Curious Investments: Savvis (SVVS)
I realized that I often use graphs of certain companies’ stocks in my posts and that it may be misleading for some. While I do publicize my current stock holdings (click to see my portfolio holdings), the link isn’t really prominent (it’s in the right sidebar under the ticker) and I don’t really make it a point to tell people when I’ve updated my holdings. Well, in the interests of better disclosure, I’m going to start better tracking changes in positions in my portfolio. I do my best to remain objective in all my posts, but, in case I do seem like I’m pumping up a stock too much, now you will be able to tell if I have ulterior motives.
Well, I have to admit that I made a huge mistake with Nucor. The stock has dropped 8% since I purchased it and it is my policy to get out of any position which loses 8%. In my opinion Nucor is decently valued at this point and the interest in it was more speculative than anything else. With people’s hopes coming crashing back to earth with a slurry of not so great news about Nucorp itself and the American steel industry as a whole, I don’t see the stock being a worthwhile pick for the next few months and maybe even the whole year. As I’m a month-to-month/quarter-to-quarter investor, that makes Nucorp especially unattractive to me.
I’ve quickly moved to another position, Savvis (SVVS) and I continue to invest my portfolio 50-50. Savvis is a communications and IT services provider and a quick survey of Yahoo! Finance statistics as well as quarterly earnings reports over the last two years show the company to have strong revenue and earnings growth though the company continues to lose money and maintains a debt-to-equity ratio that I’m not entirely comfortable with. While I normally don’t like to invest in stocks which are not profitable, the performance of Savvis’ stock over the last 18 months makes me confident enough that this should not be an issue for at least another quarter and, since it is considered a leader in an industry which is very hot right now, there don’t seem to be many other warning signs of potential near-term “media shocks” (my term for bad news).
As far as the chart goes, the stock boomed through its 52-week high today and seems to be coming out of a 7-8 month long flat base. MACD just signaled and has room before it reaches relative overbought range. The RSI continues to make progressive highs with the stock but is reaching overbought territory (which would confirm the uptrend though makes me a bit wary). OBV is congruent with price movement and the stock’s price which has been flirting with a break through the price channel has finall done it today. If I am correct in predicting this run-up, it will be the second run-up since the stock dropped over 50% about 18 months ago. The first run represented a near 300% gain, and I think this time the uptrend will comfortably take the stock to the 42-43 dollar range.
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