This company announced a new contract with Honeywell that "the Company estimates revenue in the range of $175 to $240 million over a 4 to 5 year period."
http://biz.yahoo.com/bw/050608/85461.html?.v=1
Technically, the stock moved into breakout mode today on extremely heavy volume (relative to 10-day and 3-month averages) and it's trading above its 52-week high of $13.37 set on 03-Feb-2005...
http://stockcharts.com/gallery/?ECOL
I bought at $14.89 today at 11:03. I believe the momentum and the good news will carry this to $16-$17 over the next couple of weeks, regardless of market action and only barring an unforeseen event, e.g., a terrorist attack [God forbid] or negative Middle East developments.
Note also that of the 17.48 million shares outstanding, the float is 11.34 million. To me, that means day- and momentum traders may bid up the price more if the story gets out.
For fundamentals, please check...
http://finance.yahoo.com/q/ks?s=ECOL
This has moved up faster than I thought. Because it closed ($16.22) near the high of the day ($16.27), the upward momentum should carry over into tomorrow.
Here are additional points to consider on the contract, conservatively speaking:
- If you assume a 10% profit margin on the low end of the contract value, then the Company will earn $17.5-million over 5 years or about $1 per share. And that's $0.20 per year starting next calendar quarter.
- Applying a multiple of 20 to the $0.20, the stock is $4 more than it was before the contract was announced.
- Closing price on 07-Jun was $12.63, so, conservatively speaking, the stock is now worth $16.63 .
(You can find a similar discussion at http://finance.messages.yahoo.com/bbs?.mm=FN&action=m&board=7080686&tid=ecol&sid=7080686&mid=1752.)
Change any of the conservative assumptions above and you have a higher current stock price.
A new 52-week high today with the market trending down.
I will look to exit my position soon, as the price is now above what I previously explained to be fair value. Looking at a 13%-14% return in a week; decent, I think.
I'm not sure about your experience, David, with selling stocks that have run well (IIJI aside), but I am often challenged when I *should* sell. Consequently, I end up with a smaller profit. It's not about timing the top but more about discipline.
RSI has been in overbought range for a while now...
http://stockcharts.com/def/servlet/SC.web?c=ECOL
The only favourable factor supporting a further price rise is the volume of this upleg (seems average and is less than the volume of the previous downleg; see P&F chart). Good news attracts new buyers, so it's quite possible for this to move to even $18 on momentum.
http://stockcharts.com/gallery/?ECOL
In the end, I don't want to get too greedy. As David says, other opportunities abound.
I'm out at $17.50; that translates into a gain of 17.5% in about 2 weeks.
All other things being equal, I would definitely buy again after a healthy correction. A 50% retracement of this up-leg would whet my appetite.
nice trade chakkar ;)
ECOL making a mid term trend change bullish in a long temr bullish trend. gotta love it! :o