Looking for some high momentum that just might take you higher on Monday? Check out Kemet (KEM) (January 19, 2018)KEM
I want to look at Kemet ( NYSE: KEM ) today. This is a company, it is in the electronic parts industry, sector, whatever you want to call it. Electrolytic capacitors for electronic OEMs, etcetera, so it is pretty complicated stuff but the chart is actually pretty easy.
First, if you look at the fundamentals here they have got a great earnings profile and revenue profile. We will go through the sales first. Over the last four quarters, comparing those sales, those revenues, to the same quarter in the prior year, we have a growth of 6 percent, then 7 percent, then 48 percent, and then the most recent one, 61 percent. So this company, in revenues, is not just growing but it is accelerating growth.
Now, on the earnings front, the same idea, 175 percent, 250 percent, 450 percent. Oh, sadly, this most recent quarter, 250 percent; sorry. So this is a really, really strong company fundamental. IBD, their earnings rating is up right at the top; 99 percent (I think there is no 100 percentile). It has got a really, really strong chart. Really strong relative strength and growth rate over 3-5 years, not surprising, about 97 percent, so fundamentally this is strong.
So why am I pointing this out to you because this stock just absolutely got smashed here? Okay, that was in November. Now we are up for the next earnings, when? On February 1st, so in a couple weeks. The way this stock has been trading, it has been kind of trading around in this channel, only the last couple days it has been on increasing volume. Let’s zoom in and take a look at this. If we didn’t know that the stock had done this a few months ago this would look like just an awesome breakout.
Well, I think it IS an awesome breakout because we can have a price target. The way this thing is trading, with this volume shooting up like this, frankly my price target on this would be like $25.00. If you say, “Well how do you justify that?” I don’t. I just looked at where it is here; I am looking at the way this is trading. IF it blasts through $20.00 then I think that the buyers are going to be coming for this stock and pushing it a lot higher.
Remember, great fundamentals; volume coming in here, over 4 million shares traded so this is institutional buying; I think you can be buying it too. I would just buy it and hang on. Keep a 5 percent stop on it, something like that, to make sure that you are not giving up too much money if I am wrong. I think this is a trade that will work.