By: Bill Spencer — August 31, 2019
Happy Saturday Small-Cap Connoisseurs.
Big Bill here. Thanks as always for stopping by.
I've got something very exciting for you today.
It's not exactly a "license to print money". But it could be the next best thing -- a leading 3-D printing firm in the red-hot Electronics sector.
The stock has gained 73% in less than a year, always breaking higher on heavy volume.
Right now it trades for under $20. But as you're about to see, it could soon be north of $40.
For one thing, institutions are gobbling up shares like it's a pie-eating contest. And since institutional buying is what drives higher prices... this is a great thing to see.
(Click any image to enlarge)
Details in a second. But first, let's look at...
Electronics is currently one of seven sectors showing short-term bullish strength (with BPI charts in a column of X's).
The sector's BPI chart just flipped to X's. This is significant, because a reversal like this doesn't happen unless 6% of stocks in the sector go on point-and-figure Buy signals.
And for those stocks to go on buy signals, they first have to break above key resistance levels, which means they're much more likely to trade up than to trade down.
What's more, by flipping to X's now, the sector has climbed out from oversold territory, below the 30% level. (A level where fewer than 30% of stocks in the sector are on Buy signals.)
When a sector is washed out like that, it means almost all sellers have already sold. With no more shares to sell, they can't apply downward pressure to stock prices.
The way is now clear for buyers -- the bulls -- to drive prices higher unimpeded.
The Electronics sector is also showing short-term and longer-term bullish strength versus the broad market (the equal-weighted S&P 500).
It's Relative Strength (RS) chart is in X's and it's on a Buy signal.
It is this roaring sector that contains...
Materialise NV (NasdaqGS: MTLS) provides software and 3D printing services throughout Europe, the Americas, Africa and the Asia-Pacific region.
As you might know, 3-D printing (also called "additive manufacturing") is a technology that creates a physical object from a digital design. By depositing material (metal powder for example) layer by layer in an additive manufacturing machine, the most complex components can be formed literally "from the ground up".
According to Materialise, "Our open and flexible platforms enable industries such as healthcare, automotive, aerospace, art and design, and consumer goods, to build innovative 3D printing applications ".
The 3-D printing market is expected to grow 21.7% a year between now and 2026, when it will hit $5.78 billion.
And while the future looks bright for the 3-D Printing industry, for MTLS, the present looks fantastic.
The image below shows why.
This is the Position Key, one of the proprietary trading tools that come bundled with our Sector Prophets Pro data program.
If you've attended any of Chris Rowe's free online trainings, you've heard him talk about the "5 Criteria" for selecting outstanding stocks.
The five green checkmarks correspond to those five criteria. And MTLS meets them all!
In a nutshell, (and reading the checks from left to right) this stock is...
That's what you call a "clean sweep". And it shows why...
The third quarter of 2019 is only two months old... and already funds have accumulated $88 million worth of MTLS. That's almost 56x more than the $1.58 million they've sold.
If this trend holds throughout the remainder of Q3, institutions will have bought $132 million worth of the stock -- more than five times what they bought in Q2...
... and more than 10x what they bought over the same quarter in 2018.
I'll say more about institutions after we analyze...
Here's a three-year weekly chart of Materialise.
After breaking out of an eight-month base in 2016, the stock climbed 155% in the 11 months leading up to October 2017. It then spent 11 months building the base you see in the center highlighted rectangle.
After breaking out in November, MTLS gained an additional 92% on heavy volume. It then began another period of consolidation (base building) that continues to this day.
That third green arrow at the lower right corner shows where MTLS gained 31% on heavy volume in June.
You've seen how funds are piling into MTLS. The "top guns" at those institutions (gunning for 7-figure bonuses), aren't pouring hundreds of millions of dollars into the stock because they think it'll trade sideways.
They know something. They're expecting a huge move.
How huge? Who knows? We're not here to "predict" what will happen.
We are here to spot where savvy funds are putting their capital... so we can put ours there as well, before the crowd catches on.
See the green dotted line at the top right corner? It's drawn from the stock's all-time (intraday) high of $22.99.
MTLS is just 16.4% from making a brand new all-time high at that psychologically significant level.
If the stock breaks out of this newest base, and pierces that price, we could see institutions really step on the gas.
MTLS has gained more than 13% over the past nine trading sessions. So a similar move in the coming weeks (even days) would only be par for the course.
And you've seen how this stock advances once it breaks out of a base. Last year it gained 92% in nine weeks.
If MTLS does put in a fresh record high...
... It could cake an additional 70% -- 80% or so onto the 16.4% it needs to do that.
We could see a total return approaching triple-digits.
Thanks again for reading!
Keep It Small.