[Premium] 2-to-100 Club (11-18-2020)

From the desk of Steve Strazza @Sstrazza

Welcome to the 2 to 100 Club.

Something we’ve been working on internally this year is using various bottoms-up tools and scans to complement our top-down approach. One way we’re doing this is by identifying stocks as they climb the market-cap ladder from small, to mid, to large, and ultimately to mega-cap status (over $200B).

Once they graduate from small-cap to mid-cap status (over $2B) they come on our radar. Likewise, when they surpass the roughly $30B mark, they roll off our list.

But the scan doesn’t just end there. We only want to look at the strongest growth industries in the market as that is typically where these potential 50-baggers come from.

Some of the best performers in recent decades – stocks like Priceline, Amazon, Netflix, and Salesforce, to a myriad of others… all would have been on this list at some point during their journey to becoming the market behemoths they are today.

When you look at the stocks in our table you will notice we are only focused on technology and growth industry groups such as Software, Semiconductors, Online Retail, Solar, etc.

Then like any good technician, we filter the list down to those that are closest to new 52-week highs. This allows the cream of these strongest groups to rise to the top and makes our job easier to identify technical breakouts in the top-performing stocks.

With major indexes registering fresh record highs across the board recently, we thought it'd be appropriate to sort this week's list by proximity to all-time highs as opposed to 52-week highs as we've done in the past.

Here is this week's list of stocks. They are all within 3% of all-time highs.

The list includes both Mid-Cap and Large-Cap stocks. Mids are classified as anything trading with a market capitalization above $2B but below $10B. The Mid-Caps are all shaded green in the Market Cap column while those approaching $30B become a deeper blue as they get closer on their journey to becoming a “blue-chip,” or $100B company.

Our internal list includes over 300 stocks and we expand our market cap criteria slightly to add a little cushion for those names close to $2 or $30 Billion. These companies are likely to flip in and out of the club, so we want to keep them on our radar in order to capture as many solid opportunities from our list as possible.

I want to kick things off with some updates on some of our recent trade ideas from this column. Shockwave Medical $SWAV and Appian Corp $APPN have achieved our price targets so we want to cash in on those trades for now and put that capital to work in new opportunities.

Let's take a look at this week's fresh setups now.