Written by Rich B. Meier
TopEquityNews.com
Digging into some of the top-performing ETFs is a great way to find stocks that are moving right now. Since all exchange-traded-funds are designed to mimic the performance of a specific index, Top Equity News looks for clusters of similarly themed ETFs.
For example, if a handful of Biotech based ETFs are leading gainers, then we know where Wall Street’s money is going. Instead of buying a biotech fund, why not own just the stocks responsible for the performance?
When we break out the ETF X-ray machine, we see which companies are pulling the cart and which are in it. Every investment pro knows that you run with the leaders and run away from the laggards. It’s the “L” in William O’Neil’s C-A-N-S-L-I-M.
Yesterday, two software ETFs were top 10 performers.
iShares S&P North Amer Tech-Software (IGV)
SPDR S&P Software & Services ETF (XSW)
The two exchange-traded-funds share eleven names that were up more than 4% yesterday:
- Fortinet Inc. (FTNT): GRADE B
- TIBCO Software Inc. (TIBX): GRADE B
- Ultimate Software Group, Inc. (ULTI): GRADE B
- Taleo Corp. (TLEO): GRADE C
- Ariba Inc. (ARBA): GRADE C
- Concur Technologies, Inc. (CNQR): GRADE C
- NetSuite Inc. (N): GRADE C
- Pegasystems Inc. (PEGA): GRADE C
- TiVo Inc. (TIVO): GRADE C
- Synchronoss Technologies, Inc. (SNCR): GRADE C
- Salesforce.com (CRM): GRADE C
TEN’s favorite chart belongs to Ultimate Software Group, Inc. (ULTI). Shares broke a triple top of $66 on a surge of volume. The upswing resulted in a new 52-week-high. That’s one of the Ns in C-A-N-S-L-I-M. It stands for new, new high, new products, new… and new highs are typically followed by newer higher highs.
While we like the look of ULTI’s chart, we feel its valuations are for momentum chasers only. The software company trades at 66 times forward earnings, nearly 7 times sales, a PEG ratio of 3.8 and a paltry return on equity of 5.31%. Besides projected earnings growth of more than 50% in 2012, there is not much to like here.
Top Equity News rates Ultimate Software Group as only a short-term trading candidate; with a tight stop right below its triple top breakout of $66. In fact, if shares were to close below $64, we would consider flipping ULTI around and shorting it.
ETF X-Ray: ULTI is Ultimately Priced is an article from: 
