Buy: Parsons Corp. (PSN) Quantum Score: 77.6 Buy-up-to Price: $83.69 Position Size: No more than 4% of capital Risk Point: $65.09
Stocks have gotten choppier here in April, especially today after hotter-than-expected inflation sparked doubts whether the Federal Reserve will lower interest rates at its next meeting in three weeks.
You know I like to buy cream-of-the-crop companies on pullbacks, and we have that opportunity today with Parsons Corp (PSN).
Parsons is a leader in innovative technology-driven solutions in the defense, intelligence, and critical infrastructure markets. It provides both software and hardware products, along with technical services and integrated solutions. Its areas of expertise include cybersecurity, intelligence, missile defense, space, connected communities, and more.
The company was founded by Ralph Parsons in 1944, and its first major project was providing oil well engineering, management, and drilling services. Through the years, Parsons has helped build cities, airports, highways, subways, tunnels, bridges, and more – even helping rebuild at the Pentagon and in New York after the 9/11 terrorist attacks.
The stock went public in 2019, trading mostly between $30 and $40 during its first two years, but it has been a steady climber since early 2022, running from $30 per share to today's prices around $80.
Source: TradeSmith Finance and MAPsignals.com
My data points to more upside in the months and even years ahead with PSN's excellent Quantum Score of 77.6. That high overall rating is supported by equally strong fundamentals and technicals.
Parsons is valued at $8.5 billion, which is a nice size and right in our wheelhouse here in Quantum Edge Pro. The high Fundamental Score of 75 is driven by outstanding one- and three-year earnings growth at 64.8% and 25.9%, with sales surging 29.7% last year and 12.6% the last three years.
Growth is expected to continue here in 2024 with analysts estimating a 17.3% earnings bump with sales ramping up 9.3%.
Parsons keeps 3 cents of every dollar it brings in, which isn't the highest profit margin around, but it's acceptable for this company and the massive projects its involved in. Debt is also acceptable at 40.7% of equity.
With PSN's 75% run over the last 12 months, the Technical Score is even higher than the fundamentals at 79.4. The score gets a boost because shares are trading near their three-month and one-year highs, and are above the three moving averages I monitor – the 50-, 100-, and 200-day averages.
Institutions own 98.8% of shares, so you would expect Big Money to be active, and that is indeed the case. My system shows 13 Big Money buy signals already in 2024, as shares ran from $62 to nearly $85.
Source: MAPsignals.com
If you look up at the top right, you can see the blue price line dip down toward $80. That's the pullback we're buying into. You can also see shares have consolidated in the low $80s since the end of February. That frequently indicates a base from which springs the next leg higher.
PSN has also appeared on my institutional research's Top 20 list four times already this year. These are the best of the best – highly rated stocks with Big Money flowing in. Just what we look for.
Buy PSN up to $83.69 with our initial Risk Point at $65.09. I like our opportunity to ride along with Big Money in this smaller, lesser-known company that is firing on all cylinders.
I'll be back soon with a video issue to talk more about Parsons, today's inflation data, our other stocks, and more.
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