Looking for a couple of stock picks to beef up your investment portfolio? You may want to check out Eclipsys Corporation (ECLP) and SkillSoft PLC (SKIL). The former is a technology provider for the healthcare market, and the latter is the ADR (American Depository Receipt) for an Ireland-based software company. If you're not overly familiar with these equities, don't worry - you're not alone. We actually produced these two stock trading ideas using a strict technical and fundamental scan/sort, which tends to find undiscovered companies before the media puts them on the radar.
Eclipsys Corporation may not have the best current fundamentals, but you also have to look at the sales and earnings trends to properly analyze a potential investment. In Eclipsys' case, a closer inspection will reveal how the current P/E of 71.0 may soon be whittled down to something near 24.2. How? Revenue grew at 16.2% last quarter (yoy), and they managed to use those increased sales to improve quarterly earnings by 223.3% (yoy). By the way, lately the company has started to produce results better than most analyst's predictions.
As far as the chart goes, it looks as if the 50 day line has become the undisputed floor, which is good for current owners considering the 50 day line is rising. Simultaneously, there appears to be a ceiling around the $25 level. Based on the persistence of the uptrend throughout all the volatility, we think the odds are good that the resistance will break while the support lines continue to guide this one higher.
Skillsoft's underlying numbers look pretty good too. Quarterly earnings grew by 156.7% according to their most recent filing, while revenue grew by 28.2% last quarter. The forward-looking P/E of 30.33 is a tad higher than the current P/E of 27.6, but with an ROE of 24.2%, either P/E seems acceptable. By the way, the top and bottom lines have been growing consistently, and consistently topping estimates.
Skillsoft's chart speaks for itself. It's been riding a rail since Q2 of 2005, following a major pullback in late 2004. Yeah it's been a little volatile, but the 200 day moving average line has kept things moving in a bullish direction. In fact, the retest of the 200 day average in August may end up being just what the bulls ordered - a chance to regroup and set up another wave of buying. A move past last quarter's highs of $9.40 could potentially spark a breakout move here.
As for our prior comments, it's been a while since our last update on the Trader's Corner investment portfolio. We've had a pretty strong flow of new small cap ideas to cover, so our virtual sandbox has been left untouched (though time and patience may have served us well). But, with the Spicy Pickle and Enigma up and running now, we want to get back to the business of selecting stocks.
Starting from our oldest 'open' trades and working our way down the list, we first find Cogent (COGT). Picked back in late March when shares were trading around $13.45, the current price of $16.50 translates into a 22.7% gain. Not bad, but don't be fooled - this has been one wild ride. Cogent finally got on the horse in September, breaking past its $15 ceiling and moving on up to new multi-year highs. Our target still stands at $27.00, based on the recovery potential we see for this chart. Of course, it took a long time for COGT to get into dire straits, so it could take a long time to fully realize that recovery.
Intervoice (INTV) also had a good September after a pretty lame July and August. In fact, its August was so good, we hit our target price of $9.50 on September 24th. With a purchase price of $7.58 back on May 21st, this paper trade produced a pretty decent 25.3% gain in about four months. We actually still like this stock's long-term recovery potential (much like Cogent's). However, we've also seen how INTV tends to take two steps forward and one step back. We think if you're interested, getting in after a dip may be prudent.
Our only other unanswered question was Radiant Systems (RADS). We picked RADS on July 31st, when it was trading around $13.90. Looks like we got in just in time too...at $21.99, this stock is now 22.2% above where we started with it. Our target level is still $19.30, though it could certainly be tempting to start locking in some gains as overbought as it's starting to look. We'll take the other route though, and just raise our stop to $15.20. We saw support there a few times a couple of months ago.
Of course, you get the bad and the good together. Since our last update, we were stopped on Ford (F), Deltic Timber (DEL), Interface (IFSIA), and Lennox International (LII)...all for small losses. That's just part of the game. Yet, even with those trades, this mock portfolio is still outperforming the S&P 500 since its inception a little over a year ago.
Anyway, don't forget about Eclipsys and Skillsoft.
By the way, be sure to keep a watchful eye for trading suggestions in our newsletter as well. Sometimes we'll sneak in one of the Trader's Corner ideas as an 'official' trade. While we like all the Trader's Corner possibilities, the ones that get our official coverage are considered to be the best of the best.
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