A birds-eye view of the weekly Big Cap 20 shows no major change in the overall industry landscape.
Oil stocks and the somewhat related members of the transportation sector still maintain a vise-like grip of the list.
However, thanks in large part to its excellent quarterly report, Facebook (NASDAQ:FB) has muscled its way into the list of premier growth names with market values of at least $15 billion and decent trading volume.
The world’s top social networking site stormed into the Big Cap 20 for the first time in more than one month after rising 10% last week, its biggest gain since a 15% jump in the last week of January.
Last week’s gain included a strong gap up in price, and volume of 338 million shares was not only sharply above average, but also marked the biggest amount since the week ended May 2.
Big Tech Strength
Facebook is one of those rare companies that already scores more than a billion dollars in revenue each quarter, yet continues to truly meet the C in IBD’s CAN SLIM investment paradigm. Second-quarter earnings rose 121% to 42 cents a share. Revenue rose 61% vs. a year ago to $2.91 billion, marking the fifth quarter in a row of 50% or faster increases in the top line.
Clearly, Facebook’s investment in building out its mobile-based advertising infrastructure has paid off. As revenue grows at a rapid clip, the company’s profits benefit from enhanced operating leverage. In fact, after-tax margin rose to 37.5% in the quarter, the highest in at least four years.
As Facebook built its latest base from mid-March until its cup-with-handle breakout at 66.57, it got featured in IBD’s pages more than two dozen times. On the home page of IBD’s website, Investors.com, readers can use the search box at the top right to go through the story archives.
Besides Facebook, Apple (NASDAQ:AAPL) and Micron Technology (NASDAQ:MU) have also recently joined the Big Cap 20. They represent a resurgence of the chipmaking sector and continued high demand for new computing devices and smartphones.
Apple had cleared an 82.26 entry on April 28, but is trading close to a three-weeks-tight entry at 97.20. Micron is still up 24% despite Monday’s sharp drop in heavy trade. When a stock is extended, it means the investor should continue watching for new bases or new follow-on buy points to emerge.
Back to the oil patch, EOG Resources (NYSE:EOG) may be offering such an add-on opportunity. The stock has climbed steadily since clearing a 94.25 entry point in a four-month consolidation. In early May, the global oil and gas producer tested its 10-week moving average — a good spot generally to add shares. It’s now making a second such test, and a flat base has also emerged.