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Bull’s Eye Report: Prospect Capital (PSEC)

Buy PSEC at current levels or on a pullback to the 200-day MA


At, we strive to “own the best and ignore the rest” in our equity portfolios. Toward this end, each day we search our database for a “top stock” (a top rated company in terms of earnings strength as well as company and industry performance) that presents a strong technical “set up” and a good entry point.

In short, when our equity team is looking to add a stock to one of our portfolios, the “bull’s eye” stock shown below is generally their first choice.

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Company Symbol Industry Stock Rating YTD% Gain S.T.
Stop Loss
Prospect Capital PSEC Asset Management & Custody Banks 9.0 +4.36% $11.07

Why We Like The Stock:

Prospect Capital Corp. (NASDAQ:PSEC) is our most compelling buy today due to the fact that it is a top rated stock in the Financials sector, which has been a strong performer in 2013 thus far. Since its November lows, PSEC has been trending steadily upward from ~$9.90 up to its current price at $11.38, making higher highs and higher lows during the uptrend. We featured PSEC in this report back in late January, and the stock has continued this pattern of higher highs and lower lows, so at similar prices, we think it is even more attractive now.

The stock has also nearly filled its November gap down. Should PSEC be able to break above $11.50, the next logical step would be back up to resistance at $12. Helping PSEC along is some moderate insider buying momentum, which is usually a good underpin to a rallying stock. PSEC hasn’t had quite the upward thrust of similar Asset Management & Custody Bank stocks like Waddell & Reed Financial (NYSE:WDR), Apollo Global Management (NASDAQ:APO), Federated Investors (NYSE:FII), or Janus Capital Group (NYSE:JNS) in 2013. However, that doesn’t mean that PSEC isn’t an attractive trade. The stock is currently sitting at a good entry point, is in a healthy uptrend, and has plenty of room to run.

We Would Be Buyers:

At the current price (~$11.38), or on a pullback to the 200-day moving average (~$11.16).

Company Profile:

Prospect Capital Corporation is a financial services company, which lends to and invests in middle market privately-held companies. The Company is a closed-end investment company. It invests in senior and subordinated debt and equity of companies in need of capital for acquisitions, divestitures, growth, development and recapitalization. The company works with management teams or financial sponsors to seek investments with historical cash flows, asset collateral or contracted pro-forma cash flows. Its investment objective is to generate both current income and long-term capital appreciation through debt and equity investments.

Stock Rating: 9.0

The Stock Rating indicates the combined score of our proprietary Earning Strength and Company Performance models. The rating scale is 0 – 10 with 10 being the highest.

Prospect Capital – Last Three Months

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Prospect Capital – Last 12 Months

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Prospect Capital – Last Five Years

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At the time of publication the editor and affiliated companies own the following positions: None

Note: Positions may be bought or sold while this publication is in circulation without notice.

<td align=”left”><strong>Company</strong></td>
<td align=”center”><strong>Symbol</strong></td>
<td align=”center”><strong>Industry</strong></td>
<td align=”center”><strong>Stock Rating</strong></td>
<td align=”center”><strong>YTD% Gain</strong></td>
<td align=”center”><strong>S.T.
Stop Loss</strong></td>
<td align=”left”><font color=”#770000″>Prospect Capital </font></td>
<td align=”center”><font color=”#770000″><b>PSEC </b></font></td>
<td align=”center”><font color=”#770000″><b>Asset Management &amp; Custody Banks </b></font></td>
<td align=”center”><font color=”#770000″><b>9.0 </b></font></td>
<td align=”center”><font color=”#770000″><b>+4.36%</b></font></td>
<td align=”center”><font color=”#770000″><b>$11.07 </b></font></td>

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