Tuesday, 14 February 2012

Spirit Airlines (SAVE) Bull Flag Breakout

As a trader, one of the key rules in finding great stocks with good upside potential is to look for what companys the big institutional investors are quietly buying but are still under the radar to most investors.

How do you find these stocks ?

The key is to watch the volume and price action of a stock with good fundamentals,especially when the stock has been thinly traded in the past.

One such stock that has come on my radar and is one to watch is Spirit Airlines, Inc,(SAVE).

Spirit Airlines empowers customers to save money on air travel by offering ultra low base fares with a range of optional services for a fee, allowing customers the freedom to choose only the extras they value. This innovative approach grows the traveling market and stimulates new economic activity while creating new jobs. Spirit's modern fleet, configuration and other innovations enable Spirit to burn less fuel per seat than competitors, making Spirit one of the most environmentally-friendly U.S. carriers. Spirit's all-Airbus fleet currently operates more than 175 daily flights to over 45 destinations throughout the U.S., Latin America and Caribbean.

With such a sound business model and in the current economic climate where everyone is looking to save money it is no surprise ,why institutional investors like this stock.

The airline went public in may last year at $12 and has been thinly traded since then until recently,but interestingly last 3 quarters average EPS growth is 329%!, EPS change last quarter 117%,sales last quarter 42%. Spirit Airlines announce earnings on Feb16,if it beats earnings then this one to watch for the right buying opportunity.

Technically the chart shows a bull flag breakout pattern, the stock has a had a good run up since mid January and a four day correction which was very constructive on low volume which is what you want to see with a bull flag pattern, a potential entry point will be around the $20.05 price level .

View chart below.

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