Brings U.S. Postal Service into businesses

We recommended Stamps.com (STMP) in the February 29, 2016 Cabot Top Ten Trader when it was at 119. Today, it’s up to 222. If this is the kind of stock you’d like to be buying, subscribe to Cabot Top Ten Trader for more of Mike’s picks.

What we said back then:

Why the Strength

Stamps.com is thriving by bringing all the functions of the U.S. Postal Service right into small businesses, enterprises and home offices. The company’s services allow users to print shipping information onto packages, pay for postage and insurance, create customized stamps and design themed mailings. The company made huge strides in 2015, growing revenue by 45% and increasing earnings from $2.47 per share in 2014 to $4.43 in 2015. The company’s latest quarterly report on February 25 featured a whopping 118% boost in earnings on 67% revenue growth with a 40% after-tax profit margin. Investors heartily approved. But then, investors have been enthusiastically driving Stamps.com’s stock higher since October 2014. The concept of using a printer and an Internet connection to handle all mailing and shipping functions is clearly winning approval from both users and investors. Estimates are for the company to increase earnings by 10% in 2016 and 15% in 2017. The company also has a $20 million share buyback program that’s the equivalent of about 1.25% of its shares. This is a story with great fundamentals.

Technical Analysis

STMP came to life in 2011 after years of flatlining. But the current enthusiasm for the stock dates to the fourth quarter of 2014, when it began a series of quarterly-earnings-based rallies on positive volume. With major corrections in August and September 2015 and January and the first half of February 2016, the stock has been volatile. But the stock’s gap up from 96 to 117 last Friday came on twice average volume, and kicked the stock to its highest level since Tech Bubble days in 2000. STMP is holding onto all of last Friday’s gains, but a little patience should present an opportunity to get in on a dip of a few points. Use a fairly loose stop at 107 to allow for current volatility.

Every Monday, Cabot Top Ten Trader steers you to 10 hot stocks with great potential to soar in the weeks ahead. As an example, Stamps.com (STMP) was up 2.5% in the first five days after it was recommended. If this seems like the type of concise analysis on leading stocks that you need to ride the market as it continues its climb higher, I suggest you check out Cabot Top Ten Trader now.

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