Industries (PPG), also trading near an all-time high despite some challenges in Europe that resulted in a large restructuring in Q1, offers a 2.3% dividend yield
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