Newsletter Watch: Small-cap medical stocks
Ticker Tape Digest newsletter editor Leo Fasciocco has an intriguing approach to selecting stocks. Although he focuses on fundamentals, the basis of his stock-picking strategy is rooted in technicals — more specifically: breakouts.
All of his “long” recommendations are stocks that are rising from a long-term base and are either poised to break out or have just broken out above resistance levels. (Conversely, his short sale recommendations are stocks that have broken down from a base and are poised to move below support.)
Two of his latest “breakout buys” are small-cap medical plays: Natus Medical (Nasdaq:BABY), which develops medical exams to diagnose medical disorders in fetuses and infants and Kensey Nash (Nasdaq:KNSY), which makes absorbable medical devices to seal arterial punctures created during diagnostic and therapeutic cardiovascular procedures.
Natus, based in San Carlos, Calif., has annual revenues of $130 million. Its products include ALGO, a screening device to test newborn hearing; Minimuff, an ear cover that reduces the noise an infant hears in neonatal intensive care units; and LED phototherapy systems to treat babies with jaundice.
Technical, he says that the stock has recently broken out from a 10-week flat base. “That action could well draw in new buying. The key is to notice that the price paid for blocks of stock have risen, which shows institutions are willing to pay up,” he says.
The stock has appreciated 45% the past 12 months, which, he says easily outperformed the 15% decline in the S&P 500 index. Overall, Fasciocco is bullish the stock's technicals and notes that its momentum indicator is extremely positive. He says that . . .
All of his “long” recommendations are stocks that are rising from a long-term base and are either poised to break out or have just broken out above resistance levels. (Conversely, his short sale recommendations are stocks that have broken down from a base and are poised to move below support.)
Two of his latest “breakout buys” are small-cap medical plays: Natus Medical (Nasdaq:BABY), which develops medical exams to diagnose medical disorders in fetuses and infants and Kensey Nash (Nasdaq:KNSY), which makes absorbable medical devices to seal arterial punctures created during diagnostic and therapeutic cardiovascular procedures.
Natus, based in San Carlos, Calif., has annual revenues of $130 million. Its products include ALGO, a screening device to test newborn hearing; Minimuff, an ear cover that reduces the noise an infant hears in neonatal intensive care units; and LED phototherapy systems to treat babies with jaundice.
Technical, he says that the stock has recently broken out from a 10-week flat base. “That action could well draw in new buying. The key is to notice that the price paid for blocks of stock have risen, which shows institutions are willing to pay up,” he says.
The stock has appreciated 45% the past 12 months, which, he says easily outperformed the 15% decline in the S&P 500 index. Overall, Fasciocco is bullish the stock's technicals and notes that its momentum indicator is extremely positive. He says that . . .
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