What do you look for in a stock? Good uptrend, strong growth, and a good entry. Check out Dycom (DY) (October 02, 2015)
I want to look at Dycom Industries ( NYSE:DY ). This is in the Industrial sector, an engineering and construction company. The reason I like it is, for one thing, it’s in an uptrend. Another thing, it’s an IBD 50 stock so the fundamentals necessarily require strong sales and revenue growth, that’s just the way those stocks are. What you like to see on stocks of companies that have consistent revenue growth and earnings growth, is an uptrend; that’s the first thing. Nice uptrend. Then we want identifiable highs and lows. Here’s a low, not so much, here’s a low, so we draw this thing out. We look at the 50-day moving average, which has kind of supported the thing.
The next thing we look at is, not when it’s up here, we look for it to be pulling back to support, in this case the 50-day moving average. Not just that, but we look for that, a bounce, an indication that the stock is still being bought on pullbacks, and we would keep a stop right under there, right around $69.00 or so. Now we move forward, and the stock is still working. By the way, you don’t keep stops THAT tight. But the point is, when a stock gets down to a key level of support, don’t look for it to be pinpoint accurate in bouncing off of a support level, in this case the 50-day moving average. Don’t look for that kind of pinpoint accuracy, because it virtually never happens, and when it does it’s a total coincidence.
It’s a volatile market so you’re going to get kind of repeated intraday tests of support, in this case. But I’m looking at Dycom ( NYSE:DY ) and I think that this stock is a buy. As long as the stock stays really (I’ll say it now) above Thursday’s intraday low. If it doesn’t stay above Thursday’s intraday low, then I don’t really want to be owning this right now. But so far I think this is a strong company, strong stock, strong fundamentals, good low-risk pullback. What’s not to like?
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