Relative Strength Favorites

06/10/2005 12:00 am EST


Jim Collins

Chairman and CEO, Insight Capital Research & Management, Inc.

Jim Collins uses a proprietary screening system to isolate stocks showing the strongest momentum based on many technical and fundamental variables. One important component is relative strength, and his latest two buys rank 97 out of a possible 100.

"In general, when earnings rise, stock prices rise. This has not been the case in 2005. Instead, prices for most stocks have declined even while earnings have increased. This has left p/e valuations considerably lower than at the start of the year. Overall, the risk-to-reward ratio is now tilting solidly in favor of stock investors. The long-term outlook for stocks calls for substantially increased earnings against the backdrop of a solidly expanding economy. As such, in our opinion, investors that exploit any short-term downside market fluctuations should reap the rewards by this time next year. Meanwhile, the following two featured stocks were recently chosen for their potential for more aggressive traders.

"Immucor (BLUD NASDAQ) develops and sells a complete line of reagents and automated systems used primarily by hospitals, clinical labs, and blood banks to test, detect, and identify certain properties of the cell and serum components of human blood. Most of its tests are performed prior to blood transfusions. Its latest instrument is the Galileo, a system that provides hospitals and blood donor centers a fully automated solution to perform all the routine blood bank tests, processing up to 224 different samples at once. For the quarter ended February, Immucor reported net income of $0.14 per share compared to $0.04 in the prior year. Revenues increased 36% to $38 million. The shares have a relative strength rating of 97.

"Centennial Communications (CYCL NASDAQ) is a regional wireless and broadband telecom provider serving over one million customers in rural US and the Caribbean including Puerto Rico, the Dominican Republic, and the Virgin Islands. The US region is slower growing and more mature; subscriber growth has trended in the 3% to 4% range. For the Caribbean, growth is much greater. The subscriber base has grown in the 20% range for the past two years and growth should continue to be good as these countries are relatively under-penetrated. For the quarter ended February, the firm reported earnings of $0.04 per share, up from a loss of $0.29 last year. Revenues increased 7% to $222 million. On a year-over-year comparison, the subscriber base grew 16.4%. The stock receives a A- rating for accumulation and distribution as well as a relative strength ranking of 97."

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