http://factbasedinvesting.com - Medical Products Firm Rises Near Pivot Point

CANSLIM.net Profile: Neogen Corporation, together with its subsidiaries, engages in the development, manufacture, and sale a range of products for food safety testing and animal health applications. It was founded in 1981 and is based in Lansing, Michigan. It operates in two segments, Food Safety and Animal Safety. The Food Safety segment primarily offers diagnostic test kits and complementary products that detect dangerous and/or unintended substances in human food and animal feed, such as food borne pathogens, spoilage organisms, natural toxins, food allergens, genetic modifications, ruminant by-products, drug residues, pesticide residues, and general sanitation concerns. This places the company in a strong position in the event the recent food recalls continue. The company offers its products directly, as well as through a network of national and international distributors, and large farm supply retail chains. It has operations in the United States, South America, Central America, Canada, Asia, and Europe. NEOG hails from the Medical-products group which is presently ranked 19th on the 197 Industry Groups list, which easily satisfies the L criteria. There were 24 top-rated funds with an ownership interest as of December '07, a sign of reasonable institutional interest. More encouraging, the stock has less than 13 million shares in the float, and having a small supply of shares is a characteristic that most of the greatest stock market winners exhibited before they enjoyed explosive moves up. Its annual earnings growth history has been steady but not especially strong, and quarterly earnings increases in the 4 latest quarterly earnings comparisons were borderline with the +25% guideline. Strong earnings increases are always preferred.

What to Look For and What to Look Out For: Look for the stock to confirm a new technical buy signal by breaking out and closing above its $27.74 pivot point with gains on heavy volume in the coming days and weeks. Remember that buyable breakouts require three important components: the stock must clear its pivot point with considerable gains, those gains must be backed by at least +50% above average volume, and the overall market environment must improve and produce a new batch of leadership. As always, it is of the utmost importance to sell a stock if it drops 7-8% below your purchase price. The small supply of outstanding shares could lead to dramatic price volatility, especially if the institutional crowd rushes in or out. Also, the market conditions are still somewhat questionable, largely due to the dearth of leadership, which suggests this is not an ideal environment conducive for accumulating shares. This high-ranked leader should remain on an active watchlist and could be considered as a new buy candidate in the event it closes above its pivot point on the necessary volume needed to trigger a technical buy signal.

Technical Analysis: NEOG technically traded up to a new all-time high with very heavy volume, and the gain has it now trading very near its pivot point. The bullish action prompted its appearance in yellow in today's CANSLIM.net Mid-Day BreakOuts Report (read here). Volume has easily surpassed the necessary threshold needed to trigger a technical buy signal, and a proper technical buy signal may be triggered if this leader closes above its pivot point with a gain on heavy volume. Neogen has spent the past 5 months building its latest base. The stock found great support near its 50-day moving average (DMA) line through many months of 2007, but during the market's January correction the stock violated its 50 DMA line and tested support at its longer-term 200 DMA line. It promptly found support and repaired the damage in recent weeks.