Purchase stocks after profit growth of at least 20% is announced and a breakout occurs. A breakout is when a stock which had been going back and forth within a range breaks through that range to a new high.
Above is a one year view of Dell breaking out in 1994 (adjusted for stock splits). Notice the stock went back and forth between thirty cents and fifty cents before breaking out through fifty cents after profits were up 132% in the latest quarter.
In these charts, profit growth of 20% of more is highlighted in green. Profit growth below 15% is unacceptable, and highlighted in red (in 2013 this was revised down to 10%).
David Sharek.com uses ten year charts and one year charts exclusively. Ten year charts, like the ones we looked at earlier, give a big picture view of a stock. One year charts, such as the one shown here, are more focused and excellent for determining When to Buy or When to Sell.
