#$sbac

5 Trade ideas excerpted from the detailed analysis and plan for premium subscribers:

Crown Castle, Ticker: $CCI

Crown Castle, $CCI, made a top in September and started to pull back. A small bounce found resistance at the end of the month and then it moved lower. Now it is back at that resistance with the RSI rising and bullish and the MACD turning up and positive. Look for a push over resistance to participate…..

R1 RCM, Ticker: $RCM

R1 RCM, $RCM, was a top 10 pick 2 weeks ago and had a false trigger. Now it is back at the trigger with the RSI rising and bullish and the MACD trying to turn up and positive. Look for a push over resistance to participate…..

SBA Communications, Ticker: $SBAC

SBA Communications, $SBAC, had a long run end with a top in September. it pulled back from there to find support at the 200 day SMA and is now moving higher. As it meets resistance the RSI is rising and bullish with the MACD positive and moving up. Look for a push over resistance to participate…..

Skyline Champion, Ticker: $SKY

Skyline Champion, $SKY, has been trending higher since making a bottom December 2018. Since May it has risen along trend support and is lifting off of that now. The RSI is rising and bullish with the MACD turning up and positive. Look for continuation to participate…..

TerraForm Power, Ticker: $TERP

TerraForm Power, $TERP, also rose from a December 2018 low. It peaked in September and pulled back, finding support at the 200 day SMA. It is now moving up to resistance with the RSI rising in the bullish zone and the MACD crossed up and moving higher. Look for a push over resistance to participate…..

After reviewing over 1,000 charts, I have found some good setups for the week.  These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which saw with the first full week of the New Year in the books, equity markets ranging from being a bit extended to digesting the move in a pullback.

Elsewhere look for Gold to pause in its uptrend while Crude Oil pulls back in consolidation. The US Dollar Index continues in a short term decline while US Treasuries pause in their downtrend. The Shanghai Composite looks to pause in its move higher while Emerging Markets continue to drive higher.

Top 10: Positive Scores Highest likelihood of a positive pre or post earnings drift today — Tuesday, February 22, 2017

Rank Company Earnings Report Estimize Signal Score Score (-100 to 100) & Period 1 OME Omega Protein Corp Wed, Mar 1 99.08 pre 2 BUFF Blue Buffalo Pet Products Tue, Feb 28 99.08 pre 3 CQP Cheniere Energy Partners Wed, Mar 1 98.38 pre 4 PAH Platf Spec Prod Rg Tue, Feb 28 98.28 pre 5 INGN Inogen Inc Tue, Feb 28 98.16 pre 6 MNTA Momenta Pharmaceuticals Tue, Feb 21 98.15 post 7 REGI Renewable Energy Group Tue, Mar 7 98.00 pre 8 SSTK Shutterstock Mon, Feb 27 97.95 pre 9 MITL Mitel Networks Corp Thu, Feb 23 97.95 pre 10 GWRE Guidewire Software Fri, Mar 3 97.95 pre

These are the top 10 stocks with the strongest positive signal scores today, suggesting they have the highest likelihood of a positive pre or post earnings drift. The Signal is best utilized in a dollar neutral portfolio consisting of the top and bottom decile of scores. Use it in your portfolio by rebalancing daily at the open using the new score delivered daily at 8am. Contact us to get set up »

IMPORTANT: Do not use the Signal as a buy/sell signal for individual stocks over the course of X (e.g. 2, 5, 10, 14) days.

Bottom 10: Negative Scores Highest likelihood of a negative pre or post earnings drift today — Tuesday, February 22, 2017

Rank Company Earnings Report Estimize Signal Score Score (-100 to 100) & Period 1 CEQP Crestwood Equity Partners LP Tue, Feb 21 -99.73 post 2 AVD American Vanguard Corp. Tue, Feb 28 -99.47 pre 3 RIGL Rigel Pharmaceuticals Tue, Mar 7 -99.38 pre 4 ABCO The Advisory Board Company Tue, Feb 28 -99.04 pre 5 NX Quanex Building Products Mon, Mar 6 -98.92 pre 6 CCO Clear Channel Outdoor Holdings Thu, Feb 23 -98.81 pre 7 ATSG Air Transport Services Group Tue, Mar 7 -98.78 pre 8 SUP Superior Industries International Thu, Mar 2 -98.43 pre 9 SBAC SBA Communications Mon, Feb 27 -97.38 pre 10 DCI Donaldson Company Wed, Mar 1 -97.07 pre

These are the bottom 10 stocks with the strongest negative signal scores today, suggesting they have the highest likelihood of a negative pre or post earnings drift. The Signal is best utilized in a dollar neutral portfolio consisting of the top and bottom decile of scores. Use it in your portfolio by rebalancing daily at the open using the new score delivered daily at 8am. Contact us to get set up »

IMPORTANT: Do not use the Signal as a buy/sell signal for individual stocks over the course of X (e.g. 2, 5, 10, 14) days.

WANT TO GET THE SIGNAL FOR THE STOCKS YOU CARE ABOUT?

Email us to learn how you can generate alpha with the Estimize Signal »

A Glimpse at the Signal's Power

Here is a quick demonstration of the Signal's predictive power as a stock selection signal in isolation over the last 5 years.

Time Period Return Sharpe Ratio 2012 26.0% 1.85 2013 20.5% 1.75 2014 17.7% 1.57 2015 37.7% 2.75 2016 (thru Sept) 10.9% 0.70 2012 - 3Q2016 (annualized) 23.1% 1.75

We measure a company’s financial strength using four individual factors: External Financing; Debt-to-cash flow; Debt-to-equity and 1-year change in debt. We equally-weight the four factors to create our Financial Strength Composite and rank all of the stocks in the universe from 1 to 100, with 1 being the stocks with the best financial strength and 100 being those with the worst financial strength.  Companies that have to rely on external financing instead of internal cash flow or pile on debt are generally a bad investment.

While the results are not nearly as dramatic as the ones we see from our value composite, (see my last post) they still show that investments in the stocks with the worst financial strength are a lousy investment. Had you consistently bet on the 25 stocks from our Large Stocks Universe (currently stocks with market cap’s greater than $7.5 billion) for the 50 years ending 2013, your $10,000 investment—adjusted for inflation—would have grown to just $38, 635, an average annual compound return of just 2.74%. Compared to the $200,600 you’d have had by investing in all large stocks, you can see just how destructive investing in financially weak stocks can be to your portfolio.

Interestingly, the most financially conservative stocks are not the best investment—indeed, the data shows that companies that sensibly use debt are the best bet. $10,000 invested in decile 3 of Large Stocks based on financial strength grew to $406, 891, more than double an investment in the Large Stocks Universe.  

So the lesson from the last 50 years is simple and straight forward—avoid the 30% of stocks that score the weakest on financial strength.

  Naming Names

So which stocks are currently among the most financially weak? I hate to beat up on Tesla ($TSLA) because I love the cars, but it in addition to being one of most expensive stocks in the Large Stocks Universe, it also scores a perfect 100 on our Financial Strength Composite, making it one of the most expensive and financially weak stocks in the large Stocks Universe. Other stocks that are in the worst 10% of large stocks based upon our Financial Strength Composite are SNC-Lavalin Group ($SNCAF): Constellation Brands ($STZ); SBA Communications ($SBAC); FMC Corporation ($FMC); Nomura Holdings ($NMR) and State Street Corp. ($STT). History shows that names like these are best avoided.