Searching for ways to find stocks that could outperform? Some people look at the new high list. Some people subscribe to newsletters or web-based services. Some set up various filters and screens. I try to keep things simple and look for the upgrades and downgrades on TheStreet's Quant Ratings service.
First Solar, Inc. (FSLR) was upgraded by The Street's Quant service today and that was my starting point. Because I have a technical bent, I turned to the charts and indicators. Of course it wouldn't hurt to see what fundamental analysts are saying about it, too.
In this daily bar chart of FSLR, above, we can see that prices made a saucer-like base pattern the past eight to nine months. The On-Balance-Volume (OBV) line followed prices lower to April and then turned higher to confirm the rally. The slope of the 50-day moving average line turned positive by mid-April and the line turned above the 200-day line in June for a bullish golden cross.
The Moving Average Convergence Divergence (MACD) oscillator gave a cover shorts buy signal in early April and an outright go long signal when it crossed above the zero line in early May.
In this weekly bar chart of FSLR, above, we can see how prices reversed to an uptrend after a long decline. FSLR is now trading above the rising 40-week moving average line. The weekly OBV line has turned up in the past three months and the weekly MACD oscillator has signaled an outright buy, too.
This Point and Figure chart of FSLR, above, shows the reversal for the stock and the recent strength. A potential upside price target of $62 is shown as well.
Bottom line: Having more than one approach agree on a security is added confidence. The quantitative upgrade today and a positive daily and weekly chart suggest that FSLR is headed higher. In the short-run I would expect some sideways consolidation for FSLR before renewed gains. Aggressive traders could approach from the long side risking below $40. My targets are in the $55-$60 area.