Near-Term Wobbles
Current Market Outlook
As we’ve been writing for many weeks, most of the primary evidence (trends of the major indexes, action of leading stocks) remains in the plus column, as do some key secondary pieces of evidence (blastoff indicators, number of new lows, etc.), so we’re sticking with a bullish stance. But the near-term should be interesting—the continuing dichotomy in the market means most indexes aren’t far from their 50-day lines, and we’ve started to see more up-down-up-down action, which, after a big, prolonged (13-plus weeks) upmove, tells you that the bulls and bears are beginning to fight it out. None of this is a reason to anticipate something sinister—again, most of the evidence is still positive—but it’s prudent to pick your spots on the buy side and have some stops in place in case the sellers make a stand and/or another bout of rotation takes hold (we started to see that today). We’re nudging our Market Monitor down to a level 7.
This week’s list has something for everyone, with stocks of all stripes making the cut. Our Top Pick is Etsy (ETSY), which has come alive after a year-long rest. Try to buy on dips.
| Stock Name | Price | ||
|---|---|---|---|
| Crispr Therapeutics (CRSP) | 84.11 | ||
| Etsy (ETSY) | 112.97 | ||
| Farfetch (FTCH) | 26.23 | ||
| GenMark Diagnostics (GNMK) | 15.47 | ||
| HubSpot (HUBS) | 582.89 | ||
| Inphi (IPHI) | 120.16 | ||
| Invitae (NVTA) | 32.06 | ||
| Meritage Homes (MTH) | 102.20 | ||
| Plug Power (PLUG) | 8.35 | ||
| STAAR Surgical (STAA) | 57.94 |
Crispr Therapeutics (CRSP)
Why the Strength
While most biotech companies develop medicine to treat symptoms, CRISPR employs “molecular scissors” to fix problems on the genetic level. The company uses a unique gene editing technology (dubbed CRISPR/Cas9) for creating therapies to attack cancer cells and treat other diseases. Its platform identifies DNA anomalies, then employs the protein Cas9 to remove the gene sequence problem and replace it. Its pipeline boasts five clinical stage programs, including cell therapy trials for beta thalassemia and sickle cell disease (CTX001), multiple myeloma (CTX120) and solid tumors and hematologic malignancies (CTX130), as well as research-stage cell replacement therapy for Type 1 diabetes and in vivo approaches for treating cystic fibrosis, myotonic dystrophy and muscular dystrophy. While it doesn’t yet have a commercial product, pre-clinical data suggests that CTX130, which uses CAR T-cell technology to modify a patient’s immune system, is potent in fighting hematologic and solid tumors; it also recently announced progress in the CTX001 development program. It has a partnership with Vertex Pharmaceuticals that’s already led to a milestone payment that boosted CRISPR’s cash position to $900 million, with the potential for an additional $800 million down the road. The cutting-edge platform is faster than previous gene-splicing techniques, and should any of its trials be approved, the market would be immense. It’s speculative, but there’s no doubt the potential is big.
Technical Analysis
Like most development stage biotechs, CRSP has been all over the map in recent years, but it looks to be breaking out of a two-year consolidation. The stock had a huge run late last year, but ended up giving it all back during the crash … before rallying right back during the past three months. All of that volatility, though, ended up forming a solid base, with a breakout above resistance near 70 last week and then out to all-time highs north of 74. If you’re game, you could take a stab at CRSP here or on dips.
| Market Cap | $4.68B | EPS $ Annual (Dec) | |
| Forward P/E | N/A | FY 2018 | -3.44 |
| Current P/E | N/A | FY 2019 | 1.17 |
| Annual Revenue | $289M | FY 2020e | -4.60 |
| Profit Margin | N/A | FY 2021e | -5.23 |
| Qtrly Rev | Qtrly Rev Growth | Qtrly EPS | Qtrly EPS Growth | |
| ($M) | (vs. yr-ago-qtr) | ($) | (vs.yr-ago-qtr) | |
| Latest qtr | N/M | N/M | -1.15 | N/A |
| One qtr ago | 77 | N/M | 0.51 | N/A |
| Two qtrs ago | 212 | N/M | 2.40 | N/A |
| Three qtrs ago | N/M | N/M | -1.01 | N/A |
CRSP Weekly Chart
CRSP Daily Chart
Etsy (ETSY)
Why the Strength
Etsy is basically the Amazon of unique handcrafted and differentiated goods from creative entrepreneurs all over the world. The company’s platform is all about these types of goods, which gives it a leg up on the competition and has put it far in the lead thanks to the network effect—as it attracts more sellers (2.8 million sellers at the end of March, up 26% from a year ago, listing 66 million items), it also attracts more buyers (47.7 million, up 16%), which in turn attracts more sellers and so on. Beyond that, though, are the firm’s own efforts for improving the site: Whether that’s improved marketing tools for sellers, broadening product selection to cover as many holidays/events as possible or national TV ad campaigns, Etsy has been plowing money back into the business to capture what it believes is a $100 billion-plus opportunity in terms of goods sold. (Etsy think it has about 5% of that market, with more potential as product selection continues to grow.) Ironically, it was partially the firm’s heavy investments that crimped the stock starting in early 2019; while key metrics like revenue growth (30%-plus for many quarters) and gross merchandise volume (up 32% in Q1) have been great, earnings and EBITDA (up just 10% in Q1) have been constrained by the spending. However, the spending upcycle looks likely to relax at some point, and when you add in a massive boost to business from the shut-in, it has big investors clicking the buy button—Etsy sees Q2 revenue up 80% and gross merchandise volume up 90%, and that actually assumes a slowdown after what was a torrid pace of growth in April. Some think the boost to business could be a one-time thing, but the market is clearly discounting a more bullish scenario.
Technical Analysis
ETSY had a huge run from its breakout in early 2018 (near 22) to a high of 73 in early 2019 before eroding for the next year; at the crash lows, the stock had fallen all the way back to 30. But the action since then has been extremely bullish, with an eight-week snapback that took the stock to its old highs, a collected four-week rest as the 10-week line caught up and most recently a renewed push to all-time highs. You can pick up some shares here or (preferably) on dips.
| Market Cap | $12.2B | EPS $ Annual (Dec) | |
| Forward P/E | 110 | FY 2018 | 0.61 |
| Current P/E | 166 | FY 2019 | 0.76 |
| Annual Revenue | $877M | FY 2020e | 0.92 |
| Profit Margin | 5.5% | FY 2021e | 1.33 |
| Qtrly Rev | Qtrly Rev Growth | Qtrly EPS | Qtrly EPS Growth | |
| ($M) | (vs. yr-ago-qtr) | ($) | (vs.yr-ago-qtr) | |
| Latest qtr | 228 | 35% | 0.10 | -58% |
| One qtr ago | 270 | 35% | 0.25 | -22% |
| Two qtrs ago | 198 | 32% | 0.12 | -20% |
| Three qtrs ago | 181 | 37% | 0.14 | 367% |
ETSY Weekly Chart
ETSY Daily Chart
Farfetch (FTCH)
Why the Strength
While the global pandemic decimated several major clothing retailers, online luxury fashion retailer Farfetch grew during the shut-in thanks to its digital sales channels. Online sales of luxury goods are its specialty, with products from over 700 global boutiques and brands across 190 countries; the firm sees itself as the only good-sized luxury digital marketplace ($1.9 billion of gross merchandise volume sold on its marketplace last year, with 2.1 million active buyers). Believe it or not, luxury fashion tends to be resilient during economic downturns, and management expects its market share to increase as customers transition to more online shopping. China is also a big part of its growth plans (Chinese buyers made up 35% of luxury consumption in 2019) and the firm’s expertise in local operations will help. Overall, Farfetch’s platform allows its partners to do everything from managing marketing and their product catalogue to receiving payments, fulfillment and customer service, while also getting help for distribution and brand management. Its leadership in this field was evident in Q1, as revenue rose 90% and gross merchandise value (GMV) grew 46% to $495 million, with digital sales growing each month of Q1 (including during early lockdowns). New customer GMV increased faster than existing customers for the first time in three years, with active customers up 27% across its marketplace and online visits up 45%. As with many e-commerce plays, the top brass sees the good times continuing, recently guiding Q2 GMV to rise 25% to 30%, while analysts expect revenues to rise north of 30% both this year and next. It’s a good story.
Technical Analysis
FTCH came public in September in 2018 and proceeded to slip and slide all the way to this year’s March low. But the switch was then flipped—shares bolted ahead five straight weeks off the low (including one on huge buying volume), and after a modest three-week retreat, FTCH has been perking up since early June, including last Thursday’s big-volume push to new highs. Expect volatility, but we’re OK grabbing a position here.
| Market Cap | $5.99B | EPS $ Annual (Dec) | |
| Forward P/E | N/A | FY 2018 | -0.52 |
| Current P/E | N/A | FY 2019 | -0.55 |
| Annual Revenue | $1.18B | FY 2020e | -1.10 |
| Profit Margin | N/A | FY 2021e | -0.83 |
| Qtrly Rev | Qtrly Rev Growth | Qtrly EPS | Qtrly EPS Growth | |
| ($M) | (vs. yr-ago-qtr) | ($) | (vs.yr-ago-qtr) | |
| Latest qtr | 331 | 90% | -0.24 | N/A |
| One qtr ago | 382 | 95% | -0.08 | N/A |
| Two qtrs ago | 256 | 90% | -0.20 | N/A |
| Three qtrs ago | 209 | 43% | -0.16 | N/A |
FTCH Weekly Chart
FTCH Daily Chart
GenMark Diagnostics (GNMK)
Why the Strength
GenMark is one of the “have’s” in the COVID-19 world, with business picking up steam in large part due to the virus. GenMark is a testing company: Its proprietary eSensor detection technology (dubbed eSensor XT-8) and ePlex systems are designed to support a broad range of molecular diagnostic tests with compact, easy-to-use workstations and self-contained, disposable test cartridges. And its ePlex offering optimizes laboratory efficiencies and addresses a broad range of infectious disease testing needs. And that’s where COVID comes in. Its ePlex SARS CoV-2 Test, an in-vitro diagnostic (IVD), has been made available under an emergency access mechanism by the Secretary of Health and Human Service for COVID testing. While not yet approved by the FDA, the authorization says “it is reasonable to believe that this IVD may be effective in the detection of COVID-19.” Vidant Health, the largest health system in eastern North Carolina (a recent hotspot), has just signed on to use GenMark’s ePlex SARS-CoV-2 test in all nine of its hospitals. This test is what has investors excited, and analysts forecast revenue growth of 43% this year (albeit with continuing red ink), though based on how demand for testing is only growing in the U.S. as states try to reopen, it’s certainly possible even that growth figure could prove conservative.
Technical Analysis
GNMK was a low-priced dog for a while but began to find support, ironically, just ahead of the market’s March lows. It exploded to multi-year highs in April, pulled back sharply (but normally) to its 50-day line and has since got another lift. This is a more thinly traded stock, so sharp moves are likely; we think aiming for dips to enter makes sense.
| Market Cap | $978M | EPS $ Annual (Dec) | |
| Forward P/E | N/A | FY 2018 | -0.91 |
| Current P/E | N/A | FY 2019 | -0.82 |
| Annual Revenue | $105M | FY 2020e | -0.44 |
| Profit Margin | N/A | FY 2021e | -0.28 |
| Qtrly Rev | Qtrly Rev Growth | Qtrly EPS | Qtrly EPS Growth | |
| ($M) | (vs. yr-ago-qtr) | ($) | (vs.yr-ago-qtr) | |
| Latest qtr | 38.7 | 80% | -0.04 | N/A |
| One qtr ago | 27.2 | 40% | -0.17 | N/A |
| Two qtrs ago | 20.9 | 32% | -0.20 | N/A |
| Three qtrs ago | 18.4 | 23% | -0.23 | N/A |
GNMK Weekly Chart
GNMK Daily Chart
HubSpot (HUBS)
Why the Strength
HubSpot has been doing a good business for years, and the surge in everything internet should only help going forward. This company’s big attraction is that it’s an expert in helping small- and mid-sized businesses to streamline and improve their marketing results using so-called “inbound” advertising techniques: Its platform helps clients attract sales by providing valuable content and experiences based on the customer’s needs (typically blogs, videos and landing pages), rather than old school cold calls and junk emails. Its success is reflected by happy subscribers—a full one-third of customers first heard about HubSpot via word of mouth, for instance. It’s a simple idea, but it’s been driving above-average growth for the company for many years, and that continued in Q1, when HubSpot posted total revenue growth of 31% (subscription revenues were up 31%), while the sub-metrics were also solid, as its client base surpassed 78,000 (+30% from a year ago), of which 32,000 were multi-product customers. Total average subscription revenue per customer, meanwhile, nudged higher by 2% to $10,018. (COVID will take a bite out of business in Q2, but it still sees revenues up 20% or so from last year’s tally.) Looking ahead, HubSpot recently announced Hub, its content management system that makes it easier to manage websites at scale while providing value-added features like dynamic content, adaptive testing and 24/7 security monitoring. HubSpot’s services have become more valuable to its customers in the pandemic’s wake, and its impressive free cash flow generation and $1 billion cash on hand should allow it to easily navigate any economic headwinds ahead.
Technical Analysis
HUBS wasn’t a big leader last year despite strength in growth stocks, reaching 208 in August, double topping at 201 in February and plunging in March. But for the first time in years, the stock is now advancing in a persistent manner—despite lots of rotation and some recent market potholes, HUBS has been cruising higher above its 25-day line since early April. Shares can be choppy, so we suggest aiming to enter on weakness.
| Market Cap | $9.67B | EPS $ Annual (Dec) | |
| Forward P/E | 241 | FY 2018 | 0.89 |
| Current P/E | 149 | FY 2019 | 1.50 |
| Annual Revenue | $722M | FY 2020e | 0.92 |
| Profit Margin | 8.4% | FY 2021e | 1.46 |
| Qtrly Rev | Qtrly Rev Growth | Qtrly EPS | Qtrly EPS Growth | |
| ($M) | (vs. yr-ago-qtr) | ($) | (vs.yr-ago-qtr) | |
| Latest qtr | 199 | 31% | 0.35 | -3% |
| One qtr ago | 186 | 29% | 0.45 | 22% |
| Two qtrs ago | 174 | 32% | 0.32 | 88% |
| Three qtrs ago | 163 | 33% | 0.37 | 106% |
HUBS Weekly Chart
HUBS Daily Chart
Inphi (IPHI)
Why the Strength
It seems like every few years there’s a new networking-related stock that catches the market’s eye thanks to products that help fuel the never-ending need for greater bandwidth, and today, Inphi is that stock; it’s the most straightforward way to play the boom in demand for faster data center and telecom speed. The company is leveraged to many trends that are booming at once: Intra-data center networking (its PAM4 family of digital signaling processors remain about one year ahead of the competition), which should grow 30%-plus annually for the next few years and where Inphi has a dominant market share; connections between data centers via its COLORZ optical solution (in partnership with Microsoft), where business is also likely to grow at 30% rates, partially thanks to Microsoft’s $10 billion cloud computing contract with the Dept. of Defense; and general 5G and telecom-related upgrades among customers all over the world. Business tends to go up and down in long-ish cycles, and starting last year, things turned up in a big way and analysts see much more of that going forward as the need for speed accelerates; earnings are expected to more than double from last year to 2021, with more growth beyond that. Of course, things can change fast in the networking industry, but Inphi looks like it’s in the right place, at the right time, with the right products, to push a major upturn in earnings in the years to come.
Technical Analysis
IPHI was one of the leaders right off the market bottom, showing excellent volume accumulation that eventually led to a very powerful 10 -week advance. Now the stock has consolidated during the past four weeks with some support showing up near the 50-day line. Obviously, if the market falls apart, all bets are off, but starting a position here with a tight stop seems like a good risk-reward situation.
| Market Cap | $5.41B | EPS $ Annual (Dec) | |
| Forward P/E | 42 | FY 2018 | 0.86 |
| Current P/E | 60 | FY 2019 | 1.61 |
| Annual Revenue | $423M | FY 2020e | 2.68 |
| Profit Margin | 22.6% | FY 2021e | 3.51 |
| Qtrly Rev | Qtrly Rev Growth | Qtrly EPS | Qtrly EPS Growth | |
| ($M) | (vs. yr-ago-qtr) | ($) | (vs.yr-ago-qtr) | |
| Latest qtr | 139 | 70% | 0.62 | 88% |
| One qtr ago | 103 | 19% | 0.47 | 4% |
| Two qtrs ago | 94.2 | 21% | 0.45 | 50% |
| Three qtrs ago | 86.3 | 24% | 0.35 | 133% |
IPHI Weekly Chart
IPHI Daily Chart
Invitae (NVTA)
Why the Strength
Genetic testing makes it easier for medical professionals to understand and diagnose diseases since a big portion of health problems have genetic origins. Invitae specializes in gathering genetic info across every stage of a person’s lifespan, working to consolidate testing into a single low-cost, rapid turnaround service, and it’s making good progress on that front—its efforts have led to test costs dropping from thousands of dollars to as low as $250 today. Through its expanding genome network, the eventual aim is to increase the availability of genetic data to support healthcare decisions (one facet will be what it calls “precision oncology”) and the potential is huge, with the genetic testing sector expected to reach tens of billions of dollars a year for cancer alone. The company had been doing well on its own—Q1 testing volume was up 64% from a year ago despite a virus-related slump in March—but the stock is strong today because last week’s buyout of ArcherDX has changed perception for the better: Archer provides labs with solutions to produce high-quality genetic data and has partnerships with 50 bipharma outfits, which together with Invitae’s offerings, will provide a one-stop shop for patients and providers (baseline risk/diagnosis, therapy optimization, monitoring, etc.). While it didn’t offer official guidance, the company thinks 50%-plus annual growth for the next three to five years is possible for the combined entity. Genetic testing is a big idea, and Invitae’s latest move cements its position as an emerging leader in the area.
Technical Analysis
NVTA has had some big moves up and down during the past couple of years, but last week may have changed the stock’s character in a big way. The bounce off the March bottom was decent, and the tightness in April, May and early June was also a plus. But the Archer buyout was the key, with the stock exploding higher for two straight days on massive volume and, so far, holding those gains despite some indigestion among growth stocks. If you want in, we’re OK buying a small position a bit down from here.
| Market Cap | $3.67B | EPS $ Annual (Dec) | |
| Forward P/E | N/A | FY 2018 | -1.98 |
| Current P/E | N/A | FY 2019 | -2.35 |
| Annual Revenue | $241M | FY 2020e | -2.70 |
| Profit Margin | N/A | FY 2021e | -1.96 |
| Qtrly Rev | Qtrly Rev Growth | Qtrly EPS | Qtrly EPS Growth | |
| ($M) | (vs. yr-ago-qtr) | ($) | (vs.yr-ago-qtr) | |
| Latest qtr | 64.3 | 58% | -0.80 | N/A |
| One qtr ago | 66.3 | 46% | -0.66 | N/A |
| Two qtrs ago | 56.5 | 51% | -0.69 | N/A |
| Three qtrs ago | 53.5 | 43% | -0.52 | N/A |
NVTA Weekly Chart
NVTA Daily Chart
Meritage Homes (MTH)
Why the Strength
Although coronavirus remains a challenge, for homebuilders this pandemic is bringing opportunities. Mortgage rates remain at historical lows, with the average 30-year rate sitting at 3.33%, so it’s no surprise that the housing market is beginning to shake off the virus troubles. Last month, sales of new homes in the U.S. rose 16.6%, to 676,000 units, about 13% higher than a year ago, and amounting to about 10% of all home sales. And after seeing home prices fall by 8.7% in April, prices rose 4.9% to a median price of $317,900 in May. And there’s more good news for Meritage, the seventh-largest public home builder in the U.S. Sales in the South increased 15.2% and, in the West, they jumped 29%, which are both areas of focus for this company—Meritage builds homes in Arizona, California, Colorado, Florida, Georgia, North Carolina, South Carolina, Tennessee and Texas, all historically high-growth regions of the United States. And its market is broad, targeting single-family homes for entry-level, first-time, move-up, luxury and active adult buyers. Meritage, with its LiVE.NOW product, is putting stronger emphasis on affordable housing, building homes priced around $200,000 with 1,600 to 2,500 square feet. During the first quarter, these entry-level communities contributed 61% to order growth and represented 51% of total active communities. The virus will have an impact (analysts see earnings down a touch this year), but Meritage has beat earnings estimates 17 of the last 18 quarters, and recent estimates are trending up. There’s risk if reopening trends really hit a wall, but we think it’s more likely that the sector enjoys upside surprises in the months ahead as the sector recovers.
Technical Analysis
MTH enjoyed a solid uptrend through September of last year, stalled out and then imploded with everything else in March. But the recovery from there was both strong and persistent, kissing new highs in late May. Even better, the stock’s choppy action since then has been very reasonable, offering up what appears to be a solid entry point. You can grab some here.
| Market Cap | $2.65B | EPS $ Annual (Dec) | |
| Forward P/E | 12 | FY 2018 | 5.58 |
| Current P/E | 10 | FY 2019 | 6.42 |
| Annual Revenue | $3.86B | FY 2020e | 6.06 |
| Profit Margin | 7.9% | FY 2021e | 5.76 |
| Qtrly Rev | Qtrly Rev Growth | Qtrly EPS | Qtrly EPS Growth | |
| ($M) | (vs. yr-ago-qtr) | ($) | (vs.yr-ago-qtr) | |
| Latest qtr | 905 | 27% | 1.83 | 182% |
| One qtr ago | 1142 | 13% | 2.65 | 39% |
| Two qtrs ago | 945 | 6% | 1.79 | 35% |
| Three qtrs ago | 869 | -1% | 1.31 | 0% |
MTH Weekly Chart
MTH Daily Chart
Plug Power (PLUG)
Why the Strength
Plug Power is the leader in fuel cell systems, which use hydrogen to produce electricity, with water and a little heat as the only by-products. There was a lot of hype about this power source back in the late 1990s, but while that never materialized, fuel cells have been gaining plenty of acceptance—Plug is a huge player in transportation and specialized equipment (like forklifts), with 32,000 units deployed. (Plug is the world’s largest user of hydrogen, in fact, and nearly 30% of retail food and groceries are transported on vehicles outfitted with the firm’s fuel cells.) Plug has deals with some big players (Walmart, Kroger, Sysco, Fiat Chrysler and DHL are all customers), and as those and other clients increase purchases, Plug’s business has expanded nicely; this year, the company expects $300 million in gross billings, up about 25% from 2019. However, the real juice here is in the longer-term view: Thanks in part to a couple of recently-closed buyouts (including the largest private liquid hydrogen generation firm in the U.S.—if hydrogen becomes a key green energy, this business could even surpass fuel cells down the road!), the company recently upped its already aggressive 2024 goals, now looking for $1.2 billion of revenue that year (up nearly five-fold from revenues over the past year), with EBITDA of $250 million (up from a loss today). Obviously, four-year targets aren’t something you should take to the bank, but the combination of great current execution, the acquisitions and those 2024 goals make Plug an interesting speculation.
Technical Analysis
PLUG is low priced, but it’s relatively liquid (traded north of $65 million per day even before the recent spike) and was in a decent (though choppy) uptrend in the second half of last year. The stock did reset during the market’s crash, but after bouncing, shares tightened up nicely under 4.5, broke out in early June and then really caught fire last week on the upped guidance, with further big gains today. Don’t invest the rent money here, but dips should provide an opportunity for a small position.
| Market Cap | $2.19B | EPS $ Annual (Dec) | |
| Forward P/E | N/A | FY 2018 | -0.30 |
| Current P/E | N/A | FY 2019 | -0.36 |
| Annual Revenue | $249M | FY 2020e | -0.35 |
| Profit Margin | N/A | FY 2021e | -0.23 |
| Qtrly Rev | Qtrly Rev Growth | Qtrly EPS | Qtrly EPS Growth | |
| ($M) | (vs. yr-ago-qtr) | ($) | (vs.yr-ago-qtr) | |
| Latest qtr | 40.8 | 89% | -0.12 | N/A |
| One qtr ago | 91.7 | 53% | -0.06 | N/A |
| Two qtrs ago | 58.5 | 10% | -0.08 | N/A |
| Three qtrs ago | 58.5 | 66% | -0.08 | N/A |
PLUG Weekly Chart
PLUG Daily Chart
STAAR Surgical (STAA)
Why the Strength
Staar Surgical’s implantable lenses treat cataract or refractive errors and are sold in 75 countries. Because all of its lenses are foldable, the surgeon can insert them through a small incision, making the procedure and recovery time faster than most other options. The intraocular lens market might be slow growing at this point (up 5% annually going forward), but it’s huge (projected to be $4.5 billion in 2023) and Staar is taking share. The growth is being spurred by an aging population with associated eye disorders, increasing eye diseases and diabetes in the global population, as well as technological advancements in intraocular lenses. In the U.S., there are 7.7 million diabetic retinopathy cases and 24 million cataract cases, totals that are expected to reach 11.3 million and 38 million, respectively, by 2030. But the big area for growth is emerging countries, due to the above factors, as well as rising government initiatives to include eye care in social security systems; the company is seeing excellent growth in Asia, led by Japan (up more than 70%), which has a relatively old population. Staar expects some pressure on second quarter results due to virus-related disruptions, but like many stocks, investors are thinking Q2 likely represented the bottom with a resumption of growth going forward.
Technical Analysis
STAA has a beautiful long-term chart, with an up-and-down correction since peaking near 54 back in September 2018. But the latest up action has been much more powerful—shares retraced back to resistance in the low 40s in late May, but instead of backtracking, STAA held firm and has since gone nuts on the upside, leaping on huge volume during the past couple of weeks. We think modest weakness should provide a good entry point.
| Market Cap | $2.72B | EPS $ Annual (Dec) | |
| Forward P/E | 207 | FY 2018 | 0.30 |
| Current P/E | 143 | FY 2019 | 0.49 |
| Annual Revenue | $153M | FY 2020e | 0.29 |
| Profit Margin | 5.4% | FY 2021e | 0.62 |
| Qtrly Rev | Qtrly Rev Growth | Qtrly EPS | Qtrly EPS Growth | |
| ($M) | (vs. yr-ago-qtr) | ($) | (vs.yr-ago-qtr) | |
| Latest qtr | 35.2 | 8% | 0.04 | -56% |
| One qtr ago | 38.9 | 25% | 0.12 | 71% |
| Two qtrs ago | 39.1 | 23% | 0.12 | 71% |
| Three qtrs ago | 39.7 | 17% | 0.14 | 56% |
STAA Weekly Chart
STAA Daily Chart
Previously Recommended Stocks
Below you’ll find Cabot Top Ten Trader recommended stocks. Those rated HOLD are stocks that traded within our suggested buy range within two weeks of appearing in the Top Ten and still look good; hold if you own them. Stocks rated WAIT have yet to dip into our suggested buy range … but can be bought if they do so within the next week.
Those stocks rated SELL should be sold if you own them; they will no longer be listed here. Finally, Stocks in the DROPPED category are those that failed to trade within our buy range within two weeks of our recommendation; that’s not a bad thing, we just never got the price we wanted. Please use this list to keep up with our latest thinking, and don’t hesitate to call or email us with any questions you may have. New recommendations each week are in green.
| HOLD | |||||
| 3/16/20 | Apple | AAPL | 238-248 | 362 | |
| 4/20/20 | ASML Holdings | ASML | 285-295 | 365 | |
| 6/8/20 | Autodesk | ADSK | ? | 220-230 | 232 |
| 5/18/20 | Avalara | AVLR | 97-100 | 134 | |
| 5/4/20 | Bandwidth | BAND | ? | 90-94 | 126 |
| 6/22/20 | Big Lots | BIG | 32.5-35 | 43 | |
| 6/1/20 | Bill.com | BILL | 69-73 | 90 | |
| 5/26/20 | BJ’s Wholesale | BJ | 34-36.5 | 38 | |
| 6/8/20 | Carrier Global | CARR | 21.5-23 | 22 | |
| 5/11/20 | Chegg | CHGG | ? | 58-62 | 67 |
| 4/13/20 | Ciena | CIEN | 42.5-44 | 53 | |
| 3/23/20 | Cloudflare | NET | 19-21 | 35 | |
| 3/23/20 | Coupa Software | COUP | 124-132 | 273 | |
| 4/20/20 | CrowdStrike | CRWD | 65-67.5 | 98 | |
| 6/8/20 | Datadog | DDOG | 72.5-77 | 84 | |
| 11/11/19 | Dexcom | DXCM | 196-205 | 398 | |
| 9/9/19 | DocuSign | DOCU | ? | 55-58 | 172 |
| 5/4/20 | DraftKings | DKNG | 19.5-21.5 | 34 | |
| 6/8/20 | Elastic | ESTC | 78.5-82.5 | 92 | |
| 5/18/20 | Fastly | FSLY | 36-39 | 78 | |
| 6/15/20 | Fiverr Int’l | FVRR | 60-64 | 71 | |
| 4/6/20 | Five9 | FIVN | 74.5-78 | 108 | |
| 5/26/20 | Horizon Therapeutics | HZNP | 45.5-48 | 55 | |
| 4/20/20 | Immunomedics | IMMU | 20.5-22 | 34 | |
| 3/16/20 | Inphi | IPHI | ? | 62.5-66 | 111 |
| 6/22/20 | LGI Homes | LGIH | 84-87 | 86 | |
| 6/15/20 | Lululemon | LULU | ? | 291-301 | 294 |
| 6/8/20 | Marvell Tech | MRVL | 32.5-34 | 34 | |
| 5/11/20 | MercadoLibre | MELI | 750-790 | 981 | |
| 6/22/20 | Mersana Therapeutics | MRSN | 20-22 | 22 | |
| 5/26/20 | Neurocrine Bio | NBIX | 114-119 | 126 | |
| 6/15/20 | Novovax | NVAX | 47-50.5 | 84 | |
| 6/22/20 | Nuance Communications | NUAN | 23.5-25 | 25 | |
| 3/30/20 | Nvidia | NVDA | 250-270 | 368 | |
| 3/30/20 | Okta | OKTA | ? | 118-126 | 200 |
| 6/22/20 | PagSeguro | PAGS | 33.5-35.5 | 35 | |
| 6/1/20 | Pan American Silver | PAAS | 27-29 | 28 | |
| 4/27/20 | PayPal | PYPL | ? | 117-122 | 168 |
| 4/6/20 | Peloton | PTON | 27-29 | 57 | |
| 6/22/20 | Restoration Hardware | RH | ? | 240-255 | 253 |
| 3/2/20 | Seattle Genetics | SGEN | ? | 107-111 | 164 |
| 4/20/20 | Shopify | SHOP | 575-615 | 922 | |
| 5/26/20 | Spotify | SPOT | ? | 184-191 | 265 |
| 10/28/19 | Teladoc | TDOC | 69-72 | 187 | |
| 6/22/20 | Teradyne | TER | 78-81 | 83 | |
| 11/11/19 | Tesla | TSLA | 320-335 | 1009 | |
| 6/8/20 | Thor Industries | THO | 101-106 | 107 | |
| 6/1/20 | Tractor Suppy | TSCO | 115-119 | 132 | |
| 6/8/20 | Trade Desk | TTD | 338-358 | 406 | |
| 6/8/20 | Trex | TREX | 117-122 | 128 | |
| 5/11/20 | Twilio | TWLO | 175-187 | 211 | |
| 10/28/19 | Vertex Pharm. | VRTX | ? | 191-196 | 285 |
| 5/11/20 | Wingstop | WING | 116-122 | 136 | |
| 2/24/20 | Zoom Video | ZM | ? | 96-104 | 249 |
| 4/6/20 | Zscaler | ZS | 61-64 | 105 | |
| WAIT | |||||
| 6/15/20 | Argenx | ARGX | 208-215 | 223 | |
| 6/22/20 | Yeti | YETI | 36-38 | 43 | |
| SELL RECOMMENDATIONS | |||||
| 6/1/20 | Arconic | ARNC | 14-15 | 14 | |
| 5/18/20 | Beyond Meat | BYND | 122-128 | 132 | |
| 3/23/20 | Chewy | CHWY | ? | 29-32 | 45 |
| 6/1/20 | Dynatrace | DT | 35-37 | 41 | |
| 5/11/20 | Schrodinger | SDGR | 53-56 | 86 | |
| 6/8/20 | Square | SQ | 85-89 | 104 | |
| DROPPED | |||||
| 6/15/20 | Redfin | RDFN | 30.5-32.5 | 39 | |
The next Cabot Top Ten Trader issue will be published on July 6, 2020.