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MOMENTUM


Two New Fliers To Watch

06/10/14 03:43:37 PM
by Matt Blackman

In every market, there are almost always new strong stock performers rising through the ranks. Here are two worth watching.

Security:   CXDC, HCLP
Position:   N/A

One scan I perform regularly is called "New Fliers" that looks for stocks with relatively small market caps, with a low number of shares in the float and low institutional ownership that are also experiencing momentum growth. These are the stocks that could eventually be the next Google, Netflix or Tesla. Last week, eleven stocks came up in the search, but two were clear winners, exhibiting a powerful combination of revenue growth and impressive stock performance.

Figure 1 Daily chart of China XD Plastics (CXDC) showing the parabolic growth in the stock prices over the last two months.
Graphic provided by: TC2000.com.
 
The stock with the best daily performance was China XD Plastics Company Ltd.(CXDC), a specialty chemical company that manufactures polymer automotive plastics. It reported Q1-2014 revenues of $223.6 million with gross profits of $46.6 million, up 59.6% from Q1-2013. As you see from Figure 1, not only have revenues been growing nicely, so have earnings with the latest data showing an earnings per share (EPS) growth rate of 76% with the stock price more than doubling since April. CXDC began trading on US markets December 2009 after which the stock fell off a cliff. It has clearly regained its former favor with investors.

Figure 2 Weekly chart of China XD Plastics from when it began trading on US exchanges.
Graphic provided by: TC2000.com.
 
Our next new flier is Hi-Crush Partners (HCLP), a basic mineral supplier for the extraction of natural gas and oil. According to its Q1-2014 financial report, the company reported net income of $14.3 million ($0.49 per share) on revenues of $55.8 million for the first quarter. Figure 2, the weekly chart of the stock from late 2012, shows the impressive growth rate of the stock from a low of around $15 to its recent high just below $53.

Figure 3 Weekly chart of Hi-Crush Partners.
Graphic provided by: TC2000.com.
 
Both stocks are well into overbought territory according to their RSI (seven-period) readings so now is probably not the best time to buy. But if both prove that they can weather their coming corrections and resume their up-trends, they could well be big winners in the coming weeks and months.



Matt Blackman

Matt Blackman is a full-time technical and financial writer and trader. He produces corporate and financial newsletters, and assists clients in getting published in the mainstream media. He is the host of TradeSystemGuru.com. Matt has earned the Chartered Market Technician (CMT) designation. Find out what stocks and futures Matt is watching on Twitter at www.twitter.com/RatioTrade

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