So, what’s Big Money? Said simply, that’s when a stock moves in price alongside chunky volumes. It’s indicative of institutions buying or selling the shares.
Smart money managers are always looking for the next hot stock. And Entegris has many fundamental qualities that are attractive. But sometimes when values decline, money managers look to sell or may be forced to liquidate.
This downward movement creates uncertainty for the stock going forward. And as I’ll show you, the Big Money has been exiting the shares recently.
You see, fund managers are always looking to bet on the next outlier stocks…the best in class. They spend countless hours sizing up companies, reading reports, speaking to analysts…you name it. When they find a company firing on all cylinders, they pounce in a big way. But Big Money sells too, especially when the situation changes.
That’s why I’ve learned how critical it is to gauge Big Money demand for shares. To show you what I mean, have a look at all the Big Money signals ENTG has made the last year.
We’ve recently seen Big Money selling activity. Each red bar signals big trading volumes as the stock price dipped:
In the last month the stock attracted three Big Money sell signals. Generally speaking, recent red bars could mean more uncertainty is ahead.
Now, let’s check out technical action grabbing my attention:
- 3-month underperformance vs. Technology Select Sector SPDR Fund (-9.8% vs. XLK)
Vast underperformance is an obvious red flag for leading stocks.
Next, it’s a good idea to check under the hood. Meaning, I want to understand the fundamental story too. As you can see, Entegris has been growing sales and earnings at double-digit rates. Take a look:
- 3-year sales growth rate (+11.6%)
- 3-year earnings growth rate (+70.3%)
Marrying great fundamentals with technically superior stocks is a winning recipe over the long-term. But when there is disagreement between the two, it could mean the situation has changed. Or it could be a huge long-term value play on a great stock.
In fact, ENTG has been a top-rated stock at my research firm, MAPsignals, for years. That means the stock has had buy pressure, strong technicals, and growing fundamentals. We have a ranking process that showcases stocks like this on a weekly basis. Usually when selling dries up, great stocks rally again.
ENTG has had a lot of qualities that attracted Big Money. Since 2016, it’s made the MAPsignals Top 20 list 47 times, with its first appearance on 11/29/2016, and gaining (+580.03%) since.
Despite the recent decline, the fundamental story is strong. The blue bars below show the times that Entegris was a top pick since 2016:
It’s been a top stock in the technology sector according to the MAPsignals process. I wouldn’t be surprised if ENTG reappears on this list in the years to come. Let’s tie this all together.
The Bottom Line
The Entegris decline makes the stock look oversold. Big Money selling in the shares is signaling to take notice. Given the historical gains in share price and strong fundamentals, this stock could be a huge value play long-term and still worth a spot in a growth-oriented portfolio.
Disclosure: the author holds long positions in ENTG in managed accounts at the time of publication.
Learn more about the MAPsignals process here.