Last week was a positive week for the market overall. There was a slight pullback on Friday, but all the major indices still ended positive, and even hit some new all-time highs.
Of course the coronavirus is still an issue, which caused the market to pull back on Friday. But as I’m writing this pre-market Monday morning, the S&P is trading in the green.
However, until this whole issue is resolved, you should expect some volatility in the market, including in the stocks I pick here, so as always, keep that in mind and respond appropriately as needed.
That being said, let’s get to our summary of last week’s pick:
Previous Pick: [quote symbol=”ISRG” attribute=”companyName”/] (NASDAQ: ISRG)
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What a week! I posted last week my potential concerns about Intuitive Surgical (NASDAQ: ISRG), and as you can see it is still trading below the 20-day SMA.
However, in the last week since my recommendation, it has gone up 3.5%, beating out the S&P 500, which had increased a still impressive 3.2%.
But the question is, what’s next for ISRG? Should you hold onto it or take profits?
Check out this ADX chart. I actually didn’t show this chart last week, and you can see at first glance it looks pretty abysmal.
However notice in just the last week, the -DMI line has had a significant downtrend, and in fact the DMI lines look as though they are about to cross.
Yes the ADX trend is below 25 at the moment, but the crossing of the two DMI lines is a pretty strong buy signal.
I’ll also show the Relative Strength Index that I introduced last week. Remember I said I believed ISRG was approaching oversold territory.
Well, you can see that January 31, before I had made the recommendation, was the bottom of that trend and the RSI started trending upwards after that. Now it’s at a comfortable 47.9.
Once it crosses the 50 mark, I think that’ll be a real bullish signal.
Regardless of whether you already own ISRG or not, I think there’s still a strong bullish case for it, arguably even more than when I recommended it last week.
It is still unfortunately a Zacks Rank #3 (Hold), but I’ll update if that changes.
New Pick: [quote symbol=”PRFT” attribute=”companyName”/] (NASDAQ: PRFT)
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Data as of February 7, 2020
- Company name: Perficient, Inc.
- Exchange: NASDAQ
- Last close: $51.82
- 52 week low: $25.95 (2019-02-08)
- 52 week high: $52.87 (2020-02-06)
- Employees: 3,060
- sector: Commercial Services
- Industry: Personnel Services
- CEO: Jeffrey S. Davis
- website: http://www.perficient.com
- Peers: CRM, ACN, CBRI, IBM, VRTU, WIT, CTSH, MSFT
- Ticker: PRFT
- Market cap: 1.7B
- Avg. volume: 357,459
- Zacks Rank: 1 (Strong Buy)
- YTD change: 12.24%
- Beta: 0.94
- Forward P/E ratio: 25.28
- P/S ratio: 3.39
- PEG ratio: 1.35
- Div. yield: 0.00%
- Next earnings date: 2020-02-25
Perficient, Inc. engages in the provision of business optimization and industry solutions. Its solutions include analytics, custom applications, management consulting, commerce, content management, business integration, customer relationship management, portals & collaboration, platform implementations, business process management, enterprise data and business intelligence, enterprise performance management, enterprise mobile, cloud services and digital marketing. The company was founded in 1998 and is headquartered in St. Louis, MO.
About the Company
Founded in St. Louis, Missouri in 1998, Perficient, Inc (NASDAQ: PRFT) is a leading consulting firm that serves Global 2000 enterprise customers throughout North America and select offshore locations in India and China. The company is publicly traded on the Nasdaq Global Select Market, and with a 21 year run the company continues to make big strides for the new year.
Perficient offers mobile applications for business, creative services, digital marketing strategy, information technology, management consulting, and much more. The company reportedly has an estimated annual revenue of $1.6B with over 3,000 employees. As a trusted and secure partner to Fortune 1000 Enterprises, Perficient has become a reputable consulting firm with various opportunities for growth.
Since 2018, Perficient has acquired three digital consulting firms that totaled nearly $30M in revenue. Historically, they’ve acquired 16 companies. Just a little over a month ago, Perficient acquired MedTouch LLC, a digital healthcare marketing and technology consultancy that generated an annual revenue of $13M. So, not only does the company continue to grow their revenue and profit through acquisition, but positioning itself as a leader in digital consulting services has become a priority.
Perficient’s industry expertise includes automotive, energy, high tech, communications, financial services, life sciences, consumer markets, healthcare, and manufacturing. Serving different industries is just one reason why this company’s market placement will increase in value by the year. Another reason is that many of Perficient’s partners are heavy-hitters who only increase the company’s credibility on the market. Some of these well-known partners include IBM (NYSE: IBM), Microsoft (NASDAQ: MSFT), and even Amazon services (NASDAQ: AMZN).
On the other hand, Perficient’s top competitors include private companies, Clarkson Consulting, with an estimated annual revenue of $100M; and Hitachi Consulting with an estimated annual revenue of $1B.
The company is led by, Chairman, President, and CEO, Jeffrey Davis, Chief Operating Officer, Tom Hogan, and Chief Financial Officer, Paul Martin. All three have been with the company for more than ten years with experience in consultancy, technology, and accounting.
With Perficient’s newest acquisition, one can only wait and see how the company will turn out in upcoming quarterly results.
Why I Like Them
I’ve had my eye on Perficient for a while, and they’ve steadily been growing since adding them to my portfolio.
First of all, Perficient, Inc. is a Zacks Rank #1 (Strong Buy), just receiving its upgrade on February 4. Zacks has given it a target price of $60, 15.8% above its previous closing price of $51.82.
Its value fundamentals are decent though admittedly not great. It has a P/E of 25.28, only slightly above its industry’s average P/E of 21.68. The price-to-sales is a tad high at 3.39, though not unreasonably so.
But it has great growth potential. It has Q1 (current fiscal quarter) estimated EPS growth of 21.28%, and F1 (current fiscal year) estimated EPS growth of 29.56%. This seems to be accelerating, as its historical EPS growth is only 7.15% in comparison.
On the momentum side, it’s gained 12.24% year-to-date, compared to the S&P 500’s YTD change of 2.68%. It’s also gained 27.07% over the last 12-week period, again far outperforming the S&P 500’s 7.53% gain over the same time period.
PRFT just hit a new 52 week high of $52.87 on February 6.
Now for my favorite part, the charts.
As you can see, PRFT has been trading above it’s 20-day moving average pretty reliably over the last several months, without any sign of weakening.
Certainly there have been some filled candles, signifying down days, but it hasn’t been nearly as affected by the coronavirus as many other stocks have been.
This is a beautiful ADX chart, with an ADX above 40 and the +DMI showing a strong trend above -DMI. In fact they’ve barely budged despite the recent market pullback and only seem to be getting stronger.
Both of these charts are rather picture perfect for me. PRFT has been experiencing fast-paced yet steady momentum and doesn’t show any sign of stopping any time soon. With this in consideration, Zacks price target of $60 seems rather reasonable.
PRFT’s earnings report is set for February 25 before the market opens. I’d expect a run-up in price before then, though we’ll see if any analysts revise their estimates leading up to the report. It should be an interesting run regardless.
Intuitive Surgical experienced significant gains of 3.5% last week, and its chart seems to show that this momentum could just be getting started. However it has shown itself sensitive to the movement of the broader market, so if there’s any correction in the coming weeks, then ISRG will likely feel it as well.
Perficient, Inc. is a high-growth, high-momentum stock experiencing massive gains over the last 12 weeks. Despite just recently hitting its 52-week high, there’s no reason to expect it to slow down in the near future, especially with its earnings call coming up in just a couple weeks.
As always, I own positions in both these stocks. This is not to be taken as investment advice, and you take on any risk for following the guidance in this or any other post.