Little-Known Stock is a Screaming ‘Buy’

One of the best things about quantitative indicators is that they do not discriminate. Unlike investors, they cannot be swayed by emotions. They do not care if a stock is loved or hated, big or small, well-known or obscure.

All that matters is cold, hard facts. That is something I can get behind.

Now, that’s not to say all indicators work well. To the contrary, many are garbage. But when you find one that works, it’s like striking gold.

When Profitable Trading developed a new indicator based on momentum two years ago, we spent hundreds of hours backtesting it. And it quickly became the most successful indictor in our company’s history.

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This unique indicator is designed to find stocks right before they soar. And that’s exactly what it’s been doing. In the past few years, it’s tagged over 100 stocks right before they broke out. In 2015, we closed out winners of up to 88%.

In fact, for two years in a row, this indicator spotted several of the best-performing stocks of the year — ones that went on to gain as much as 242%.

At the beginning of each year, we compile a list of the top trades based on this indicator. 

Our Top 10 Trades for 2016 are available now, but they won’t be for much longer. This report is being taken down at 11:59 p.m. on Thursday, Jan. 21.

You can find out how to access the full list here, but I want to give you a little taste by revealing one of the names on the list: Volaris (NYSE: VLRS).

If you’ve never heard of Volaris, you’re far from alone. It is a small airline company that provides low-cost service to travelers in Mexico and Central America, as well as select cities in the United States.

Why This Airline Stock is Set to Soar Even Higher

Shares nearly doubled last year, and the company is growing like gangbusters. Analysts expect it to report earnings growth of 266% in 2015, posting EPS of $1.50.

There’s good reason to believe Volaris will meet expectations and possibly even exceed them. Earlier this month, the airliner reported that it booked a 22% increase in passengers last year with 12 million. Total demand, as measured in revenue passenger miles (RPMs), increased 18.9% from 2014, reaching 11.6 billion.

Investors seemed pleased with the news. Shares jumped more than 4% following the report before settling 1.8% higher on the day.

The chart shows a stock in a clear uptrend since March with strong support at $15.

VLRS Stock Chart

Volaris has solid fundamentals, such as an industry-leading return on equity (ROE), which measures how effectively a company is using investor dollars. It also has little long-term debt and an ultra-low PEG ratio that signals the stock is nearly 80% undervalued.

But what earned Volaris a spot on the Top 10 Trades for 2016 list was its sky-high reading on the indicator I mentioned earlier. VLRS scored 188 out of a possible 200.

The specifics for calculating this indicator are closely guarded, because it’s been proven that once a market-beating strategy gets too widely known, it can lose its effectiveness.

But I can tell you that one of its main components is relative strength (RS).

RS assigns a numerical score from 0 to 100 to a stock based on its price performance relative to other stocks in the market. This offers a way to quantify the strength of a stock’s performance in the recent past, which numerous studies have proven helps determine how it will perform in the future. In short, a stock with a high RS is likely to continue outperforming.

VLRS has a RS of 94 out of 100. This puts it in the No. 1 spot in terms of RS in the airline sector and means it has outperformed 94% of all stocks in all industries in the past six months. 

It’s not too late to purchase shares of this stellar growth and value stock, though. Our indicator continues to flash a strong buy signal, and I anticipate shares running to at least $24 in 2016, which is more than 45% above the current price.

If you’re interested in getting the names of the other stocks on the Top 10 Trades for 2016 list — including a stock with a score of 193 — you need to act quickly. 

As I mentioned, the report will come down forever at 11:59 p.m. on Thursday, Jan. 21

Click here to access it before then.