Bull Of The Day: Cree (CREE) – February 8, 2019

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Cree (CREE Free Report) is a Zacks Rank #1 (Strong Buy) and sports the divergence that I love to see in the Zacks Style Scores.  I see an A for Growth and a D for value and that tells me right away that I am on the right path.  My focus is on aggressive growth, and I know that growth investors are looking for the opposite of what value investors are looking for.  When I see that divergence, I know I found what I am looking for.

Today, CREE is the Bull of the Day.  Let’s take a look at why I like this stock right here.

First off, I see that it is in the chip space and while I normally say that chips are for dips — right now they look like a tasty treat.  The chip names are likely to move significantly higher when a China deal is announced due to the relationship that so many names have with that region and country specifically. 

Secondly, a big buyer just put some cards on the table.  Artisian Partners filed a 13G with the SEC stating that they control 8.1M shares.  That was just announced the other day… and it follows an early January filing that saw Vanguard announced a 10.4M share position.

When I see big buyers of size on a stock with a great Zacks Rank, I know it is worth a much deeper look.

Earnings Estimates

When a stock is a Zacks Rank #1 (Strong Buy) then we know the estimates are moving higher.  That is the key part of the Zacks Rank.

I see the current quarter move higher by 2 cents, and the full year (fiscal 2019) has moved from $0.73 to $0.78.

The Zacks Consensus Estimate for fiscal 2020 has remained at $1.27 over the last 90 days.

Valuation

The forward PE of 66x is a little rich, but when you look at the other metrics it doesn’t look that bad.  A see a 2.4x price to book multiple, which is pretty pretty good for a stock with a 12% topline growth rate.  I also see a 3.4x price to sales multiple which is a little high but still within an acceptable range.

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2019-02-08 11:26:00

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