Setting The Table – 1-27-13

Catamaran Corp (CTRX)

Once again this week it seems like the good setups are few and far between. It’s starting to feel like if you aren’t already in a profitable position, you may have missed the boat. It is a very positive sign that most of the stocks that have broken out recently have logged some solid gains.

Michael Kors (KORS)

It’s no secret that I have wanted to hold KORS for quite sometime now. I wore a KORS tie to my wedding in June. I also bought KORS in August and ended up selling it right around break-even a month later. What has me very interested this time is that it is poised to break out into an all-time high.

The main attraction to KORS has been the tremendous earnings and sales growth. In the past three quarters, KORS has posted earnings growth of 133%, 162%, and 96% and sales growth of 58%, 71%, and 74%. It is set to report earnings again on February 12. If we see another quarter of blowout growth numbers, this stock could really explode.  2013 is projected to be the fifth straight year of annual earnings growth.

Despite its incredibly strong earnings and sales growth, KORS is currently suffering from a lack of strength among the clothing manufacturers. KORS has the power to lead the group higher, but it will need some support from the rest of the industry.

A move to a new high on big volume this week could make me a buyer, however I would be very uncomfortable holding into the earnings report.

Generac Holdings (GNRC)

GNRC went on a monster run from the beginning of October through the second week of November. Since then, it has been consolidating those gains. During its consolidation, GNRC has had one week of accumulation and one week of distribution, however  it finished at the very bottom of its weekly range during the accumulation week.

GNRC posted stellar earnings growth of 284% three quarters ago and 41% two quarters ago, but that growth slowed to only 4% in its most recent quarter. Sales growth has seen a similar decline from 138% to 48% to 26% in the past three quarters. Despite the slowing growth in quarterly earnings, 2013 is projected to be the sixth straight year of annual earnings growth for GNRC.

GNRC has a strong return on equity of 24% and saw a nice jump in fund ownership in its most recent quarter.

Catamaran Corp (CTRX)

From July through October of 2012 CTRX build a very nice shaped base that I thought very much resembled AAPL from 2004. Despite the resemblance, CTRX never broke out of that base and has gone on to build another base. It has now poked its head out of that base into a new all-time high, however volume was not supportive.

Over the past four quarters, earnings growth has decelerated from 71% to 53% to 32% to only 14% in its most recent quarter. Despite this deceleration, sales growth was 148% in its most recent quarter. 2013 is projected to be the sixth straight year of earnings growth for CTRX, which is scheduled to report again on February 23.

CTRX has a return on equity of 17% and has increased fund ownership dramatically over the past year, but medical service stocks are not performing very well right now.