CAN SLIM Strategy – TWLO

TWLO daily chart courtesy of MarketSmith

Current Quarterly Earnings – Per share earnings are up 188% in the most recent quarter compared to the same quarter last year. Well above the 25% threshold. Additionally, earnings growth has now accelerated for 2 consecutive quarters (3 is ideal) with latest earnings report scheduled for 2/12 after the close.

Annual earnings growth – TWLO is estimated to make a profit of 15 cents this year versus a profit of 11 cents last year. A 36% jump in annual earnings growth is well above the 25% threshold.

New service – TWLO software allows developers to make and receive phone calls, send and receive texts and perform other communication functions including embedding voice and video functions. TWLO acquired SendGrid (SEND) in October 2018. SEND is the leader in mass email marketing services. According to both companies, the synergies present a “massive opportunity” to become one of the top service-as-a-software (SaaS) companies in the world. TWLO was founded in 2008 and is headquartered in San Francisco, California.

Supply and demand – TWLO has an up/down volume ratio of 1.6 as shares have reached a target profit zone out of a stage 2 base. This is a range to consider taking at least a partial profit.

Leader or Laggard – TWLO is in the top rated Enterprise Software group which is currently ranked number 2 out of 197 industry groups. With a relative strength rating of 99, TWLO is significantly outperforming the S&P 500 over the last 12 months.

Institutional sponsorship – TWLO has an Accumulation/Distribution rating of A- and mutual fund participation has increased to 465 funds from 269 nearly a year ago.

Market direction – Market is in a confirmed uptrend with 2 distribution days on the S&P and 1 distribution day on the Nasdaq.

Note: TWLO is currently extended from a proper base with earnings pending on 2/12. Waiting for a proper setup or potential add-on buying opportunity such as a new base breakout, 50 ma pullback, 3 weeks tight, EPS power gap, etc is a prudent approach.

TWLO weekly chart courtesy of MarketSmith

Disclaimer: None of the presented content represents individual investment advice to buy or sell securities and the information provided is solely for informational, educational and entertainment purposes. Author has no position in TWLO at the time of this writing.