Wednesday, September 1, 2010

Simulations Plus Is Worth Watching

There aren't many stocks outside the gold universe that reside on my "A" list, but this is one of them. Stocks in general seem to be in a condition where they get jerked around by the latest fret or relief rally over global finances. Finding those that are dancing to their own music these days is tough. Simulations Plus (SLP) is a tiny company that seems to be doing just that. They in a good area of the market, "para-pharma". They assist drug companies with research programs, so they aren't that economy dependent. And the healthcare overhaul uncertainty storm has blown over. It's technical condition presents a plethoria of positives:

In addition to a nice looking cup and handle bottom, long since completed, it has been working on a resistance level at around $2. Earlier this year, this resistance was broken then successfully tested as support. This seems to be one of those stocks that likes to sneak up on investors and clobber them with a big climb after they've left the building. The chart shows the big moves up only after volume has gotten very quiet. It is at such a stage right now. It's trading close to a parallel 140/200 ema that has established a smooth uptrend. The stock was totally oblivious to the nasty tumble in February and the dive after April.

Fundamentally, eps has been in a steady climb since '05 with only a mild interruption in '09 (up over 100% in 5 years), and the ttm eps is up from '07 while the stock has been smashed from $8 to less than $2. Debt is zero, current ratio over 9, and the insiders love it, carrying a whopping 47% of the shares.

It's no gold stock, and it's not smartphone, but maybe the next best thing.

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