NEW BULLISH Plays
MDC Partners Inc. - MDCA - close: 23.37 change: +0.29
Stop Loss: 20.85
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Entry on December -- at $---.--
Listed on December 09, 2014
Time Frame: 8 to 12 weeks
Average Daily Volume = 227 thousand
New Positions: Yes, see below
Why We Like It:
MDC Partners (MDCA) is a marketing firm. The company describes itself as
"one of the world's largest Business Transformation Organizations that utilizes technology, marketing communications, data analytics, insights and strategic consulting solutions to drive meaningful returns on Marketing and Communications Investments for multinational clients in the United States, Canada, Europe, Asia and Latin America."
After an incredible performance in 2013 where MDCA's stock rallied from $8 to $26 (+225%) this year has been a disappointment. That might be due to the company's earnings, which have been pretty hit or miss. On a longer-term perspective 2014 merely looks like a massive consolidation (see the weekly chart below).
The company's most recent earnings report was October 29th. They missed bottom estimates while beating the revenue number. The stock initially sold off but investors bought the dip and MDCA has been outperforming the market recently.
Miles Nadal is the Chairman and CEO. He commented on their Q3 performance saying,
"This was yet another strong quarter for our business, and it is shaping up to be another exceptionally strong year as we are on pace to deliver on all of our financial objectives. But what's most exciting is that we have established a solid foundation for what we believe will be an even better year in 2015... It's our continuing and unwavering belief that our organization is healthy, strong and strategically better positioned than all of our competition." Nadal also said, "2014 shaping up to be our best year to-date." Commenting on the Q3 results, "revenue increased 13% over the last year to nearly $327 million, with organic revenue a record 8.2%. Second, our adjusted EBITDA increased 8% to $42.5 million with margins of 13%... Nearly 8% of our revenue is now outside of North America, up from 6% a year ago. We continue to see robust organic growth in foreign markets up 30% per year."
It's worth noting that MDCA is a small cap stock and doesn't get a lot of analyst coverage. Yet investors seem to be bullish on it. The stock is up five weeks I a row and shares are up almost +30% from their October lows.
Technically shares are in breakout mode. They broke through the 200-dma, resistance near $22.50, and its long-term trend line of lower highs, all in the last few weeks.
Tonight we are suggesting a trigger to launch bullish positions at $23.55. However, I would consider this a slightly more aggressive trade. Investors may want to limit their position size to reduce risk.
Trigger @ $23.55 (consider smaller positions)
- Suggested Positions -
Buy MDCA stock @ $23.55