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 It seems some Internet stocks that were high flyers years ago are back from the dead.
Take the case of Monster Worldwide Inc. (MNST), which runs a big job website at www.monster.com. This baby fed on the Internet craze, and the stock grew in price from $6 back in 1997 to $94 by March of 2000 -- the top in the prior bull market. The company had a lot going for it: A strong economy with a vibrant job market and growing earnings that the market was willing to pay up.
However, for investors back in those days, the dream turned into a nightmare as Monster’s stock appeared to die. The stock -- like many in the Internet sector -- fell precipitously. In the case of Monster, it fell from a high of $94 to a low of $8 by February 2003.
History has shown many times that the big winners in a prior bull market don’t come back in the next. It appears that is not the case with Monster. It has come back to life, climbing to $31, a 288% surge from its low in February 2003.
Many issues in the staffing sector are doing well. As of mid-December, Robert Half International Inc. (RHI) is up 125% from its March 2003 low, Labor Ready Inc. (LRW) 220%, Adminstaff Inc. (ASF) 120% and Korn / Ferry International Inc. (KFY) 225%. The reason: A rebounding economy and more demand for jobs and recruitment services.
Is there more to go in 2005?
From the look of the pattern of the economy’s expansion, the answer should be "yes." Technically, Monster’s stock muscled its way through upside resistance at $30 on December 15. It was an important move because that wall had stood for 15 months. (See the accompanying chart.)
There are five important factors eSignal subscribers should always take into consideration before buying a stock. They are:
- The trend of the General Market
- The trend of the stock’s industry group
- The company’s earnings
- The individual stock’s price trend
- The tape action of the stock
Currently, the stock market is in a bull market. It began in March 2003. The Dow worked higher strongly that year. In 2004, the bull market rested, but the trend still remained up overall. Monster’s industry group is a leading sector. Monster’s earnings will be strong too. The New York-based operator of the monster.com job search website is expected to rack up a 50% increase in earnings for 2004 to 60 cents a share from 40 cents a year ago.
When we look out to 2005, we see that profits are expected to climb 41% to 85 cents a share. The stock sells with a 35 price-earnings ratio based on 2005 net. That is reasonable. Annual revenues are approximately $700 million. Monster's stock is in an up trend. Finally, Monster’s tape action is very strong. A trick that eSignal subscribers can use is to look at a stock’s time and sales report going back several days, especially on a pivotal day, such as Monster’s breakout move on December 14.
eSignal does a great job of providing this important data and even has filters, so one can take a good look at big block trades. What you want to look for are the large blocks to see if they are crossing at a higher price than the prior trade. The idea is to see if there is institutional buying and if it is aggressive (meaning that they are willing to pay up sharply for the stock).
A look at the clip of the tape from Monster’s trading on December 14 shows a big block of 200,000 shares crossing at $30 at 9:43 a.m. That came on an "up tick" from the prior trade of 700 shares at $29.81. What it says is that someone wants a lot of the stock and is willing to pay up.
So, Monster has it all going for it and prospects to move higher in coming months, provided the economy continues on a favorable course.
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