Scanning for profits

Whenever I begin looking for stocks to add to my portfolios I always begin by screening on Barchart for the stocks hitting the most new highs in the recent trading sessions. I don't look for the highest percentage appreciation but I look for the stocks hitting new highs day after day on a consistent basis. Today ScanSources (SCSC) was near the top of the list.

As this economy begins to turn around control of the movement of merchandise from manufacturer, to wholesalers and distributors and finally from the retailers to the consumer will be essential. SCSC is a distributor of the optical scanning devices that will be at the heart inventory control as the inventory goes through the various levels. They are a key player in optical scanning devices in the US, Latin America and Europe.

It has had a price appreciation on 15 of the last 20 trading sessions and continues with 4 of the most recent 5 sessions. The price appreciation in the last 65 days has been 30.04%. The stock's price has recently turned upward and the stock has 5 buy signals on Barchart's 5 short term technical indicators of a 100% short term buy signal.

The stock is not widely followed by Wall Street but analyst predict that sales will increase by 6.6% and EPS by 17.1% in the coming year. There are no major sell recommendations out there and the smart money -- the short sellers -- have reduced short sales from 2.8 million shares to below 980,000 share in the past year. Fewer people are betting against them.

On other sites Wall Street Survivor reader give the stock a 5/5 Survivor Sentiment rating. Over on Motely Fool their CAPS members think the stock will out perform the market by a vote of 73 to 4 with the All Stars in agreement 31 to 1. Of the Wall Street columnists Foll follows they are favorable 3 to 0.

The stock has what I look for :

• Hitting new highs in better than 50% of recent trading sessions
• Analysts predict increased sales and earnings
• Short sellers are reducing their bets against the company
• Other technical sites have the same opinion I can up with.

Recommendation: No business can compete effectively without proper inventory control. Optical scanning devices have a pivotal place in inventory control. The company is positioned in the prime markets of the US, Latin America and Europe. I'm adding SCSC to my Wall Street Survivor portfolio around 29.64 with a protective stop loss no lower than 25.50.

Disclosure: I hold no positions in SCSC 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 JimVanMeerten@gmail.com