It's OK to Nibble

Institutional buying demand is the lifeblood of any market uptrendand while it's not clear to me that's happening yet, the Nasdaq Composite did flash a buy signal Friday, which means it's OK to test the waters with a new buy or two. I've added five new names to the Ultimate Growth Stocks model portfolio in the month of June, the latest being on Friday. I still have a big cash position, but will look to put more money to work if the market tells me to. Late Sunday, premarket futures pointed toward a nicely higher open after the elections in Greece came and went without any major surprises. It didn't win a clear majority, but Greece's pro-austerity New Democracy party will be able to form a coalition government in Greece after fending off the Syriza party. The status quo was interpreted as good news late Sunday, but early Monday futures had turned lower. Spain's debt load remains a concern, and the yield on its 10-year government bond rose above the psychologically important 7% level despite news last week of a bailout of up to $125 billion for the country's financially-strapped banks. The market's behavior over the next few trading sessions will be important to watch. If major averages suffer a higher-volume decline today, Tuesday or Wednesday, it would call the viability of the nascent uptrend into question. It's OK to nibble here, but don't get too aggressive with new buys. On the home front, leadership is starting to emerge, which is a good sign. But it's too early to get overly excited despite Friday's sign of strength. One small-cap growth name -- MWI Veterinary Supply (MWIV) -- is on my radar here. Shares rose 3.4% Friday to $97.89 on volume of 307,000 shares. It normally trades about 72,000 shares a day. The stock is thinly traded but it has solid fundamentals, a bullish chart and a good mutual fund sponsorship. Clearly, there were big, block buys going through Friday, which is significant, especially since a new uptrend could be starting for the major averages. A general rule of thumb is to avoid illiquid names because institutional investors rarely fish in this pond. Despite the fact it's thinly traded, MWIV has good sponsorship. At the end of the first quarter, Neuberger & Berman Genesis Fund (NBGNX) owned 1.1 million shares; JP Morgan Small-Cap Equity Fund (JSERX) owned nearly 390,000 shares and Fidelity Small Cap Stock Fund (FSLCX) owned 295,000 shares. The company, with a market capitalization of $1.25 billion, distributes animal health products. It primarily offers pharmaceuticals, vaccines, diagnostics, veterinary pet food and nutritional products. In early May, the company reported its second-straight quarter of accelerating earnings and sales growth. Second-quarter profit rose 25% from a year ago to $1.04 a share. Sales increased 38% to $507.2 million. Sales were helped by its October acquisition of Micro Beef Technologies, improving online sales and higher pharmacy revenue. It forecast full-year earnings of $3.96 to $4.06 a share on revenue of $2 billion to $2.03 billion. Its prior forecast was for earnings of $3.85 to $4.00 a share on revenue of $1.9 billion to $1.95 billion. What's most compelling about the stock is that it's the go-to name in its space. Henry Schein (HSIC) and Patterson Companies (PDCO) are competitors, but recent quarterly results at each firm show they aren't executing as well as MWIV. Shares of MWIV remain under accumulation. The stock closed Friday at $97.89, just underneath a swing point of $100.64, its May 3 intraday high. Improving market health means the stock could attempt a technical breakout soon.

It's OK to Nibble

But don't get too aggressive with new buys.

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