Money
& Investing 
How to Get “Lucky” in the Stock Market -- Just “Stack the Deck” in Your Favor
The old line that luck is when preparation meets opportunity is often true when it comes to the stock market.
Investors who take the time to study, analyze and watch the market will often be rewarded. The average investor today has a wonderful arsenal of tools to gather fundamental and technical information, thanks to the Internet and services such as eSignal and those offered by its partners.
Best of all, commission rates are extremely low when compared to years ago. So, you have great flexibility to move in and out of positions quickly.
One of the best high-percentage investment plays is when a stock fits many bullish investment criteria all at the same time. As comedian Jackie Gleason used to say, “How sweet it is!”
The idea is to go through a checklist and see how many bullish parameters a stock has going for it. You might check for the following:
- Strong earnings outlook
- Strong historical earnings
- Strength in industry group
- Something new working
- Domination of competition
- Stock trending higher
- Pulling out of consolidation pattern
- Acting well on the tape
- Top institutions holding the stock
- Bullish stock market
Obviously, your list could go on and on. You also want to collect the negatives on a stock, too, just to be safe. The point is that, often, when you “stack up” a lot of bullish parameters, there's a good chance that a “little luck” may come your way, too.
Such was the case with several stocks recently.
One of them was Robbins & Myers Inc. (RBN). The company, based in Dayton, OH, makes pumps, mixers and valves used by the petroleum, wastewater-treatment, papermaking and chemical industries. The firm has annual sales of 672 million dollars.
The stock is not a household name. However, from early 2006 to late 2007, the stock climbed from 20 to 60. There, it set up a three-month base. On October 15, RBN pushed out of the base on expanding volume gaining 1.39 to 60.47. The day before, it was up 4 points.
Then, on October 16, the “lucky holders” got a pleasant surprise -- the stock soared 11.05 points to 72.14 gapping higher in the morning. The company reported a big upside surprise for third-quarter earnings. The Street was looking for a 31 percent rise in net, to 84 cents a share from 64 cents a year ago.
Instead, RBN posted a 64 percent surge in profits to 1.05 a share. The net topped the highest estimate on The Street of 85 cents a share. That kind of earnings surprise is often a powerful driver that sends a stock higher. Of course, a good tape watcher could have picked up on the potential good news because the stock was moving higher two days prior to the earnings report.
Apple Inc. (AAPL), a high-tech leader, dished out a pre-Halloween treat to the lucky little devils who owned it on October 23.
Apple posted a big 63 percent increase in net for the fiscal fourth quarter ended September 30. Net was 1.01 a share, up from 62 cents a year ago. The 1.01 topped the consensus Street estimate of 84 cents. Apple cited strong sales of its iPhone and Mac computers.
The stock responded by leaping 11.80 to 186.16 on the earnings report. The stock had been trending higher and acting strong. Analysts lifted their price targets on Apple to the 225 area.
Research in Motion Inc. (RIMM) was another “lucky play” for investors going with a leader with a hot product. Research in Motion’s flagship product is the BlackBerry device used for mobile communications. The stock has made a sensational five-fold move in the past two years.
Research in Motion leapt 11.15 to 124.53 on October 23 after it disclosed that it will begin selling its BlackBerry smart phones in China this year. Analysts said that if Research in Motion captured just 1 percent of the market in China, it would be extremely beneficial to the company.
For this fiscal year ending February 2008, The Street is projecting a 92 percent spurt in Research in Motion’s profits to 2.13 a share, up from 1.11 a year ago. Next fiscal year, they predict a 46 percent gain in net to 3.12 a share.
The old adage, good things happen to good stocks, is often true.
However, investors always need to be alert, especially, when the “roach theory” kicks in. That states that, if there is one piece of bad news, there is often more to come. So, it is often wise to exit a stock when it acts badly.
Mr. Fasciocco’s is publisher of Ticker Tape Digest at www.tickertapedigest.com. He is a contributing writer for several national publications. To get a free trial subscription to the Ticker Tape Digest Pro Report, which comes out daily with a stock market video show, go to: www.tickertapedigest and insert username: freetrial and password: stocks. Mr. Fasciocco can be reached at: leo2@tickertapedigest.com.
