Tuesday, September 25, 2007 - CANSLIM.net
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Transdigm Group Inc. |
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Ticker Symbol: TDG |
Industry Group: Aerospace/defense Equipment |
Shares Outstanding: 46.9 Million |
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Price: $46.99 9/26/07 11:30AM |
Day's Volume: 244,700 9/26/2007 11:30 AM ET |
Shares in Float: 13.1 Million |
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52 Week High: $46.78 9/25/2007 |
50-Day Average Volume: 211,700 |
Up/Down Volume Ratio: 1.0 |
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Pivot Point: $43.99 7/17/2007 high plus .10 |
Pivot Point +5% = Max Buy Price: $46.19 |
Web Address: http://www.transdigm.com |
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CANSLIM.net Profile: TransDigm Group Incorporated engages in the design, production, and supply of engineered aircraft components for use in commercial and military aircraft worldwide. It offers ignition systems and components, such as igniters, exciters, and spark plugs that are used to start and spark turbine and reciprocating aircraft engines; gear pumps used primarily in lubrication and fuel applications; mechanical/electro-mechanical actuators and controls used in various actuation applications; NiCad batteries/chargers used to provide starting and back-up power; and power conditioning devices used to modify and control electrical power. The company was founded in 1993. It was formerly known as TD Holding Corporation and changed its name to TransDigm Group Incorporated in January 2006. TransDigm Group is based in Cleveland, Ohio. The company sports a very healthy Earnings Per Share (EPS) rating of 98 and a strong Relative Strength (RS) rating of 92. Return on Equity of 18% is above the 17% guideline. The company has managed to increase its earnings by well above the +25% guideline in each of the past four quarterly comparisons versus the year earlier (satisfying the C criteria) and its annual earnings history (the A) is solid. TDG resides in the Aerospace/Defense Equipment group which is currently ranked 20th of out the 197 Industry Groups covered in the paper, placing it in the much preferred top quartile. This helps satisfy the L criteria of it being a leading company in a leading industry group. Management owns an impressive 72% of its shares, which provides great motivation to protect and build shareholder value.
What to Look For and What to Look Out For: The stock has cleared all technical resistance and odds favor further price gains. Ideally, this stock would consolidate and continue rallying on heavier volume over the next few days and weeks, following through with additional gains on higher volume to confirm the breakout. Disciplined investors know it is best to accumulate shares below its maximum buy price of $46.19, so they might watch for the chance to accumulate shares on a light volume pullback. Keep in mind that TDG appeared in the 9/24/07 CANSLIM.net Mid-Day Breakouts Report at $42.57 at it was approaching its $43.99 pivot point (read here). Now it has cleared all remaining overhead supply or chart resistance and is quickly becoming extended. Undisciplined buys can hurt your investment results. Caution and a disciplined sell strategy could be required, and concerns would definitely be raised if the stock reverses to a close which negates its breakout above the $43.69 mark which was its best high close (on July 17th) prior to the latest bullish action. Technically, if that occurs, the stock becomes more likely to spend a lot more time consolidating in its prior base. It is not wise to hold a struggling stock, leaving it open to get into bigger trouble or a fundamental disappointment. Always limit losses if any stock you buy closes 7-8% below your purchase price.
Technical Analysis: On Tuesday, September 25th, 2007, TDG triggered a technical buy signal as it surged above its $43.99 pivot point with heavy volume that was nearly three times its average total after a 10-week consolidation. Whenever a stock explodes out of a sound base and vaults to new highs it suggests that there is strong institutional sponsorship (the I criteria). Thus far, the recent volume patterns have been bullish, which is best indicated by the fact that volume was light before the stock broke out and surged as the stock was climbing to new highs.
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