One good thing about a broad decline in the stock market is that we seems to get more PIC Stock Candidates appearing. For the second week in a row we're showing a new stock.
Urban Outfitters (URBN) shows up on the 100 Highest Growth Stocks list in Value Line indicating 10 years of superior growth on many fronts and an expected 3-5 year continuation of good growth. However, something about the company, business sector or general market has taken some of the starch out of the stock in recent times. This has forced Value Line to demote it to a #5 Timeliness - lowest for the next 12 months.
Does this spell disaster? Well, if you decided around the end of 2005 to invest your entire retirement funds in it with no cash reserve, then you'd be in pretty sorry condition. However, the PIC strategy might have saved you considerable damage by waiting until the price had fallen nearly 50% from its late 2005 peak.
It was very steady in its climb, not offering an AIM user much in the way of volatility to capture with standard Lichello settings, but offering significant capital appreciation and cash buildup during that time even with AIM. Remember, AIM does not preclude capture of Capital Appreciation in a rising market even if there's no reversals that AIM can use.
Now, looking back, we see that this has been nearly a six month reversal. This would test anyone's resolve, but an AIM user would have been pulling loads of cash from it all along its 6X rise from $5/share. The pull back would have allowed some of that cash to be employed in rebuilding inventory.
How about the PIC List investor? Well, we've managed to avoid this terrible fall from grace by following the rules of waiting for good stocks to get a bad Timeliness report. Then we can afford to take a chance. So, with the i-Wave's current suggested cash level, we're starting a new PIC candidate history with Friday's closing price.
Does Urban Outfitters have a fit in your portfolio? Do their styles fit your style? Study it well before committing your hard earned dollars! Most of the PIC stocks have turned in good results but you'll notice that some have not. Certainly a bit of study might be of value here.
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