In a market flexing trillion-plus market caps and where ‘FOMO’ is the questionable ticker of choice, mid-cap growth stocks can be an attractive alternative for many investors’ portfolios. Let’s take a look at three of these companies which are also in position on their price charts for risk-adjusted purchases.
From Apple (NASDAQ:AAPL) to Microsoft (NASDAQ:MSFT) and most recently Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOGL), the once-elusive, then exclusive $1 trillion market cap club has become a bit more inclusive these days. Moreover, the inclusion into this large-cap club has been driven by a common and unsustainable thread called FOMO.
This “fear of missing out” behavior on the part of investors has also put most of these companies’ price charts in a much riskier position. Because of their obvious influence, warnings the market has gone too far, too fast are spreading faster than the coronavirus. Yet there’s more to the market.
In a market made up of stocks, today’s price action and valuations aren’t universally problematic. Mid-caps with valuations of $2 to $10 billion and more specifically, mid-cap growth stocks which sport solid business trends to support larger price gains, are available if you know where to look. Right now three companies of this caliber have caught our attention in a very big way.
Alteryx (AYX)
Source: Charts by TradingView
Data science and analytics outfit Alteryx (NYSE:AYX) is the first of our mid-cap growth stocks to buy. The company is scheduled to report earnings this Thursday evening. Guidance from Alteryx’s management calls for the company to grow sales by roughly 45% year-over-year.
Expectations in front of the release are high, but rightfully so according to a recent analyst note from Wedbush. This mid-cap growth stock also has the benefit of a price chart built for success. Shares of AYX are currently forming a small handle consolidation within a monthly chart cup base. Further, as a first-stage corrective base and fairly recent IPO, there are plenty of reasons to see Alteryx stock as an even more attractive buy.
Alteryx Strategy: I see AYX stock as a purchase in front of earnings. However, as a former options market-maker, I’d also suggest using a limited and reduced risk, slightly out-of-the-money bull call spread to improve investor’s risk profile.
Exelixis (EXEL)
Source: Charts by TradingView
Exelixis (NASDAQ:EXEL) is the next of our mid-cap growth stocks to buy. This cancer-fighting biotech is profitable and sports double-digit revenue growth which offers an almost numbingly price multiple of just 19x earnings. Need I say more? That’s not a problem.
Technically, shares of Exelixis have confirmed a bullish higher-low pattern above former key resistance dating back to 2002. The price action follows a successful test of this threshold in late 2018 during the broader market’s correction. And with Exelixis’ stock’s stochastics confirming this pattern strength, the time to buy shares is now.
Exelixis Strategy: With earnings slated for later this month, I like approaching this mid-cap growth stock with a married put strategy. This long stock and long put combination contains risk while allowing for open-ended upside in front of what’s sure to be a volatile report.
Simply Good Foods (SMPL)
Source: Charts by TradingView
When it comes to the trend of healthier eating, Simply Good Foods (NASDAQ:SMPL) is a mid-cap growth stock worth biting into. Goldman Sachs agrees. What’s more, not only is SMPL stock sporting solid double-digit sales gains which have that firm’s attention, there’s a delicious-looking price chart for strong risk-adjusted positioning.
Technically, this mid-cap growth stock is on the cusp of establishing a double-bottom or “W” base on the weekly time frame. Even in healthy markets, all stocks correct. And with SMPL stock finding support off the 38% retracement level and an oversold stochastics well-positioned to back up a durable bottom, SMPL stock has all the right ingredients for an imminent buy decision.
Simply Good Foods Strategy: Purchase Simply Good Foods if the weekly pivot low is confirmed by price action above $25.13 and supported by a bullish crossover from stochastics.
Investment accounts under Christopher Tyler’s management do not currently own positions in securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits
