Follow The Leaders – 2-22-13

Alaska Air Group (ALK)

My leadership screen returned seven stocks that meet the leadership criteria and had positive weeks this week. Adjusting the weekly return to a minimum of 2% cut that number to five stocks.

Alaska Air Group (ALK)

ALK was up 3.7% this week in volume that was 20% lighter than average. The stock was up big on Tuesday in above average volume, pulled back Wednesday in light volume, then continued higher Thursday and Friday in increasing, but still light volume. It is well extended from the first stage cup with handle base that it broke out of in early October. Since that breakout, the stock has seen only one week of distribution compared to seven weeks of accumulation.

In its most recent quarter, ALK reported earnings growth of 37% and sales growth of 8%. This was the third straight quarter of earnings growth and this most recent quarter was the highest growth of the three quarters. The sales growth has been consistent, but not quite as high as we would like to see. The most recent quarter was the fifth straight quarter of positive sales growth that didn’t break 10%. Annual earnings are projected to grow 16% and 12% for the next two years. Fund ownership has barely increased over the past year, but return on equity is a very healthy 26% and the stock’s industry group has been performing very well.

China Biologic Products (CBPO)

CBPO was up 11.4% this week on very strong volume that was 89% better than average. The stock jumped out of the gate on Tuesday, rocketing up on huge volume. It then pulled back Wednesday and Thursday on about average volume and then recouped those losses on Friday. CBPO is now well extended from the first stage consolidation that it broke out of in late November. Since that breakout, this week marks the tenth week of accumulation compared to only one week of distribution.

In the past three quarters, CBPO has reported earnings growth of 55%, 52% and 29% and sales growth of 37%, 21% and 29%. The company is scheduled to report earnings again on March 12. Annual earnings for 2012 are projected to be up 36%, but that growth is projected to slow to 6% in 2013. CBPO is owned by very few funds, but it does sport a return on equity of 28% and is in a strong industry group.

Celgene Corp (CELG)

CELG was up 2.9% this month on volume that was 13% lighter than normal. After a strong start to the week on light volume Tuesday, it shot higher on Wednesday, but closed at the low of the day on above average volume. It pulled back a little further on Thursday and then moved higher Friday, but didn’t get back to the highs it lost on Wednesday. The stock is currently extended from a first stage flat base that it broke out of at the beginning of the year. Since that breakout, it has logged two weeks of accumulation and no distribution.

In its most recent quarter, CELG posted earnings growth of 26% and sales growth of 13%. The company has posted very similar growth numbers in each of the past eight quarters. Annual earnings are projected to increase 15% this year and 20% next year. The company has seen increasing fund ownership, has a strong return on equity of 39% and is in a solid industry group.

Jeffries Group Inc (JEF)

JEF was up 4.6% this week on volume that was 47% above average. The stock was up slightly in huge volume on both Monday and Tuesday. It then pulled back a bit Wednesday in volume that was just slightly above average and then closed the week with a huge pop in strong volume on Friday. The stock is well extended from a first stage cup with handle that it broke out of in early December. Since breaking out, the stock has only had one down week, and that week’s loss was only 0.1%.

JEF has reported two straight quarters of earnings and sales growth. In those quarters, the company reported earnings growth of 220% and 106% as well as sales growth of 19% and 22%. Despite these strong quarters, annual earnings are only projected to be up 1% this year and 14% next year. Fund ownership has held relatively constant for the past year and the company has a return on equity of only 9%, but it is in a strongly performing industry group.

Mastec Inc (MTZ)

This is the third straight week that MTZ has made this screen. The stock was up 2.4% this week in volume that was exactly average. The stock was down slightly in about average volume on Tuesday and Wednesday. It then moved up a bit on slightly better than average volume on Thursday and then jumped 2.3% higher on Friday in volume that was 63% above average. It is currently extended from the fist stage flat base that it broke out of at the beginning of the year. Since that breakout, the stock has only had one down week and has seen three weeks of accumulation.

In its most recent quarter, MTZ reported earnings growth of 25% and sales growth of 31%. The company is schedule to report fourth quarter earnings on February 28. Annual earnings for 2012 are projected to be up 45%, and earnings for 2013 are projected to be up another 27%. MTZ has increased fund ownership over the past four months and is in a strong industry group, but has a return on equity of only 12%.