One of the most difficult aspects of picking stocks riding the fast-money waves is to know when a particular stock is overextended, and therefore when it’s too late to jump on that wave, asserts Mark Skousen and Jim Woods, co-editors of Fast Money Alert.
In our Fast Money Alert service, we look at the charts to make sure our entry points are such that we aren’t “chasing” a stock higher. In condensed bull-market periods such as the one we’ve seen since the late-December sell-off, many fast-money fueled stocks have seen share-price spikes.
And while many of those stocks are overextended by any technical measure, there are some that continue to march higher even after very big gains.
One such stock is communications software app developer Twilio Inc. (TWLO). Shares of this leading company have been on a remarkable run over the past 12 months.
The stock is up some 212% during the period, easily vaulting it into the top 1% of all publicly traded stocks in terms of relative price strength in the past year.
Twilio’s software platform allows computer app developers to embed voice, text messaging and video into their products. So, if you’ve used any kind of app with these features, it’s a good bet that Twilio’s platform played a part.
Don’t believe us? Well, have you ever used apps such as Uber, Airbnb or OpenTable? If the answer is “yes,” then you’ve also used Twilio.
Technically speaking, TWLO shares have seen a rather steady rise despite that 212% run. Yes, there was some selling in late December; however, the selling was far less than most momentum-oriented stocks, and certainly far less than the major indices.
Interestingly, on Feb. 12, Twilio reported that its full-year 2019 profit outlook had missed expectations slightly. The company announced guidance that earnings per share (EPS) for the year would be in the range of 8 cents to 11 cents. Wall Street was expecting 16 cents per share.
Yet that guidance included a $2 billion acquisition of cloud-based email marketing platform company SendGrid. So, basically, Twilio used capital for the acquisition to help increase sales going forward.
The bottom line is that Wall Street barely blinked at the news, because analysts suspect the acquisition will mean even more revenue going forward — and likely more of the same when it comes to that robust share-price leadership of this fast money stalwart.
