Monday, May 14, 2012

MNTX: The lifter

Manitex International Inc. (MNTX) makes tools for lifting.

When you see an electrical company worker high among the trees at the end of a crane, there's a chance that the Bridgeport, Illinois company made that gear. Same thing when a container is moved from point A to point B at your local shipping terminal, if you have such a place in your neighborhood and if you can get past the gate.

The company's products, at the most basic level, are part of the infrastructure that allows goods -- from durables to electric current -- to reach customers.

MNTX had the most bullish chart among 44 stocks added over the weekend to the Zacks top buy list.

The company's stock began its most recent leg up on Jan. 5 from $4.10 and has stair-stepped with corrections lasting a week or two, up to today's high of $10.56. The most recent correction of the upswing began last Thursday from $8.27.

The corrections experienced by this stock are enough to give a trader pause. The most recent carried the price from $10.00 down to $8.13 in 16 trading days. And it was a 7% upside earnings surprise that pulled the price out of its slide.

In the leg up since January, the upward swings have lasted from six to as few as three days. This stock spends a lot more time falling that it does rising. It's only the magnitude of the upswings that keeps it from being a loser.

Having cast a dark shadow on this bullish chart, I must in fairness add that MNTX has been trading in blue-sky territory since last March.

Manitex in no shooting star, with return on equity of 8%. Long-term debt is a punishing 93% of equity.

Institutions own 44% of shares, and the price is quite depressed even at today's all-time highs. It takes only 75 cents worth of stock to control a dollar in sales. If you're a glass-half-full trader, you'll interpret the price/sales number to mean that there's room to grow. half empty, and you'll call it the market's just verdict on the company's financials.

Quarterly earnings lack a trend. They've been positive five out of the six quarters from 2011 onward.

MNTX trades 100,000 shares a day on average. Even for that level of liquidity, the options selection is abysmal, with only three strike prices to choose from and single-digit open interest. The single digit is "one".

So it's shares or nothing when it comes to trading MNTX.

Manitex next publishes earnings on Aug. 10, 2012.

Decision for my account: Nice chart, despite the bumps, but this stock is too illiquid for my taste. The lack of options is a deal-killer. I'm passing it. The only way I would consider trading it would be to buy shares, tuck them away in a corner of my account and check the trend once a quarter on a weekly chart. If up, I would keep the shares. If down, sell.

I screened the stocks using a tourney bracket with a one-month daily chart and a three-day half-hour chart, and then turned to a five-year weekly chart for the broad context in analyzing the bracket winner. See my essay "10,000 Charts" for a discussion of my screening methods.

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

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