Finding A Stock That Still Offers Great Returns

This market is not producing stocks with astronomical returns like we saw in 1999, 2003, and even 2004. Gains now seem to get cut off anywhere between 50-100% unless you are (PDO) and (MXC). Although it’s been difficult, I still manage to find excellent stocks although the market is bad. I want to see stocks with tremendous growth in sales and earnings, not 15% growth but 100% or more. This gives me laser focus on the top growth stocks in the market.

With this focus on growth, I’ve come across American Physicians Svc. (AMPH). Lets get to the numbers:

Sales % growth YoY: 120.92%
3 yr Sales growth: 43%

EPS % growth YoY: 1,476.11%
3 yr EPS growth: 45%

These are certainly the type of growth numbers I want to see, very high and even its 3 year growth is impressive. Moving onto management and if they are successful. Many studies show how important Return on Equity can show how effective a management team is. Anything above 17% or more clues me in on an effective team. AMPH sports a healthy 31.04% ROE, showing me they can produce.

Talk about all this growth many often wonder about P/E ratios. I could care less about P/E ratios because I focus on quality of growth and not so much on price. However, when a P/E as low as AMPH sports its worth mentioning. AMPH sports a 5.5 price to earnings ratio. Why so cheap with growth in sales and earnings? It’s quite simple, institutions are just now beginning to notice as well as mutual funds.

Onto the charts.

Taking a look at the daily chart you’ll notice that there is one drawback to this stock. It trades thinly, roughly 28k shares a day are only traded on this issue. With only 28k shares trading daily, it makes this stock more vulnerable to wild intra-day swings and why we do not have a large institutional following.

The weekly shows the inability to close the weeks on the highs. But, what you do see is the relative strength vs. the S&P500 is steadily growing. A great sign, now we just need more upside volume.

I would love to begin a position with a bounce supported by volume from its 50dma.

Disclosure: No positions in AMPH, MXC. Author owns PDO

Posted in Categories: Contributor, External Research, Stocks, USA.

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