Avalara (AVLR) Moves To Hold
Since reporting earnings earlier this week shares of Avalara (AVLR) have retreated modestly, despite a solid quarter. As I’ve flipped through dozens of charts over the last two days I’ve been struck by the diverging performance of earnings winners. Some that had good numbers, like Avalara, just didn’t get enough of a pop to punch through overhead resistance while others blasted through. It may have to do with so many new stocks to choose from (thanks to IPOs and SPACs) that investors are being less patient with good but not amazing earnings reports and more attracted to the next shiny thing. I may easily be wrong, but I can foresee a scenario where many of companies with “good” earnings reports see their stocks move sideways in established trading ranges for several weeks or months. That group could include Avalara. If that’s the case, investors are better off trying to buy on weakness near the bottom of the range rather than near the top. Alternatively, if AVLR punches above resistance that could also be an attractive time to buy to catch the next updraft. I may easily be overthinking this (it’s only been two down days and AVLR is a mere 8% below its all-time high), but I wanted to share my thought process anyway as you try to decide where to direct each new dollar invested. In summary, I like Avalara a lot and think the growth trend is very much intact and that the longer-term trend will be up. I’m just a little wary that there’s not enough momentum right now to get the stock to move significantly higher in the coming weeks. Therefore, I’m moving to hold. HOLD