Advanced Enzyme has broken out of a 17-week, 27% deep Consolidation Base 5-weeks ago. The stock then rallied around 8% from the pivot price and started pulling back towards the 21-day moving average. The pull back is on lighter volume and this kind price action is not unusual for a leading stock.
When looked at the daily chart, the stock is taking support near the 21-day moving average line forming a tight price action. The current price is only -4% away from the ideal buy price of INR 385.
What makes Advanced Enzyme a special stock is its consistency in earnings. It has a top notch EPS Rank of 92. The earnings and sales for the stock have grown by 17% and 7%, respectively over the past three years. Its 3-years earnings stability is 3, on a 0 to 99 scale (lower the better). Over the past five years, the earnings and sales for the stock have grown by 14% and 11%, respectively. The 5-years earnings stability is 5. The return on equity for the last reported year is 17%.
Another key part of the jigsaw is institutional sponsorship. Advanced Enzyme has an Accumulation/Distribution Rating of 'A+'. This represents heavy institutional buying over the past 13 weeks. The number of institutional sponsors and shares held by the sponsors, both increased in the last reported quarter.
In the last twelve months, Advanced Enzyme has rallied over 195% as compared to 51.5% for the Nifty500. It has a Relative Strength Rating of 80. We definitely would like to see improvement in the rating. At this point we are taking a step back and focusing on the RS Line.
The RS line of the stock is showing some encouraging signs. The overall long term trend of the RS line is trending upward. It has been making good progress in the last two weeks. If Advanced Enzyme can maintain a healthy price action, it could make sense as a CANSLIM trade.
The key trend lines, 10 and 40-week moving averages are at a comfortable position. The current trends of both the averages are upward and the 10-week moving average is trending above the 40-week moving average. The current price of the stock is trading around 5.9% away from the 10-week moving average.
The stock belongs to the industry group of Chemical-Specialty, which is exhibiting a fair amount of strength in the current market environment. The current industry group rank is 83. The current price of Advanced Enzyme is -12% off from its 52-week high price and 276% above its 52-week low price.
At this point, you want to see a strong close on heavy volume before initiating a position. That signals institutional support.