I require 80% or more in order for a stock to meet my valuation criteria. CoStar currently meets my valuation requirement. The stock now meets my performance and valuation criteria, just one more to go.
Some investors are momentum investors. Some investors are value investors, and some investors are technical investors. I am all three. I combine them all. This really narrows down a large field of stocks.
The one-year chart of the stock is the final arbiter for me. I never buy stocks that are in downtrends, even if they meet the other two criteria. I don't like sideways or undecided trends. I wait for them to break one way or the other. I am also very wary of long, extended uptrends that are beginning to roll over.
I like charts that are breaking out of consolidations or are in very healthy uptrends.
I bought CoStar in late December of last year as it began to emerge out of its sideways base. I still own it. The stock is still in a very, very healthy uptrend. I would still buy CoStar today. It is currently one of the strongest stock in the entire market.
This stock passes my stock chart test, performance test and valuation test.
Of the 3,403 stocks that I grade and compare, this stock is currently ranked at number 21. I pretty much focus on the top 200 at any given point in time. As you can see, the stock has been in my top 200 for over six months.
If the stock starts to falter in performance, get too expensive or if the chart starts to roll over, I will move on. But for now, clients of Gunderson Capital Management are still long the stock.
Data from Best Stocks Now App
At the time of publication the author had a position in CSGP.
This article was written by an independent contributor, separate from TheStreet's regular news coverage.