I am trialling a new trend following stock trading strategy. This strategy looks for stocks breaking out to new 52 week highs. The stock must also have decent sized volume, a PEG less than 1 and an RSI score less than 70. Trades are exited on a 20 week low. So far, results look promising but too early to say whether it will work longer term. I am paper trading this before taking it live.

Here are this week’s trend following stock picks. Both are in the auto parts industry suggesting that this is a good sector to be involved in as a whole. Normally I wouldn’t buy more than one stock in the same sector. Out of these two I’d go for MGA.

Magna International Inc ($MGA)

Magna International is an auto parts wholesaler based out of Canada with 128,000 employees in 29 countries. The stock has broken to a new 52 week high but the financials are in good condition. PEG is 0.99 and price to sales is 0.67. EPS has grown over 100% over the past 5 years and current ratio is 1.30. The stock also has 5% insider ownership.

trend following stock picks mga chart

Lear Corp ($LEA)

Lear was founded in Detroit, Michigan in 1917 and  is a leading manufacturer of assemblies for the automotive and aircraft industries. PEG is 0.94 and forward PE is 10.30. EPS is expected to grow at over 18% over the next 5 years.

trend following stock picks lea chart

 


Tags: , ,


2 comments

    • xavi

    • October 10, 2014

    • 12:13 am

    • Reply

    Hi Joe, how is it going this strategy? do you have ny news?
    I’m using the all time high breakout and an strict risk management and it’s going well.
    I’m mixing all time high and a little bit of fundamentals (sector leader, EPS, Sells…)
    Thanks
    X.

    • To be honest I haven’t had the time to keep following it, so I can’t say. I think could work well, particularly with a strict risk management like you mention. Glad you are having some success with a similar strategy.

Leave a Reply

%d bloggers like this: