Tuesday February 07, 2012
by Leo Fasciocco, editor Ticker Tape DigestRackspace Hosting (
RAX), which provides internet hosting and cloud computing services, is our latest featured breakout stock.
Rackspace serves some 130,000 business customers and managed more than 66,000 servers, 2.1 million e-mail accounts, and 417,000 cloud hosting domains.
The stock came public in 2008 and soared from a low that year of $4.80. Its push to a new high is very bullish and could attract more buying.
For 2011, analysts expect RAX to post a 50% gain in net to 53 cents a share from 35 cents a year ago. The stock sells with a price earnings ratio of 83. That is very high. So, one needs to be watchful.
Looking out to the first quarter of 2012, net is expected to surge 70% - an acceleration in quarterly earnings growth. For all of 2012, Wall Street projects a 52% gain in net to 80 cents a share.
The stock has broken out from a 16-week flat base. The move also represents a breakout from a one-year, cup-and-handle base.
RAX pushed to a new high with volume surging to 4.4 million shares, triple its normal daily volume. The tape action was very bullish and indicated strong institutional buying.
Institutional sponsorship is excellent. The top three fund holders all have a 5-star rating. We are targeting RAX for a move to 57. A protective stop can be placed near 42.
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