Idexx Labs Nears Breakout

Idexx Labs, holding up, building the right side of a base. With pet ownership still rising, vet products demand trends are strong. RS line isn't great lately, but monthly chart shows stellar outperformance.

Video Transcript


- And last but not least, IDEXX, this is one of IBD's long term leaders. So we'll take a look at the monthly chart here shortly, but first a quick look at the daily. This stock is building the right side of a base and gained 7/10 of a percent today. So outperforming from that sense amid widespread weakness. Ed, what do you like about this stock?

ED: Well, I mean, there's some nice. The fundamentals are pretty strong. And for a few quarters, it was accelerating. It slowed down a little bit, but, you know, pretty high growth. Pet ownership went up, you know, in the COVID crisis, and I don't think-- a lot of people see those trends continuing. So this does vet products and services.

So that-- those demands are going to pick up. I bet a lot of people delayed vet appointments because you and I both know you couldn't actually go into those vet appointments. And it's a lot more fun to-- to be with your cat or dog during those visits.

You know, the relative strength line isn't great right now, but on a longer term basis, It's been a really strong performer. And so years and years where, yeah, there'll be some little periods of down. But from there. You could even go back to 2000 really, is how long it's sort of been outperforming the market. And just a pretty tremendous run. You know, it may seem, oh, this is dull. This-- this is not dull. This is a lot of fun If you could have this stock going from, you know, like a six to 400 over that time.

So, you know, in that situation it's really nice to see. You know, like having some stocks like this-- you know, this is why we have the long term leaders list, because there are some stocks-- sometimes it's nice to balance out your portfolio with stocks that aren't so volatile that tend to outperform over the long term.

- Mm-hmm. And so at this point with where the stock is, less than 5% above the 10 week line, investors can size their positions off of that level, and use that as their stop area. But with it being a long term leader, and with the market being where it is, and earnings two weeks around the corner, how should investors weigh all of those factors and decide whether or not to put this in their portfolio now or wait for some sort of handle or pullback or just wait for the earnings report?

ED: I mean, I think-- yeah, I would probably wait for the earnings report because if you wait for a handle, by the time that forms you're only about a week away from the earnings. And also, I think, look at one more time at the daily chart. There's one other little flaw, the volume on the updates has been sort of weak. I mean, you know, we've seen that with a lot. The whole market seems to have lighter volume, but that's a little less encouraging. So, you know, I'd rather see some real power come in. Maybe a pullback, because it just maybe a little more vulnerable to a pullback. If it pulls back, forms a handle, is near the 10 week line, breaks out on earnings that seems like a good opportunity in that situation. But yeah, I think right now, in this environment that just waiting until-- until that comes out would probably be the way to go.