From the desk of Steve Strazza @Sstrazza
Welcome to the 2 to 100 Club.
As many of you know, something we’ve been working on internally is using various bottom-up tools and scans to complement our top-down approach. It's really been working for us!
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, 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, Salesforce, and myriad others – 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'll notice we're 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.
Growth, Tech, and the Nasdaq continue to be leadership areas, as they're all trading at or just points away from all-time highs.
Our overall position remains neutral in the short term but bullish over longer timeframes. Evidence continues to be mixed, but the pendulum has been swinging more and more in favor of the bulls of late. As for these secular Growth stocks, they are often the best when it comes to bucking the overall trend. A mid-cap Software stock with top-notch growth prospects is going to be impacted a lot less by falling yields than more value-based, Cyclical stocks.
And that's just what we're seeing when we look at the Growth vs. Value ratio:
Growth remains in the driver's seat, which means our 2 to 100 Club list is on the winning side of this choppy environment, as many of these stocks are where the relative strength has been and continues to be.
As usual, we’ve sorted this week’s list by proximity to all-time highs:
As such, all of these stocks are exhibiting the kind of strength characteristic of continued and future leadership.
Let's dive in and discuss some of our favorite long setups!
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