The science of fat

Time to do a little trimming in my Wall Street Survivor portfolio. I never sell a stock because I found a better stock, but I do sell a stock from my portfolio if it fails to keep trading above its 50 day moving average. This week both Korea Electric Power (KEP) and the Limited Brands (LTD) began trading below their 50 DMA so they were trimmed.

On BarChart I screened for stocks trading above 100K shares a day that were hitting the most new highs and after eliminating stocks trading below $5 and those that scored under 80% buy on BarChart's technical indicators came up with a stock I never heard of -- Cytori Therapeutics (CYTX). As I researched it I found that it was involved with finding therapies that are cell based. Instead of using embryonic cells they use fat cells. We all have plenty of that and fat cell research might not run into the ethical concerns that other stem cell research is receiving.

The stock has hit 14 new highs in the last 20 trading sessions and hit new highs in 4 of the last 5 sessions. Price appreciation in the last 65 days has been 100% and BarChart's technical indicators are hitting 13 out of 13 buy signals for a 100% buy rating.

On Wall Street the 5 analyst following the stock have 4 buy recommendations and the only under perform rating hasn't changed since January 2008. The analysts consensus for sales growth is 17.7% with EPS growth of 54.5% expected next year.

I always try to see what some of the other sites think about a stock in case I missed some negative signals. On Wall Street Survivor Mark's checklist has a Survivor Sentiment rating of 5 of 5, a fundamental rating of 5 of 5 and a technical rating of 5 of 5. The Motley Fool CAPS members think the stock will outperform the market 132 to 20 with the All Stars giving it a 34 to 9 vote. The Wall Street guys Motley Fool follows vote 4 to 0.

This stock passes the 3 tests I use:

• The stock is hitting new highs better than 50% of the time and has a BarChart technical indicator rating of better than 80%
• If Wall Street brokerages are foll0wing the stock they are not trashing it. Why would I buy something if brokerage firms are publishing negative reports and having their brokers call client soliciting sells -- I don't spit in the wind
• I try to get confirmation from other rating sites that the stock has better than a 50/50 chance to beat the market.

I'm adding Cytori Therapeutics (CYTX) to my Wall Street Survivor portfolio because it meet my 3 major criteria. If I can't find a stock that meets my criteria, then I don't buy anything that day.

Disclosure: No positions in CYTX at the time of publication.

Jim Van Meerten is an investor who writes on financial matters here and on Financial Tides. Please leave a comment below or email FinancialTides@gmail.com