Hallador Energy (HNRG) - 427% Gain in 21 Months
This is a trade rationale from a past trade for educational purposes only. For access to our current portfolio subscribe today!
We added HNRG to the portfolio in February 2021 at a price of $1.84. The stock met our valuation and market cap criteria, and was among the top 50 micro cap stocks outperforming the S&P 500 over the previous 12 months.
Price and volume action over the preceding months showed clear signs of accumulation. There was a volume climax as the stock bottomed in April 2020 followed by a loss of selling pressure. The stock proceeded to have several weeks of high volume accumulation, followed by a breakout in February 2021.
We removed the stock from the portfolio in November 2022 at a price of $9.70, for a gain of 427%, as it fell below our momentum cutoff.
While the stock declined for the following 8 months, it later returned to new highs. Our strategy will never get us in at the very bottom and out at the all time high. We’re looking to use the stock market’s mean reversion to our advantage by buying undervalued companies that are showing signs of upward price momentum and selling when that is no longer the case.
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