[Strategy Week] My 2016 “Profit Catalyst” Candidates Revealed
Over the past few days I’ve heard from many readers curious to get a sneak peak at my 2016 “Profit Catalyst” watch list. While we’re keeping the full watch list restricted to our priority notification list (which you can sign up for here), I’m including a preview of five watch list companies below.
NOTE: I am NOT recommending you buy these stocks today. This watch list reflects an initial filter of my key criteria for “Profit Catalysts”. My final vetting process has already started, and many of these stocks will be eliminated from consideration. I’ll be updating you as I finalize the best of this group in the coming days.
OSI Systems (OSIS)
OSI sells electronic systems for security screening. In mid-November I saw a meaningful spike in price due to an order from the French government for its baggage screening system. The chart looks great but I need to investigate whether this is a sign of sustainable improvements or a one-time event.
Sally Beauty Health (SBH)
Sally Beauty is a retail and commercial distributor of beauty supplies. A recent volume spike looked passable to me. It traded twice its average volume, just above the low end of my acceptable volume surge. Sally Beauty’s turnaround plan also seems to be getting some traction. Profit from its retail stores is improving due to product resets but profit from sales to salons is still declining.
This auctioneer of salvage vehicles and parts raced upward on earnings in November. The spike in volume for this junkyard dog was exactly what tips me off to most “Profit Catalyst” stocks. Plus, a decline in shares outstanding, which should continue due to a recently announced buyback program should ensure higher earnings per share in the future. But is there a “fundamental shift” in this business? I need to get management on the phone and talk through this.
Berry Plastics Group (BERY)
The manufacturer of plastic consumer packaging recently announced the acquisition of AVINTIV, who makes healthcare packaging products. It will surely give it exposure to a new set of customers. I need to dig into the core business and see if this will be the catalyst that doubles this stock.
Silver Springs Networks (SSNI)
Silver Springs develops systems that let utility meters transmit data on energy usage. What’s not to love about this perfect play on the Internet of Things? Indications that deal flow is robust sent the stock up on big volume in early November. Could we find enough good news to justify the expensive valuation? I’ve been burned by stories like this in the past, so I need to get comfortable this stock is worth every penny we pay.
Again, this is just a sample of my full watch list. To see the full list of 25 candidates, register for our priority notification list. As a reminder, I’ll also be hosting a special webinar presentation on January 5th to run through my strategy in more detail and update readers on the final vetting of these 25 candidates. Click here now to register.