Fundamental Analysis
On a valuation basis, PDLI looks quite impressive. Its operating margins are extremely high compared to the competition at 93% vs. an industry average of -158%. The price/earnings ratio is about 1/3 that of the industry at 7. The PEG ratio is a beauty at .23 vs. the industry 1.27, and anything below 1 is already considered cheap. I'm not a huge price/sales person, but let's throw it in as a small bolster to the argument at about 1/5 the industry average.
13% of the shares are also held short, and anything in the double digits is extremely high. So I'm looking for a mid-term general increase bolstered by a significant short squeeze.
Technical Analysis - Weekly
Relative strength is a weak indicator on this one, but the RSI values have been bouncing along traditional resistance of 50, and a current value of 63 gives the stock decent room to run to an oversold value of 70, and even then you have to see divergence to price before concern sets in. The price just broke out in the highest volume area of the 3-year chart. So there is not significant support below at about $6.50 per share. The price has also been in a slight uptrend as it has been consolidating from October thru January. Stochastics are pretty neutral. The price relative to the Wilshire 5,000 has been flat meaning it's paced the market almost exactly. The accumluation/distribution line has been about flat, but a bit negative in a downtrend. Not enough to cause concern, however.
Technical Analysis - Daily
The RSI on this stock is showing that it's ripe for a pullback, which has likely already started. The price could surge again and diverge before it pulls back. However, this was the most appealing stock in my screens this week, my investment horizon is 3 months, so timing isn't quite as of the essence as if I was day trading. I also force myself to make one trade a week. So if it pulls back for a few weeks or a month, gains appear to still be on the horizon. Stochastics also show that the pullback might already be happening. I usually wait for the stochastics to
diverge from price once and then drop out of overbought territory, reentering and diverging again, and then dropping out of overbought territory. This appears to be happening right now. The only way these stochastics could resolve themselves is if they blasted through the previous high and didn't dip below. But you are about to get a cross, so the short-term pullback looks set. Volume has been healthy, increasing as the stock rose. Hopefully, volume will be fairly benign as the stock pulls back, setting it for another move higher. The price relative to the Wilshire 5,000 has been going up, meaning that the stock has been outperforming the broad market recently. The accumulation/distribution line has also been in an uptrend, signifying recent interest in the stock as the price increases. So obviously, I would rather the stock continue to go up, but a short-term pullback is OK because the 3-month uptrend appears set.--------------------------------------
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