In his "Homework" segment of Mad Money Friday night, Jim Cramer followed up on a few stocks that had stumped him during earlier shows. He said that the medical aesthetics maker InMode (INMD) is a rarity in the biotech space as the company has both rapid revenue growth and actual earnings. With its products in demand, Cramer said its valuation of 15 times earnings makes it cheap, although he cautioned that the company is small and the stock is speculative.
Next, Cramer said that BioLife Solutions (BLFS) is another intriguing biotech play. The company offers cold storage solutions for cells, tissues and organs. While it's a tiny company with just a $300 million valuation and a volatile stock, Cramer said he likes its story.
Let's check out the charts of these two companies.
In this daily bar chart of INMD, below, we can see that we are dealing with a new issue with limited price history. From early August prices more than doubled by the middle of September. A shallow can be seen in late September and into October but prices have managed to climb back and are now within striking distance of new highs.
INMD is above the now rising 20-day moving average line and the trend-following Moving Average Convergence Divergence (MACD) oscillator is above the zero line and about to cross to the upside for a buy signal.
The limited history of the On-Balance-Volume (OBV) line is actually positive as it suggests further buying after the IPO (lately a number of new issues have seen liquidation/selling soon after going public).
In this daily bar chart of BLFS, below, we can still see prices moving from the lower left to the upper right (basically an uptrend) but there have been some detours along the way. We could also say that prices have been in a broad sideways range since February. Prices have been finding support around $15 but they are below the 50-day and the 200-day moving average lines.
The OBV line has been in a sideways range and the MACD oscillator has been hugging the zero line for much of the time. Prices made a long base in 2015-2017 (not shown) below $5 and then rallied to $25 so the price action of the past year could be considered a long consolidation pattern. Strength above $21 is bullish.
Bottom line strategy: Both INMD and BLFS look like they can rally further in the months ahead. Traders should keep positions small.