JANUARY
ISSUE NO.3
2021
IN THIS ISSUE:
ROSS HABER & TL TEAM
2020 Model Book
AMZN
1
2020 Model Book
AMZN
Amazon.com
Sector:
Industry:
Consumer Discretionary
Internet & Direct Marketing
Summary: Amazon.com, Inc. engages in the retail sale of consumer products and subscriptions in North
America and internationally. It sells merchandise and content purchased for resale from third-party sellers
through physical and online stores. The company also manufactures and sells electronic devices, including
Kindle, Fire tablets, Fire TVs, Rings, and Echo and other devices; provides Kindle Direct Publishing, an online
service that allows independent authors and publishers to make their books available in the Kindle Store; and
develops and produces media content.
AMZN was not the most powerful leader of 2020 by any means. However, its EPS, revenues and EPS
estimates cannot be ignored, and its price volume action was extremely healthy and constructive.
It clearly respected its 23-EMA throughout the length of its run and despite ultimately moving sideways the
past 6 months, AMZN is still the leader of its group.
AMZN’s quarter over quarter EPS has accelerated over the prior 3 quarters to a rate of 192% in their most
recent quarter, backed by a solid stream of sales.
Their annual earnings grew by 51% in 2020 and the street is looking for 29% in 2021.
Also, AMZN’s ROE has accelerated from 18.5% to 25.5% over the prior 3 quarters and it continues to be wellloved by 7 of MarketSmith’s flagship funds.
AMZN broke out through $1,933.02 on April 6th as the NASDAQ followed through and made an all-time high
of $3,552.25 on September 2nd for a gain of 84% in 20 weeks.
AMZN has gone on to build a constructive base since, and with a little more time, it looks like AMZN could be
off to the races again in 2021.
2
2020 Model Book
CRWD
3
2020 Model Book
CRWD
CrowdStrike
Sector:
Industry:
Technology
Application Software
Summary: CrowdStrike Holdings, Inc. provides cloud-delivered solutions for next-generation endpoint
protection in the United States, Australia, Germany, India, Romania, and the United Kingdom. It offers 11
cloud modules on its Falcon platform through software as a service subscription-based model that covers
various security markets, such as endpoint security, security and IT operations, and threat intelligence to
deliver comprehensive breach protection even against today’s most sophisticated attacks. CrowdStrike
Holdings, Inc. was founded in 2011 and is headquartered in Sunnyvale, California.
The computer security software group was on fire in 2020 and CRWD was a major leader in the space.
CRWD grew their quarter over quarter earnings at a triple-digit pace over the prior 4 quarters and saw
acceleration over the last three.
CRWD’s quarter over quarter revenue stream grew at a rate of 84 – 89% over the prior 4 quarters, which is not
only large but consistent.
CRWD has seen a tremendous pick-up in their annual earnings over the last 3 years and the street is looking
for 45% growth in 2021.
Institutional sponsorship grew consecutively for the last five quarters and Fidelity’s Contrafund, which is a
MarketSmith flagship fund, had a position as of the end of 2020.
CRWD broke out through $59.50 on April 7th, one day after the NASDAQ followed through and hit an all-time
high of $227.39 on December 24th for a move of 282% in 34 weeks.
4
2020 Model Book
DOCU
5
2020 Model Book
DOCU
DocuSign
Sector:
Industry:
Information Technology
Application Software
Summary: DocuSign, Inc. provides cloud-based software in the United States and internationally. The
company provides an e-signature solution that enables businesses to digitally prepare, execute, and act on
agreements. It also offers DocuSign CLM, which automates workflows across the entire agreement process;
Intelligent Insights that use artificial intelligence to search and analyze agreements by legal concepts and
clauses; and Negotiate for Salesforce that supports approvals, document comparisons, and version control.
The company was founded in 2003 and is headquartered in San Francisco, California.
Other than a rough quarter in July 2019, DOCU’s fundamental snapshot is top-notch.
DOCU was a major leader in the computer enterprise software group, which exhibited tremendous strength
throughout 2020, and was a clear driver behind the powerful trend in the general market. Despite not seeing
quarter over quarter acceleration, DOCU grew quarterly earnings at a swift pace.
Fortunately, DOCU’s quarterly earnings growth was backed by solid double-digit revenue growth, which
accelerated consecutively over the last 4 quarters.
DOCU’s annual earnings growth over the last 5 years was textbook. Their earnings picked up every year
consecutively from a loss of $0.79/share in 2016, to a gain of $0.31/share in 2020.
It certainly doesn’t hurt that DOCU’s estimates for fiscal ’21 and ’22 are enormous at 139% and 50%
respectively. Additionally, DOCU’s ROE has increased every quarter for the last 4 quarters from 10.2% to
24.8% in the most recent quarter.
DOCU broke out through $88.27 on March 30th about a week before the NASDAQ followed though and ran up
to an all-time high of $290.23 on September 2nd for a gain of 229%.
6
2020 Model Book
ETSY
7
2020 Model Book
ETSY
ETSY, Inc.
Sector:
Industry:
Consumer Discretionary
Internet & Direct Marketing
Summary: Etsy, Inc. operates online market places for buyers and sellers. Its online market places include
Etsy.com and Reverb.com. The company offers approximately 66 million items in its various retail categories
to buyers. It also provides various seller services, including Etsy Payments, a payment processing service;
and Etsy Ads, an advertising platform. Etsy, Inc. was founded in 2005 and is headquartered in Brooklyn, New
York.
ETSY’s fundamental snapshot was outstanding by the end of 2020 and has been for a few years now. Even
though ETSY experienced a notable slowdown in their quarter over quarter earnings growth during the second
half of ‘19 and the first quarter of ‘20, they experienced triple-digit earnings growth and acceleration of 113%
to 367% over the 3 quarters prior, from the quarter ended December ‘18 to quarter-end, June ‘19.
ETSY’s quarter over quarter revenue growth also experienced a slowdown during the second half of ‘19 and
the first quarter of ‘20, but not nearly to the same degree. Their revenue growth only experienced a slight
deceleration comparatively, and then accelerated in a big way over its most recent 3 quarters, which carried
over to their earnings over the same period.
Not surprisingly, ETSY’s quarter over quarter growth in ROE also exploded from 18.6% to 48.5% over its most
recent 3 quarters. ETSY’s annual earnings growth has been accelerating at a swift pace over the last 5 years,
from a loss of $0.49/share in 2015 to what’s shaping up to be a huge year once their final quarter of 2020 is
reported. The retail internet group has been among the top ranks of leading industry groups for a few years
now and ETSY has been a big RS winner since the beginning of 2016.
Finally, institutional sponsorship in ETSY has picked up in a big way over the prior 5 quarters and as of the
most recent quarter, 4 of MarketSmith’s flagship funds hold positions. ETSY broke out through $44.40 on
April 6th as the NASDAQ followed through and ran up to an all-time high of $198.50 on December 22nd.
8
2020 Model Book
FVRR
9
2020 Model Book
FVRR
Fiverr.com
Sector:
Industry:
Consumer Discretionary
Internet & Direct Marketing
Summary: Fiverr International Ltd. operates an online marketplace worldwide. Its platform enables sellers to
sell their services and buyers to buy them. The company’s platform includes approximately 300 categories in
eight verticals, including graphic and design, digital marketing, writing and translation, video and animation,
music and audio, programming and technology, business, and lifestyle. The company was founded in 2010
and is headquartered in Tel Aviv, Israel.
FVRR was an extremely powerful leader in the retail internet group in 2020. The retail internet group exhibited
solid relative strength throughout the year, with many other high quality, high relative strength stocks in the
group confirming its move.
2020 will be FVRR’s first year of positive earnings, assuming their final report for the year is near what the
street is currently expecting. In ‘19 FVRR lost $0.50/share. However, analysts are currently looking for them
to earn about $0.27/share by the end of fiscal 2020.
FVRR’s spectacular earnings acceleration story doesn’t end here. The street is looking for a staggering 159%
growth over fiscal ‘21.
FVRR’s quarter over quarter earnings showed a similar turnaround from negative to positive and have
accelerated big time over the last 2 quarters.
The acceleration in FVRR’s institutional sponsorship has been explosive over the prior 7 quarters. Not to
mention, 4 of MarketSmith’s flagship funds held positions in the stock as of their most recent quarter.
FVRR broke out through $26.98 on April 8th and ran up to an all-time high of $228.49 on December 22nd for a
gain of 747% in 34 weeks.
10
2020 Model Book
NIO
11
2020 Model Book
NIO
NIO Limited Designs
Sector:
Industry:
Consumer Discretionary
Automobile Manufacturers
Summary: NIO Limited designs, manufactures, and sells electric vehicles in the People’s Republic of China,
Hong Kong, the United States, the United Kingdom, and Germany. The company offers five, six, and sevenseater electric SUVs. It is also involved in the provision of energy and service packages to its users;
marketing, design, and technology development activities; manufacture of e-powertrains, battery packs, and
components; and sales and after-sales management activities. NIO Limited was founded in 2014 and is
headquartered in Shanghai, China.
NIO is clearly not included in this model book for its phenomenal earnings track record. They haven’t earned a
dime since 2016 and the street is looking for a loss of $0.33/share for fiscal 2021. However, this should be a
big improvement over their EPS loss for 2020 once they report their final quarter.
Conversely, NIO’s quarter over quarter revenue stream is worth noting. By no means have their revenues been
accelerating in a smooth, consistent manner. However, they have exhibited the ability to generate some
extremely powerful quarters, especially their most recent 2, at 140% and 159% respectively.
The major reason NIO was included in this model book was that it has been part of one of the most powerful
themes, sectors/industry groups in the market for the last few years and it appears as if this should continue
well into the future. Remember, nearly 50% of a leading stock’s price performance is directly correlated to
its sector and industry group, and NIO has been a super RS leader in the space.
NIO started off the year trading below $5.00, a relatively ignorable penny stock. However, by August 25, 2020,
it broke out of a cup and handle base through $15.45 on huge volume, offering CANSLIM style investors a
clear buying opportunity.
For those traders/investors open to a bit more risk, NIO could have been purchased even earlier, at lower
prices, due to its extreme liquidity. Nevertheless, even if you didn’t get started until $15.45 at the end of
August, NIO reached an all-time high of $66.99 on January 11, 2021, which is a gain of 334% in about 10
weeks.
12
2020 Model Book
PINS
13
2020 Model Book
PINS
pinterest.com
Sector:
Industry:
Communication Services
Interactive Media & Services
Summary: Pinterest, Inc. provides a visual discovery engine in the United States and internationally. The
company’s engine allows people to find inspiration for their lives, including recipes, home and style ideas,
travel destinations, and others. It shows them visual recommendations based on people’s personal tastes
and interests. Pinterest, Inc. was founded in 2008 and is headquartered in San Francisco, California.
PINS has been a high RS, powerful leader in the internet content group, which has graced the lists of topperforming industry groups for quite some time now.
PINS quarter over quarter earnings growth is powerful, yet erratic. Their quarter over quarter revenue stream,
on the other hand, has grown at a much more stable pace, other than a quick dip in the quarter ended June
‘20.
The pace at which PINS’ annual earnings have grown over the last 5 years has been nothing short of
phenomenal and the street is expecting 129% growth over fiscal ‘21.
Institutional sponsorship in PINS has picked up at a furious pace, showing big acceleration every quarter for
the last 8 quarters consecutively.
Additionally, 5 of MarketSmith’s flagship funds held positions in PINS as of their most recent quarter.
PINS is a very recent, high quality, liquid IPO. It came public on April ‘19, so it still has plenty of room to
continue growing from here assuming their earnings stay on track.
PINS broke out through $16.13 on April 8th and ran up to an all-time high of $75.44 on December 23rd for a
gain of 368% in 34 weeks.
14
2020 Model Book
PTON
15
2020 Model Book
PTON
Peloton Interactive
Sector:
Industry:
Consumer Discretionary
Leisure Products
Summary: Peloton Interactive, Inc. provides interactive fitness products in North America and internationally.
It offers connected fitness products, such as the Peloton Bike and the Peloton Tread, which include a
touchscreen that streams live and on-demand classes. The company also provides connected fitness
subscriptions for multiple household users, and access to all live and on-demand classes, as well as the
Peloton Digital app for connected fitness subscribers to provide access to its classes. Peloton Interactive,
Inc. was founded in 2012 and is headquartered in New York, New York.
PTON has been one of the most powerful RS leaders in its group over ‘20, which is the leisure services group
as per MarketSmith. Both the leisure services group as well as the leisure products group were big
contributors to the strength behind the overall trend in ‘20.
Additionally, many fundamentally sound, leading stocks throughout the entire sector were given a big boost
by the COVID-19 lockdowns. PTON reported quarter over quarter earnings growth of 259% and 211% over
their most recent 2 quarters on the heels of losses for the 6 quarters prior.
Conversely, PTON’s earnings have been fueled by massive quarter over quarter revenue growth over the past
8 quarters, which is a huge positive. PTON has yet to report a positive year of earnings. However, they lost
much less in ‘20 than they did in ‘19, and the street is expecting enormous annual growth over ‘21 and ‘22.
Currently, the street is looking for PTON to earn $0.35 in ‘21 vs a loss of $0.32 in ‘20, and their current
estimate for ‘22 is $0.76, which would be an increase of 117%.
Finally, institutional sponsorship in PTON has accelerated at an incredible pace over the last 6 consecutive
quarters. Also, two of MarketSmith’s flagship funds hold positions in the stock as of their most recent
quarter. PTON broke out through $27.38 on March 30th and ran up to an all-time high of $167.37 on
December 24th for a gain of 368% in 35 weeks.
16
2020 Model Book
RARE
17
2020 Model Book
RARE
Ultragenyx Pharmaceutical
Sector:
Industry:
Health Care
Biotechnology
Summary: Ultragenyx Pharmaceutical Inc., a biopharmaceutical company, focuses on the identification,
acquisition, development, and commercialization of novel products for the treatment of rare and ultra-rare
genetic diseases in the United States. Its biologic products include Crysvita (burosumab), an antibody
targeting fibroblast growth factor 23 for the treatment of X-linked hypophosphatemia; and Mepsevii, an
enzyme replacement therapy for the treatment of children and adults with Mucopolysaccharidosis VII.
RARE is part of the Biomed/Biotech group, which has been a major contributor to the general market’s
uptrend for quite some time now, but was a notable force behind the market’s powerful move higher in ‘20.
As per MarketSmith, the Biomed/Biotech group currently consists of 645 stocks and is the third strongest
group of the 14 groups in the medical sector, many of which have participated
By no means is RARE an earnings story, which is quite often the case in the Biomed/Biotech group.
In many cases, however, the leaders in this group will have a powerful revenue stream as is the case with
RARE.
RARE’s quarter over quarter earnings growth were nothing short of spectacular over the prior 8 quarters, and
their quarter over quarter earnings acceleration over their most recent prior 3 quarters was an eye-popping
100%, 156%, and 216% consecutively.
Institutional sponsorship in RARE has increased consecutively for the last 4 quarters and 3 of MarketSmith’s
flagship funds held positions in the stock as of their most recent quarter.
RARE broke out through $45.40 on April 1 and rose to an all-time high of $179.65 on December 24th, for a
gain of 296% in 31 weeks.
18
2020 Model Book
SNAP
19
2020 Model Book
SNAP
Snapchat
Sector:
Industry:
Communication Services
Interactive Media & Services
Summary: Snap Inc. operates as a camera company in the United States and internationally. The company
offers Snapchat, a camera application that helps people to communicate through short videos and images
called Snaps. It also provides Camera, a tool to personalize and add context to Snaps; Chat that allows
creating and watching stories, chatting with groups, making voice and video calls, and communicating
through a range of contextual stickers and Bitmojis; and Discover that helps to surface the stories and shows
from publishers, creators, and the community based on a user’s subscriptions and interests.
SNAP was an extremely powerful leader in the internet content group throughout 2020. Furthermore, the
internet content group exhibited consistent strength throughout ‘20 and was home to several other powerful,
high relative strength leaders with superior fundamentals.
SNAP came public during the first week of March ‘17 and took until the third week in October of ‘20 to find a
low, recover and ultimately break out through the $26.05 high it printed on the day of its IPO. That’s basically
a 32 month IPO U-turn which is very easy to see on its monthly chart. It ultimately carves out a big inverse
head and shoulders pattern, also referred to as a head and shoulders bottom over that period.
SNAP’s quarter-over-quarter earnings are nothing to write home about and it has yet to finish in the black on
an annual basis going back the last 7 years.
Conversely, SNAP’s quarter over quarter revenues were not only solid but very consistent. Other than a dip to
17% in the quarter ended June ‘20, SNAP reported quarter over quarter sales in the 40% – 50% range every
other quarter, going back 8 quarters. Additionally, SNAP’s institutional sponsorship has increased every
quarter for the last 8 quarters consecutively. Their fund ownership grew from 195 funds for the quarter ended
March ‘19, to 953 funds for the quarter ended Dec ‘20. That is an increase of 389%!
It is also worth noting that 4 of MarketSmith’s flagship funds held positions in the stock as of the December
‘20 quarter-end. SNAP broke out through $12.60 on April 8th and ran up to an all-time high of $54.71 on
December 17th for a gain of 334% in 33 weeks.
20
2020 Model Book
SQ
21
2020 Model Book
SQ
square, inc.
Sector:
Industry:
Information Technology
IT Services - Data Processing
Summary: Square, Inc. provides, together with its subsidiaries, payment and point-of-sale solutions in the
United States and internationally. The company’s commerce ecosystem includes point-of-sale software and
hardware that offers sellers payment and point-of-sale solutions. Square, Inc. was founded in 2009 and is
headquartered in San Francisco, California.
SQ is a well-known name currently in the credit card/payment processing industry group as per Marketsmith’s
database, which is broken up into 197 industry groups. The credit card/payment processing group may not
always be ranked in the top third of all 197 industry groups. Nevertheless, it has home to quite a few powerful
leaders, with superb fundamentals for ‘20 and well before.
I have found that as long as there are at least 3 or 4 other high quality, high relative strength stocks in the
same group for confirmation, you are in good shape. This is more important than the stock’s industry group
rank.
SQ’s quarter over quarter earnings clearly took a hit in the quarter ended March ‘20. However, it is important
to keep in mind that SQ is just one of many that saw a dip over the same time period due to COVID-19.
Millions upon millions of people were hurt so bad financially that they were unable to continue covering their
most basic necessities, like housing and food.
SQ’s quarter over quarter revenue growth was much more resilient and even saw notable acceleration over
their 3 most recent quarters. For the quarters ended March, June, and September of ‘20, SQ grew their
revenues at 44%, 64%, and 140% respectively. SQ’s sponsorship increased every quarter for the last 6
quarters. Not to mention, 6 of MarketSmith’s flagship funds held positions in the stock as of their most
recent quarter.
Finally, SQ’s ROE is currently at a stout 27%. SQ broke out through $59.25 on April 9th and ran up to an alltime high of $243.38 on December 22nd for a gain of 311% in 33 weeks.
22
2020 Model Book
TSLA
23
2020 Model Book
TSLA
tesla, inc.
Sector:
Industry:
Consumer Discretionary
Automobile Manufacturers
Summary: Tesla, Inc. designs, develops, manufactures, leases, and sells electric vehicles, and energy
generation and storage systems in the United States, China, Netherlands, Norway, and internationally. The
company operates in two segments, Automotive; and Energy Generation and Storage. The Automotive
segment offers sedans and sport utility vehicles. It also provides electric powertrain components, systems,
and services for electric vehicles through its company-owned service locations, Tesla mobile service
technicians, as well as sells, used vehicles. Tesla, Inc. was founded in 2003 and is headquartered in Palo
Alto, California.
TSLA was one of the most powerful leading growth stocks of 2020. It is the clear leader in the red hot electric
vehicle space, showing triple-digit, quarter over quarter earnings growth of 140%, 300%, and 105% for the
quarters ended March, June, and September of ‘20.
TSLA’s quarter over quarter revenues are far from stable, although they are certainly not lacking, with 39%
growth reported in their most recent quarter.
TSLA’s annual earnings growth has been accelerating at a furious pace since 2017. TSLA is expected to earn
$2.40/share once their final quarter is reported for fiscal ‘20, and the street is currently looking for them to
earn $3.87/share in 2021, which would be 61% growth.
Institutional sponsorship in TSLA has picked up every quarter, for the last 7 quarters and 3 of MarketSmiths
flagship funds held positions in the stock as of their most recent quarter.
TSLA broke out through $154.99 on April 27th and ran up to an all-time high of $718.72 on December 31st for
a gain of 364% in 32 weeks.
24
2020 Model Book
Z
25
2020 Model Book
Z
Zillow Group
Sector:
Industry:
Communication Services
Interactive Media & Services
Summary: Zillow Group, Inc. operates real estate brands on mobile and the web in the United States. It
operates through three segments: Homes; Internet, Media & Technology; and Mortgages. The company’s
platform offers buying, selling, renting, and financing services for residential real estate. It also provides a
suite of marketing software and technology solutions; and advertising services. The company’s portfolio of
consumer brands consists of Zillow, Zillow Offers, Zillow Home Loans, Trulia, StreetEasy, HotPads, Naked
Apartments, and Out East; and business brands for real estate, rental, and mortgage professionals include
Mortech, dotloop, Bridge Interactive, and New Home Feed. Zillow Group, Inc. was founded in 2004 and is
headquartered in Seattle, Washington.
Z is the clear leader in its space, as well as the household name, or go-to website when it comes to checking
on the prices of homes and related information. Z’s quarter over quarter earnings finally turned positive in
their September ‘20 quarter after reporting 6 negative quarters in a row. They reported a gain of $0.37/share
vs a loss of $0.12/share for the same quarter a year prior, which is 408% growth.
Overall, Z’s quarter over quarter revenue growth has been rather powerful, glancing back over the prior 8
quarters. However, they’ve experienced a sharp deceleration over the prior 3 quarters. Their quarter over
quarter revenues for the quarters ended in March, June, and September of ‘20, shrunk to the tune of 148%,
28%, and -112% respectively, which is far from ideal.
Conversely, Z’s earnings and revenue estimates moving forward look a whole lot better. Their consensus
earnings estimate is currently for $0.27/share vs -$0.26/share in the quarter a year prior, which is an
enormous jump, despite the expected slowdown in quarter over quarter revenue growth over the next couple
quarters. Institutional sponsorship in Z hasn’t skipped a beat. It has picked up every quarter consecutively for
the last 8 quarters which is a 50% growth in the number of funds that held positions in the stock as of the last
quarter. Additionally, 2 of MarkstSmith’s flagship funds held positions in the stock as of their most recent
quarter. Z broke out through $43.74 on April 28th and ran up to an all-time high of $144.30 on December
22nd for a gain of 230% in 31 weeks.
26
2020 Model Book
ZM
27
2020 Model Book
ZM
Zoom Video
Sector:
Industry:
Information Technology
Application Software
Summary: Zoom Video Communications, Inc. provides a video-first communications platform. The
company’s product portfolio includes Zoom Meetings that offers HD video, voice, chat, and content sharing
through mobile devices, desktops, and conference room systems; and Zoom Phone, an enterprise cloud
phone system that provides secure call routing, call queuing, call detail reports, call recording, call quality
monitoring, voicemail, and switch to video.
ZM’s fundamental picture is absolutely off the charts! It would be hard to qualify both their quarter over
quarter and annual earnings and revenues as anything less than explosive. Therefore, it is not surprising that
ZM exhibited such massive relative strength, even as the general market was undergoing a sharp decline
back in February and March.
Not only did ZM start to display relative strength well before the NASDAQ followed through on April 6, but it
was also showing clear strength and power before COVID-19 really became a concern, which in turn propelled
ZM even higher as it became one of the “go-to” stay-at-home stocks. There is no shortage of other
companies that make similar software when it comes to video teleconferencing, yet ZM has taken over as the
clear new leader in the space.
ZM is one of the 83 stocks that make up the computer enterprise software group in MarketSmith’s database,
which was one of the strongest groups during 2020, and home to many other big winners with superior
fundamentals during the year. ZM’s quarter over quarter earnings growth over the last 8 quarters was
massive. Last year their quarter-over-quarter growth was 275%, 567%, 999%, and 999% for the quarters ended
January, April, July, and October of ‘20 respectively. That is some seriously huge earnings acceleration.
ZM’s quarter over quarter revenue growth over the same period was 78%, 169%, 355%, and 367%, which is
also an example of what incredible acceleration looks like. It should be no surprise that ZM’s annual earnings
were also not only enormous but also show ridiculous acceleration from 2018 – 2020 and the street is
currently looking for 731% growth in 2021. Institutional sponsorship in ZM has picked up every quarter, for
the last 7 quarters and much like their earnings and revenue numbers shows massive acceleration. Also, one
of MarketSmith’s flagship funds held a position in the stock as of their most recent quarter. ZM broke out
through $69.24 on January 6th and ran up to an all-time high of $588.84 on October 19th for a gain of 751%
in 37 weeks.
28
2019 Model Book
ARWR
30
2019 Model Book
ARWR
Arrowhead Pharmaceuticals
Sector:
Industry:
Health Care
Biotechnology
Summary: Arrowhead Pharmaceuticals, Inc. develops medicines for the treatment of intractable diseases in
the United States. Some of the company's pipeline includes ARO-AAT, a RNA interference (RNAi) therapeutic
candidate that is in Phase II clinical trial for the treatment of liver diseases associated with alpha-1
antitrypsin deficiency & ARO-APOC3, which is in Phase I clinical trial to treat hypertriglyceridemia.
ARWR has sported triple-digit EPS and sales growth for the prior 4 quarters, a sharp increase in institutional
sponsorship over the last 8 quarters, not to mention, a big turnaround in ROE over the prior 4 quarters.
ARWR triggered two clear entry areas at the beginning of its run. It then went on to form a constructive base
over the next few months and broke out on massive volume, offering a couple more entry areas along the
way.
ARWR then continued higher in an organized, stair-step pattern as its rate of ascent steepened.
ARWR broke out through $15.13 on 2/8/19 and traded as high as $73.72 on 11/29/19, which so far, is a gain
of 387% in 40 weeks.
31
2019 Model Book
SHOP
32
2019 Model Book
SHOP
Shopify
Sector:
Industry:
Technology
Software - Enterprise
Summary: Shopify Inc. provides a cloud-based multi-channel commerce platform for small and medium-sized
businesses in the United States, the United Kingdom, Canada, Australia, and internationally.
SHOP's qtr. over qtr. EPS and sales have been very strong for the last 8 Qtrs. and then some. However, it’s
worth noting that SHOP’s September’s qtr. over qtr. EPS dropped off into the red on both the September ’18
and September ’19 Qtrs., despite revenues maintaining
their solid double-digit growth of about 50%.
The only other chink in SHOP’s armor is that it is currently forming a 6th stage base, which is considered late
and thus has a much higher probability of failing than a stage-1 or stage-2 base. Otherwise, SHOP is a big
leader in its group with a relative strength rating of 98 and a huge pick-up in institutional sponsorship, each
quarter, for the last 8 quarters in a row.
SHOP has been a stellar performer since July 2016. It broke out through $164.13 on 1/31 and hit an all-time
high of $409.61 on 8/27 for a gain of 150% in 28 weeks. Despite a few shakeouts below its 21-DMA and 23EMA during its massive run, it respected its 50-DMA and 65-EMA until it topped and rolled over.
SHOP is currently attempting to break out from its most recent, late-stage base, which intrinsically carries a
much higher risk, although it appears to be back under accumulation, since the beginning of December.
33
2019 Model Book
BEP
34
2019 Model Book
BEP
Brookfield Renewable Partners
Sector:
Industry:
Utilities
Alternative
Summary: Brookfield Renewable Partners L.P. owns a portfolio of renewable power generating facilities
primarily in North America, Colombia, Brazil, Europe, India, and China. The company generates electricity
through hydro, wind, solar, cogeneration, and biomass sources. Its portfolio consists of approximately 17,400
megawatts of installed capacity.
BEP's quarter over quarter earnings were growing at a solid triple-digit pace until its most recent quarter.
Also, alternative energy stocks have been a leading industry group since the beginning of the year and BEP
has been one of its top performers.
BEP broke out through $29.11 at the beginning of February 2019 and hit an all-time high of $48.72 on
12/10/19 for a gain of 67%.
This stock trades in a very tight and organized manner has yet to close below its 65-EMA and has respected
its 23-EMA throughout the majority of its run. Stocks that trade in this manner are much easier to hold.
35
2019 Model Book
CDLX
36
2019 Model Book
CDLX
Cardlytics, Inc.
Sector:
Industry:
Technology
Software - Enterprise
Summary: Cardlytics, Inc. operates a purchase intelligence platform in the United States and the United
Kingdom. It operates in two segments, Cardlytics Direct and Other Platform Solutions. The company's
platform is the Cardlytics Direct solution, a proprietary native bank advertising channel that enables
marketers to reach consumers through their trusted and frequently visited online and mobile banking
channels.
CDLX reported 120% growth quarter over quarter for the most recent quarter, backed by a 63% increase in
sales. Also, institutional sponsorship has exploded over the prior 8 quarters.
CDLX’s float is just 14.7 million shares and its 50-day average volume is 530,000 shares, which makes for a
powerful mover.
CDLX broke out through $19.98 on 5/10/19 and made a new all-time high of $65.43 on 12/5/19, for a gain of
227%, and appears ready to head even higher.
CDLX has respected its 65-EMA since it broke out back in May, so a close below this key moving average
would be a major sell signal.
37
2019 Model Book
BLD
38
2019 Model Book
BLD
TopBuild Corp.
Sector:
Industry:
Discretionary
Construction Products
Summary: TopBuild Corp. engages in the installation and distribution of insulation and other building
products to the United States construction industry. The company operates in two segments, Installation, and
Distribution. It offers insulation products, rain gutters, glass and windows, fireproofing and firestopping
products, garage doors, fireplaces, shower enclosures, closet shelving, accessories, and other products; and
residential insulation services.
BLD has been growing quarter over quarter earnings at a solid double-digit rate over the prior 4 quarters,
although their sales growth has dropped off noticeably over the prior 2 quarters. This is a red flag and
something to be aware of if BLD begins to break down.
BLD has been trading in a tight and organized manner since it broke out through $51.49 on 1/13/19. It has
also shown great respect for its key moving averages along the way.
So far, any break of its 23-EMA has been contained by its 50-DMA and any break of its 50-DMA has been
contained by its 65-EMA.
BLD hit an all-time high of $113.74 on 11/27, which is a gain of 121% in 42 weeks and it could easily continue
higher from here.
39
2019 Model Book
COUP
40
2019 Model Book
COUP
Coupa Software
Sector:
Industry:
Technology
Software - Enterprise
Summary: Coupa Software Incorporated provides a cloud-based business spend management platform. The
company's platform connects organizations with suppliers globally; and provides visibility into and control
over how companies spend money, as well as enables businesses to achieve savings that drive profitability.
COUP has shown extremely strong EPS and sales growth, quarter over quarter for the last 8 quarters, not to
mention, its institutional sponsorship has risen swiftly and consecutively for the last 8 quarters as well.
COUP has shown tremendous power since the beginning of 2018 and has been one of the more stellar
performers in the enterprise software group over the last couple of years.
COUP broke out through $67.34 on 1/15/19 and hit an all-time high of $156.16 on 9/6/19, before rolling over
and closing below its 65-EMA for the first time. That is a gain of 132% in 31 weeks.
Also, COUP made a new all-time high of $159.97 on 10/14/19 and is currently building a new base.
41
2019 Model Book
INMD
42
2019 Model Book
INMD
InMode Ltd.
Sector:
Industry:
Health Care
Medical Systems - Equipment
Summary: InMode Ltd. designs, develops, manufactures, and markets minimally-invasive aesthetic medical
products based on its proprietary radiofrequency assisted lipolysis and deep subdermal fractional
radiofrequency technologies. The company offers minimally-invasive aesthetic medical products for various
procedures, such as liposuction with simultaneous skin tightening, body and face contouring, and ablative
skin rejuvenation treatments.
INMD has exhibited tremendous earnings and sales growth quarter over quarter for the last 8 quarters. Also,
INMD’s industry group exhibited notable relative strength throughout 2019.
Unfortunately, there is only one quarter of sponsorship data currently available for INMD, so there is no basis
for comparison yet. INMD is a recent IPO in the medical systems/equipment group which has been a very
powerful leading group for over 2 years.
INMD became one of the most powerful stocks in the group very quickly after it went public and is now the
most powerful stock in the group with a relative strength rating of 99.
INMD broke out through $29.38 on 10/22/19 and hit an all-time high of $58.76 on 11/18/19 for a gain of
exactly 100% in slightly less than a month. Keep in mind, INMD was as low as $13.06 when it came public on
8/8/19. So, that would be a 352% gain in just 14 weeks, using its all-time high of $58.76 on 11/18/19.
INMD could triple, or quadruple again from here, however, it will have to be able to maintain or improve its
stellar record of EPS and sales growth for that to happen.
43
2019 Model Book
NVCR
44
2019 Model Book
NVCR
NovoCure Limited
Sector:
Industry:
Health Care
Medical Products
Summary: NovoCure Limited, an oncology company, engages in the development, manufacture, and
commercialization of Optune for the treatment of a variety of solid tumors. The company markets Optune
and NovoTTF-100L, a Tumor Treating Fields delivery system for use as a monotherapy treatment for adult
patients with glioblastoma. It is also developing products that are in Phase 2 pilot and Phase 3 pivotal trials
for brain metastases, non-small cell lung cancer, pancreatic cancer, ovarian cancer, liver cancer, and
mesothelioma.
NVCR got a pass early on even though it was lacking the quarter over quarter EPS growth. Actually, it was
devoid of EPS altogether until its most recent quarter.
This is because it was a top performing stock in a robust group of leaders, with a great story. NVCR has a
state-of-the-art medical technology known as Tumor Treating Fields, which are proving effective in fighting
many kinds of solid tumor types, including some of the most aggressive forms of cancer.
When a company is drastically changing people’s lives in the way that NVCR has been doing, it’s ok to make
an exception for their EPS because everything else is hitting on all cylinders. NVCR is a great example of a
stock that stair-steps its way higher in an organized manner, respecting its 21-DMA and 23-EMA the entire
way, which makes it much easier to know when to sell.
Another benefit of a stock that trades in this manner is that it is much easier to have conviction adding to
your position when it pulls back to logical support. It always looks easy in hindsight, but when the general
market is under pressure and emotions are running high, the last thing most traders want to do is buy, even
when a stock is at logical support. This is why it’s so important to have sound rules and a plan.
NVCR broke out through $49.09 on 5/9/19 and hit an all-time high of $98.70 on 8/21/19, which is a gain of
101% in 14 weeks.
45
2019 Model Book
PAYC
46
2019 Model Book
PAYC
Paycom Software, Inc.
Sector:
Industry:
Information Technology
Application Software
Summary: Paycom Software, Inc. provides cloud-based human capital management (HCM) software service
for small to mid-sized companies in the United States. It provides functionality and data analytics that
businesses need to manage the employment life cycle from recruitment to retirement. The company's HCM
solution offers a suite of applications in the areas of talent acquisition, including applicant tracking,
candidate tracker, background checks, on-boarding, e-verify, and tax credit services; and time and labor
management, such as time and attendance, scheduling/schedule exchange, time-off requests, labor
allocation, labor management reports/push reporting, and geofencing/geotracking.
PAYC is one of the most fundamentally sound companies in its group. For the last 8 quarters, PAYC has
shown extremely consistent double-digit EPS and sales growth quarter over quarter as well as annually, not to
mention a very high and consistent ROE.
PAYC’s institutional sponsorship has grown for 7 of the last 8 prior quarters and is highly populated by highquality holders.
PAYC broke out through $137.21 on 1/18/19 and hit an all-time high of $259.71 on 8/29/19 for a gain of 89%
in 30 weeks, even after cranking out incredible gains over the prior few years, and it appears to be setting up
to continue even higher.
47
2019 Model Book
RH
48
2019 Model Book
RH
Restoration Hardware
Sector:
Industry:
Consumer Discretionary
Specialty Retail
Summary: RH, together with its subsidiaries, operates as a retailer in home furnishings. It offers products in
various categories, including furniture, lighting, textiles, bathware, décor, outdoor and garden, and child and
teen furnishings. The company provides its products through its retail galleries; and Source Books, a series
of catalogs, as well as online through rh.com, restorationhardware.com, rhbabyandchild.com, rhteen.com,
and rhmodern.com, as well as waterworks.com.
RH has shown explosive EPS growth quarter over quarter for the last 8 quarters, yet their accompanying
quarter over quarter sales have been tepid, to say the least.
Regardless, the street is still looking for 54% annual growth in 2020, which is comforting given their unusually
weak sales.
RH broke out through $118.31 on 7/1/19 and hit an all-time high of $243.67 on 12/6/19, for a gain of 106% in
21 weeks.
RH exhibited clear respect for its 23-EMA and 50-DMA as it stair-stepped its way higher in a very organized
manner. Stocks that trade this way are typically much easier to hold than stocks that trade in a wide and
loose fashion, with little respect for their moving averages.
49
JANUARY
ISSUE NO.1
2019
IN THIS ISSUE
R O S S
T L
+
H A B E R
T E A M
2018 Model Book
LULU
51
2018 Model Book
LULU
Lululemon athletica
Sector:
Industry:
Consumer Discretionary
Apparel & Luxury Goods
Summary: Lululemon Athletica inc., together with its subsidiaries, designs, distributes, and retails athletic
apparel and accessories for women, men, and female youth. It operates through two segments, CompanyOperated Stores and Direct to Consumer. The company offers pants, shorts, tops, and jackets for a healthy
lifestyle and athletic activities, such as yoga, running, and training, as well as other sweaty pursuits; and
athletic wear for female youth. It also provides fitness-related accessories.
LULU’s quarterly earnings and sales accelerated for four consecutive quarters, the quarter ended October 31,
2017 – the quarter ended July 31, 2018. Their quarterly earnings and sales decelerated for the first time last
quarter, although their annual estimates going out to 2020 are strong. The stock is currently sporting an ROE
of 24% and institutional sponsorship has picked up for the last eight consecutive quarters.
On March 28, 2018, LULU reported EPS and was buyable as it gapped up and broke out of a base that was
nearly 6 years long on huge volume. In general, stocks that break out of bases that take longer to form will
tend to have more powerful moves to the upside than those which break out of shorter base patterns. Simply
put, a prolonged period of contraction, leads to a prolonged period of expansion. Hence the phrase, “the
longer the base, the higher into space.”
LULU proceeded to ride its short-term 4-EMA higher for five weeks, right after it broke out, and respected its
21-DMA throughout the entire quarter. Therefore, most of this position could have been held through their
next earnings report on 6/1/18.
LULU gapped up on enormous volume in reaction to their earnings on the 6/1/18 report, although it spent the
following ten weeks building a new base thereafter. The stock was buyable two times throughout its basebuilding process, although the first time it quickly failed, and triggered sell stops.
The second buy area worked out well and more than made up for its prior failure. These shares were
profitable enough to hold through earnings again on 8/31/18. LULU gapped up and closed much higher on
enormous volume in reaction to earnings again. However, LULU reached an all-time high of $164.79 on
10/1/18 and has been making lower lows ever since.
52
2018 Model Book
TWLO
53
2018 Model Book
TWLO
twilio inc.
Sector:
Industry:
Information Technology
IT Services
Summary: Twilio Inc., together with its subsidiaries, provides a cloud communications platform that enables
developers to build, scale, and operate communications within software applications in the United States and
internationally. Its customer engagement platform provides a set of application programming interfaces that
handle the higher-level communication logic needed for nearly every type of customer engagement, as well
as enable developers to embed voice, messaging, and video capabilities into their applications. The company
was founded in 2008 and is headquartered in San Francisco, California.
TWLO is a recent IPO in the computer enterprise software group, which was one of the more powerful groups
in the tech sector during 2018.
TWLO posted six consecutive pocket pivots in a row beginning on 2/9/18, as it formed the right side of its
base. It was then buyable for six days in a row beginning on 2/16/18, in and around its $33.07 entry area. The
stock trended higher and formed a new base over the next few months. TWLO could have been purchased at
a few points as it built this base and depending on one’s average cost, it could have been held through its
earnings announcement on 8/7/18.
TWLO continued to trend higher and reached a price of $88.88 on 9/26/18 before it ultimately rolled over and
broke below its 50-DMA on heavy volume.
TWLO’s was up 169% in just a little over 7 months.
54
2018 Model Book
NFLX
55
2018 Model Book
NFLX
netflix, inc.
Sector:
Industry:
Communication Services
Entertainment
Summary: Netflix, Inc. provides subscription streaming entertainment services. It offers TV series,
documentaries, and feature films across various genres and languages. The company provides members the
ability to receive streaming content through a host of Internet-connected screens, including TVs, digital video
players, television set-top boxes, and mobile devices. Netflix, Inc. was founded in 1997 and is headquartered
in Los Gatos, California.
NFLX has exhibited explosive earnings growth over the prior 5 quarters, despite the noticeable deceleration
for the quarter ended March 31, 2018. Remember, 25-30% quarterly growth is a minimum.
NFLX more than doubled in the first six months of 2018, although it has been an extremely powerful leader
for much longer than that. The stocks crossed a post-split price of $4.00 in December 2008 and by June 2018
it traded as high as $423.21.
NFLX was buyable in multiple areas along the way during this sharp, quick run of over 100%. However, it
reached an all-time high of $423.21 on 6/21/18 and has been in a downtrend ever since.
56
2018 Model Book
FNKO
57
2018 Model Book
FNKO
funko, inc.
Sector:
Industry:
Consumer Discretionary
Distributors
Summary: Funko, Inc., a pop culture consumer products company, designs, sources, and distributes licensed
pop culture products in the United States and internationally. The company offers vinyl, blind-packed
miniature, and action figures; plush products; accessories; apparel, such as t-shirts and hats; homewares,
including drinkware, party lights, and other home accessories; and bags, purses and wallets, and board
games. It offers its products under the Pop!, Loungefly, Mystery Minis, Paka Paka, 5 Star, SuperCute, and Pint
Size Heroes brand names; and licenses its properties under the classic evergreen, movie release, current TV,
and current video game categories.
FNKO is one of those one-off, specialty retail companies that nobody realized existed until its stock broke out
through $10.00 on 5/30/18, went on a parabolic run, and gained 100% in just a little over three months.
It hit an all-time high of $31.12 on 9/12/18 and then imploded on massive volume. By 12/24/18 the stock
traded as low as $11.22.
FNKO’s quarterly earnings grew at a triple-digit pace over the prior three quarters. At first glance, these
numbers seem exciting, but upon closer inspection, it is important to note that their quarter over quarter
earnings and revenues, both decelerated over the same period, which is the opposite of what we are looking
for. While it’s not impossible, it is highly unlikely that a stock like FNKO will ever recover and make new alltime highs again.
58
2018 Model Book
DECK
59
2018 Model Book
DECK
deckers outdoor
Sector:
Industry:
Consumer Discretionary
Apparel & Luxury Goods
Summary: Deckers Outdoor Corporation, together with its subsidiaries, designs, markets, and distributes
footwear, apparel, and accessories for casual lifestyle use and high-performance activities. It offers premium
footwear, apparel, and accessories under the UGG brand name; sandals, shoes, and boots under the Teva
brand name; and footwear under the Sanuk brand name. The company was founded in 1973 and is
headquartered in Goleta, California.
DECK’s quarter over quarter earnings for the last 5 quarters have been solid but erratic. Meanwhile, their
quarter over quarter revenues for the last 5 quarters have been much steadier albeit, clearly on the low side.
DECK’s institutional sponsorship has risen steadily for the last eight consecutive quarters, it currently has an
ROE of 19% and it is a well known liquid leader in its industry group, with a track record of success.
DECK broke out through $73.45 on 11/22/17 and hit an all-time high of $137.49 on 11/8/18, which is a gain
of 87% in a little less than a year.
The stock formed 2 constructive bases and offered several entry areas throughout the length of its move. It
will be interesting to see if DECK can continue to make new all-time highs from here.
60