Follow The Leaders – 2-15-13

Barrett Business Services (BBSI)

My Follow The Leaders screen returned 11 stocks that met my leadership criteria and had positive week this week. Sliding the minimum return for the week to 3% cut that list down to five stocks.

Barrett Business Services (BBSI)

BBSI was up 8.4% this week on volume that was 7% above average breaking out of a three weeks tight pattern. The stock was positive every day this week, but logged most of its big gains on Wednesday and Thursday. The stock is well extended from a third stage flat base that it broke out of in September. Since the breakout, BBSI has seen a good bit of accumulation and virtually no distribution.

In its last three quarters, BBSI has reported earnings growth of 89%, 93%, and 95% and sales growth of 26%, 30%, and 34%. Not only are these numbers impressive, they’re growing. Annual earnings are projected to increase 33% this year. In addition to having strong fundamental numbers, BBSI has also seen steady growth in fund ownership and is in a very strong industry group.

CaesarStone Sdot-Yam Ltd (CSTE)

After last week’s powerful move, CSTE continued upward this week. The stock was up 6.3% on volume that was 6% above average. After being down on Monday and Tuesday, the stock booked some modest gains on Wednesday and Thursday, then jumped again on Friday. Monday, Thursday, and Friday were all on above average volume. The stock is well extended from the first stage flat base that it broke out of in December.

In its most recent three quarters, CSTE has reported earnings growth of 30%, 30%, and 68% and sales growth of 14%, 5%, and 14%. While the sales numbers are not as impressive as we would like to see, the earnings growth is still very solid. Annual earnings are projected to grow 13% this year. This is also light compared to what we generally look for. Fund ownership has been grown consistently and its industry group has been very strong.

Mastec Inc (MTZ)

MTZ was up 3.2% this week on volume that was 6% lighter than average, but was stronger than the previous week. The stock was up slightly on Monday and Tuesday, booked a big gain on Wednesday, went up a little more on Thursday, and then pulled back just a bit on Friday. Volume was slightly above average on Wednesday and Friday. MTZ is scheduled to report earnings on February 28.

In its most recent quarter, MTZ reported earnings growth of 25% and sales growth of 31%. While this does meet our baseline growth requirements, the numbers don’t exactly jump off the screen. Annual earnings are projected to be up 45% in 2012 and another 27% in 2013. MTZ has a return on equity of 12%, which is a good bit below what we generally look for. It has increased fund ownership consistently in the past year and is in a strong industry group.

Walter Investment Management (WAC)

WAC was up 7.7% this week in volume that was 18% above average. Most of the weekly gains were logged on Tuesday and Wednesday, and both of those days had strong volume. The stock has formed a third stage flat base with a pivot point of 49.67. The base contains two weeks of accumulation and no weeks of distribution. WAC is scheduled to report earnings on March 7.

In its most recent quarter, WAC reported earnings growth of 27%, which was way down from 195% and 196% the two previous quarters. Sales growth dropped to 6% after four straight quarters of over 200% growth. Despite this drop, annual earnings for 2012 are projected to be up 72% and then grow another 122% in 2013. The stock has a very weak return on equity of 8%, but is in a very strong industry group.

Waddell & Reed Financial Inc (WDR)

WDR was up 4.5% this week on volume that was 4% greater than average. This makes the stock even further extended from the first stage flat base that it broke out of in early December. It is also interesting that WDR has broken into an all time high, which means that there is no overhead resistance left. The stock increased every day this week and had big volume support on Tuesday and Friday.

In its most recent quarter, WDR reported earnings growth of 33% and sales growth of 11%. Once again we see numbers that meet our base criteria but don’t necessarily stand out. 2012 was the company’s third straight year of increased annual earnings and it projects growth of 11% in 2013. Fund ownership hasn’t budged much in the past year, but the stock is in a strong industry group.