From the desk of Steve Strazza @Sstrazza
Welcome to the 2 to 100 Club.
Our apologies for the late delivery as we've all been so buried in charts preparing our Q3 Playbook that we forgot about this week's column!
As many of you know, something we’ve been working on internally is using various 'bottoms-up' tools and scans to complement our top-down approach.
One way we’re doing this is by identifying the strongest growth stocks as they climb the market-cap ladder from small, to mid, to large - and ultimately 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 highs. This allows the cream of these strong groups to rise to the top and helps streamline our mission to identify technical breakouts in the top-performing stocks.
While markets remain bifurcated, Growth, Tech, and the Nasdaq are trading back at fresh all-time highs.
Our overall position is cautionary as evidence continues to be mixed and we think markets are likely to remain a mess for the foreseeable future.
As for the 2 to 100 Club universe, it's on the winning side of this choppy environment as our list is comprised entirely of growth stocks which is where the relative strength has shifted to in the near term.
As usual, we’ve sorted this week’s list by proximity to all-time highs:
With growth making a comeback of late, many long-term leaders have broken back to record highs and are offering some favorable risk/reward setups at current levels.
Let's dive right in and check them out!
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