BWXT: added to our 'Momentum, Growth & Innovation'-PortfolioBWXT has been added as a new trade to our 'Momentum, Growth & Innovation'-Portfolio with 10% of total equity.
Here is a detailed analysis of the trade:
Technical Observations:
BWXT is fluctuating above its 50-day and 200-day moving averages, which suggests an overall bullish trend. The Bollinger Bands indicate a range where the stock has been trading, with recent price action closer to the lower band, potentially offering a good entry point as per Minervini's strategy.
Volume and Price Action:
The volume seems to be lower on down days, which could indicate a lack of seller conviction. This can be seen as a positive sign if you're looking for a potential upward movement.
Relative Strength Index (RSI):
The RSI is not in the overbought territory, which means there could be room for upside before the stock is considered overbought.
Fundamental Factors: The market capitalization of $7.04B and a dividend yield of 1.19% suggest a stable company. A P/E ratio of 31.74 is on the higher side, indicating investors may expect higher earnings growth. The earnings per share (EPS) of $2.43 is a critical figure for evaluating the company's profitability.
Growth and Profitability: The fundamental slide indicates the company’s performance in terms of revenue, net income, and net margin percentage. It appears there has been some volatility in net income margins, which could be a risk factor.
Here is a link to the fundamental data of this trade:
www.tradingview.com
Position Sizing:
Using 10% of your equity for this trade aligns with the concept of position sizing, which is critical in Minervini's strategy. It's essential to manage this position carefully and be ready to cut losses if the trade goes against the expected trend.
2) Summary of Minervini Trading Strategy
Trend Template: Minervini emphasizes stocks in a strong uptrend, above key moving averages, and showing outperformance against the market.
Volatility Contraction Pattern (VCP): He looks for stocks that have gone through periods of price contraction on lower volume, indicating potential for a breakout.
Relative Strength: The stock should be one of the market leaders, with a high relative strength rating.
Risk Management: Minervini is strict about cutting losses quickly to preserve capital. He advises setting a stop loss at the point where the original trade thesis is invalidated.
Entry and Exit Points: He advocates for entering trades as they break out from sound base patterns on higher volume, and exiting based on specific sell rules to capture the bulk of a stock’s advance without giving back significant gains.
Fundamental Analysis: While Minervini is a technical trader, he also considers strong fundamentals as a backbone for a stock's potential to succeed, looking for companies with strong earnings growth, return on equity, and profit margins.
