Trading Growth & Value Stocks

Hello, everyone, and welcome to Schwab Coaching. My name is Cameron May. I'm a senior manager here at Schwab, and this is Trading Growth and Value Stocks. I'm filling in as today's presenter, and I'm looking very much forward to today's discussion. I thought, you know what? Why not just try to cover it all? We're gonna be talking about finding, timing, and buying growth stocks. I'll set sort of an explanation for why I chose to go in that direction today in just a moment through a quick peek at the markets. But before we get to that, let me say, first of all, hello to everybody that's joining us out there on YouTube. Hello there, Will and Naresh, David, Scott, JW, Kevin, Eva, SJS Photography, Ocean Life, Grace, everybody else.

Thanks for joining these webcasts week after week, time after time. We do appreciate your attendance and your contributions. If this is your very first webcast, or if it's your first time and one of mine, I wanna welcome you as well. And if you're watching on the YouTube archive after the fact, enjoy the presentation, but be aware that you're invited to join us in the live discussion. This webcast series typically kicks off right at four o'clock Eastern time on Wednesdays. So we'd love to have you here. And I also want to let you know that my very good friend, Brent Morris is going to be hanging out in the chats. Brent's going to be addressing any questions that I can't get to just during the flow of the presentation as long as those questions are on topic.

Brent's there to pick up that slack. So thanks for being there, Brent. And Brent and I would also like to issue an invitation to all of those in attendance and all of those listening on the archives. So please do follow us on X. It's a great resource to connect with your favorite presenters in between the live streams. So you can follow Brent there at BrentMoorsCS. You can follow me on X at CameronMayCS. All right, but let's get into growth investing. And as we do this, of course, the first thing that we need to discuss is the risk associated with investing or with trading. Risk is real. So bear this important information in mind. The information here is for general informational purposes only and should not be considered as a risk.

It should not be considered an individualized recommendation or endorsement of any particular security, chart pattern, or investment strategy. Schwab does not recommend the use of technical analysis as a sole means of investment research. And investing in stocks involves risks, including the loss of principle, okay? So let's get right to it. Let's go right to the thinkorswim desktop. This is going to be the paper money platform. And I mentioned that I wanted to explain why I chose today to talk about growth stocks, okay? But over the course of this session, I do have three things that I want to accomplish. First thing that we want to do is identify what it is a growth investor might be looking for. Second, what might influence the timing of when a growth investor buys a growth stock.

And finally, I want to just make sure that we actually place an example trade, okay? But getting to the point of why did Coach Cameron choose to talk about growth investing, versus value investing? Well, simple answer is, the markets have been going up and up and up. And I believe with this sort of late-stage surge we've had in today's session, we're right up there, I think less than 1% below the all-time highs on the S&P 500. And the simple mathematical fact is it might be more difficult to find value stocks right now than growth stocks, than traditional growth stocks, depending on one's definition of both, of course. Okay. It might be. More of what one might consider to be sort of a growth environment. So let's talk about growth stocks.

Well, let's put ourselves in the shoes of the hypothetical growth investor or growth stock trader. And let's say they want to go out and find some new growth trade candidates to add to their portfolio. Well, first thing that that investor might need to do is define just for themselves exactly what a growth stock is. And I think the title sort of gives it away to a large extent, but let's talk about potential considerations for a growth stock investor as they're looking for a potential investment candidate. So what is a growth stock? Before we go looking for it, what is it? Well, for some, the size of the company can have important implications towards its prospects for future growth. Now, that's not going to be always accurate on every security from one stock to the next.

But let's say that our growth investor has a couple of things that they want to focus on as far as the size of the company is concerned, a couple of things they want to avoid. First of all, people who say 'value is tough to find' you ain't been doing any dip buying for over a week, may have been a few more value scenarios back here, right? In the early weeks of, in the early part of August. Yeah. But for our growth investor, for some, they may see that very large companies have the potential to grow, but it might get more and more difficult to grow and become bigger and bigger and bigger when a company, you know, gets up to the very large cap up even into the mega cap category.

Okay. So the size of the company, let's phrase it this way, the company size may be a little bit bigger than the company size. So the size of the company, let's phrase it this way, the company size may be a consideration. Okay. Now that is on one, on one end of the extreme for the size of the company, maybe our growth investor might not be looking so much for those huge companies, but to the same extent, maybe on the other end of the scale, they, they may have preferences to not invest in very small companies and obviously very small companies conceptually may have lots of upside potential, but what also, what's commonly attendant with those very small companies still trying to get their financial footing in place, still trying to find their competitive advantage.

Well, oblivion is a potential outcome with those very small companies, right. Can still happen to the big guys, but yeah, those smaller companies do have a tendency more toward volatility. Okay. Volatility can be good. Volatility can be bad. As a matter of fact, spoiler alert, it's going to make it into our list here. But let's say our investor, our investor, has kind of a Goldilocks approach to their growth investing. Not too hot, not too cold. Maybe not too small, not too big. Okay. So we're going to be building that into today's search for growth candidates. Now, number two is that companies that are pretty large tend to have quite a bit of trading volume, not all of them, but that tends to be the general case.

The smaller we go down that maybe the, the, uh, the fewer shares that are traded in low liquidity can be, it can, can be problematic when investing. So maybe the trading volume may be a point of emphasis for some growth investors, just to make sure maybe they, you know, that if they're allowing for companies of a certain smaller size, they possibly might want to check to make sure the volume is also there. Okay. Now, number three, let's get back to volatility. I want to throw out this question for those in attendance here, just give me your sincere opinion on this. There's no right or wrong answer here, but it's volatility: good or is volatility bad, good or bad. What do you think?

Well, I think for some, they can see a lot of risk in highly volatile stocks, and that might not align with their preferred investments. So I think for some, they can see a lot of risk in highly volatile stocks, and that might not align with their preferred investments. So I think for some, they can see a lot of risk in highly volatile stocks, and that might not align with investors; they might want to sidestep volatility as much as possible, but they may also realize in doing so, volatility can work in both directions. Volatility can damage one's portfolio. It can also very quickly add to the performance of one's portfolio, depending on whether the volatility is bullish or bearish, right? And of course, whether one is long or short, but today we're talking about just buying stocks.

Okay. Trey says it's a double-edged sword. That's right. Now for some growth investors, they, they might see, they might lean a little bit more toward volatility being potentially, um, good. Okay. It may, may, if they do the rest of their homework, conceptually, it may just spur the success that they're hoping to, to encounter. Now, obviously it's not, they're not always going to get it right. Okay. Eva, you say you're not always a fan of volatility. Um, really depends. Yep. Okay. But for some, they may actually be looking for higher volatility levels in their growth investing. Now, a fourth potential characteristic, um, we have our big companies, uh, appear apparently, hopefully more toward the more liquid end of the scale. Volatility is there for better or for worse.

Um, but, uh, for a growth investor, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, truly over a long period of time, conceptually is responsible for growth in price. Isn't that the ultimate objective to buy a stock and see the price go up? Well, news can drive price up for, for some periods of time. Um, some unsupported optimism can drive price up for a period of time, but really it, it conceptually boils down to, is this company generating profits? Right. A profitable company, a consistently profitable company, hopefully will be rewarded for, for those results in price appreciation. So profitability may be a point of emphasis. There we go. For our growth investor, as they're trying to outline the sorts of characteristics they're looking for in a, in a potential growth trade candidate.

Now, the final thing, and this is sort of another, for some, a conceptual bottom line, um, metric, and that is just plain old growth. If a company is, is currently profitable, that's great. Maybe it's a better if they're, if their profits are growing, if their sales are strong right now, that's great. It might be preferable if those sales are strong over time. And there's one fundamental metric that, that sort of encompasses all of those things. And it might be, it might be expressed this way. A growth investor might be looking for a growth in shareholder value. What's in it for me? Okay. What is shareholder value? I'm going to, I'm going to outline a metric for that as we go to run our scan here, but this is sort of an, an example list of characteristics of a potential growth stock that, that some investors might look for.

Is it the exhaustive list? Is it the exhaustive list? Is it the exhaustive list? Is it the exhaustive list? Is it the definitive list? No, obviously some of you out there are going to be looking at this and say, Hey, Cameron, maybe I like your list, but I would change this, or I would add that, or I would take this one away and replace it with another. That's great. Every investor should feel empowered to make the decisions about what they define as an investable stock. That's up to them, right? But these are the five that we're going to use to define our growth candidates for our example trade today. So however one outlines the preferred characteristics, how do we use the thinkorswim platform to find stocks that meet those criteria? Well, let's go run a scan. And since we're looking for stocks today, I'm going to use the stock hacker. And let me just come up here. I'm going to click the, I don't know if you knew this, but you can just clean the whole thing up just with a reset button right up here. That allows us to start. And I do want

you to keep aakk to make sure that we're not proceed to paint the chart again, but we don't have to worry about because it's not going to have to be ball day to day, but it does have to be sejaunt to run this test. I think it takes a slight bit of work, but it's it's it's, if I can define very huge companies where we need to come up with a way to minimize these. Let me talk one last time around NorthernTT. This isn't our, this is our real problem. I've got it on a larger scale theme. company. That's a micro-cap company. That's a mid-cap company. What do those things mean? Well, the capitalization, the market capitalization of a company is a very simple formula.

It's just the price per share times the number of shares. So if we have a company that is currently trading $100 per share, and there are a million shares out there, $100 times a million shares means that's a $100 million company, which can sound like, to me, $100 million sounds like a lot of money. To Wall Street, that's not much money at all. That would actually be firmly in the micro-cap category. And as a matter of fact, you don't really get out of the small-cap category until you get to about $2 billion. So let's say that our investor is looking for that, okay, in their term, they might call it the Goldilocks. Now, that's a phrase that could vary from one to the next. Not everybody would even use it.

But let's say they're looking for, a company size that's maybe at least mid-cap, but going up toward the upper range of large-cap and steering clear of the mega-cap size companies, okay? So let's go search for something like that. So the very first criteria, we're going to scan through all stocks. I'm not going to direct this to a specific index or to a watch list I've already constructed. Instead, we're just going to scan all stocks. And our first choice is going to be the market cap. And notice this is looking for market capitalization in millions of dollars. So if I put a one right here, that would be looking for a minimum market cap size of $1 million. Well, let's say that we wanted to go at least to that mid-cap category.

Let's say we're going for $2,000 million. That would be $2 billion, okay? Once again, $2 billion sounds like a lot of money. But let's say that we're going for a minimum market cap size of $1 million. Well, let's say that we're going for a minimum market cap size of $1 million. But let's say that we're going a lot. And on the Wall Street scale, it's still toward the smaller end. And as a matter of fact, if I come over here and click, you can see that does eliminate a lot. There are a lot of little companies out there, little being defined as smaller than $2 billion. But now, and bear with me, I'm just going to hide this left column so we can see the full display here.

I'm not going to put a cap on this. Let's just leave this as nothing for the market. I'm going to put a cap on this. Well, actually, no, I'm sorry. I did intend to do that. Let's put this at $100,000 million. Oh, my goodness. That's an enormous number. What is that? That is $100 billion, right? There are actually companies that are larger than that. There are actually quite a few of them. Those are the mega-cap companies. This would still be considered in the large-cap. It's toward the high end of the range. Actually, large cap is seen as, and definitions can vary here. The large cap can go actually, according to some definitions, up to $200 billion. Right. So out of all the companies trading out there, there are actually 2,245 that are between $2 billion and $100 billion in size.

Yeah, $100 billion. Right. I'm explaining things and entering the metrics at the same time. I can twist myself up from time to time. But in any case, still quite a few candidates. We're narrowing the field, but still a ways to go. All right. So let's go back over here and look at what else we're looking for. Volume. Now, this volume, we've got to be careful with this. Now, this one happens to already have volume selected by default. So I'll leave it there, volume. But as we put in our minimum here, let's say our minimum is $1,000. Let's say our minimum is $1,000. Let's say our investor is looking for, how about at least a million shares? This volume refers to the number of shares that have traded so far today. Okay.

Well, as of the time of this recording, the markets have closed. So we've had all day to build up volume. So there are 1,700 companies that had at least a million shares traded. What does that mean? There's going to be at least 500 companies out of this list. You think, oh, these are multi-billion dollar companies. Surely at least a million shares trading. Nope. Nope. There are 500 that didn't meet that requirement for liquidity. Okay. But if I had run this same search, let's say first thing in the morning, just be aware, the volume numbers are just starting to accrue. So this number would be much smaller. Okay. Just be aware of that. Let's say that our growth investor is looking for liquidity. They're looking for liquidity.

Let's say that our growth investor is looking for company size, and that's how they're defining those characteristics for our scan. Next up, volatility. Maybe our investor is looking for stocks that have above average volatility, but maybe not what they might consider crazy volatility. How could we define that? Well, there is a metric known as beta. Let's add beta as one of our choices here. And beta is a comparison of a stock to the S&P 500. And if a stock just tends to move right along with the S&P 500, the S&P goes up 1% and our stock tends to go up 1%, same direction, same day, same distance. We would say that the stock basically has a one-to-one relationship with the S&P. In other words, it has about average volatility as measured by the S&P 500.

If a stock is less volatile than the S&P 500, it will have a lower number, like 0.9, 0.8, 0.7. A beta score of, for example, 0.7 would mean that we have our stock. It's positively correlated with the S&P 500, so it's a positive number, but 0.7 means 30% less volatile than the S&P typically. Not every day, but on average. Okay, so how about we say we're going to put our minimum here at 1.1. So literally what we're saying here is we're looking for stocks that are about 10% more volatile than the S&P, but they tend to still move in the same direction as the S&P. Now, for a maximum, there are some extremely volatile stocks out there. How about we put the maximum at 2?

So we're saying anywhere from 10% more volatile than the S&P up to 100%, twice as volatile as the S&P 500. Okay, and there are actually 4,000 stocks that fit that criteria. And Trey says, hey, one to one and a half is reasonable to Trey. Yeah, you can see that there are going to be differences of opinion on where to set these ranges. And the nice thing about thinkorswim Scan is that we can just choose whatever we consider appropriate for our preferred approach, if beta is even one of the elements of our scan at all. Okay. All right, so we have size, we have liquidity, we have volatility. Next up, profitability. There are plenty of big companies out there that are volatile and unprofitable. So let's add a profitability metric here.

And the way to add a metric, there are a number that we could do here. I'm going to look for, let's add a filter. And I'm going to go for a fundamental filter. Okay. Specifically, I'm going to be looking for earnings per share, TTM. Who knows what TTM means? You'll see that all over the place when using fundamental metrics. That stands for trailing 12 months. This means what have been the earnings or the profits over the last 12 months? Add them all up. So I'm going to choose that. I'm going to leave that at the annual profits or earnings. And let's put in a minimum that's fairly, very demanding. How about we say at least 10% profits over the last, or $10 profits over the last 12 months.

You can see there are only 329 companies that meet that criteria. So of these 329, there are going to be some with a beta between 1.1 and 2. There are going to be some that also have at least a million shares that traded today. And there are going to be some with a market capitalization between 2 billion and 100 billion. So we are narrowing the field at this point, I think pretty dramatically. And I'm going to see if we can get away with one more here. Okay. Yeah. Eva and Kevin, you nailed it. Absolutely right. Finally, that growth bottom line. What does growth in shareholder value mean? What in the world does that mean? Well, there is a metric in fundamental analysis.

Fundamental analysis just refers to analyzing basically the performance of the company and not the performance of the company's stock price. Okay. But let's come up here under add filter. And I'm going to go to fundamental. And I'm going to look for, look at this. It actually defaulted right to it. The book value. What in the world is book value? Well, if a company were to liquidate all of its assets and pay off all of its liabilities, and then whatever cash is left, that big old pile of cash, they were to chop that cash up and distribute it among their shareholders. How much would each shareholder get? That's basically what we're going to do. And then we're going to look at the book value in a nutshell of a company.

And so what an investor might be looking for is, well, if my share of the pile was X amount two years ago, and then it was Y amount last year, what do I want for Z amount this year? We'd prefer to see that pile, that individual pile representing that shareholder value growing from year to year. Okay. So I'm going to look at this three-year value. And I'm going to look at this three-year value. And I'm going to look at this three-year average. And let's set a minimum here. Notice, yeah, there have been some companies that have been losing shareholder value. Minus 100% would be, those are the companies that went to zero. Anyway, let's set our minimum at 10% growth per year. Okay. That's our three-year average growth.

So this is going to be our example scan for potential growth stock candidates. So just to recap, these are mid-to-large cap companies with at least a million shares that traded today with volatility somewhere from slightly above average to twice average. Earnings per share, there's profits generated over the last 12 months, at least $10 per share and 10% growth in shareholder value as measured by book value per year over the last three years. Okay. So let's run this scan, see what we get. All right. So it looks like there are 22 companies out of the thousands out there that just can meet these five criteria. Now, just because these companies meet our criteria, it doesn't mean that they're necessarily going to be, you know, the investor is going to buy them right away as a growth candidate.

Some investors will have other additional preferences, like what is the stock price actually doing? But let's do this to make the navigation among these. I want to move now to the timing portion. For some investors, yes, they may just run a search and they'll say, hey, you know what? If this company meets all of the criteria that I'm looking for, I don't care whether I buy it on a Tuesday or Friday. I don't care whether I buy it in June or February. It meets what I'm looking for, so I'm going to buy it. Others though, they'll bring up a chart and they look at the chart and see if there are price behaviors that are in alignment with what they prefer to see regarding the timing of entry. Okay. Okay.

I was checked over here in the chats and I can see, thank you, Brent, for helping out a little clarification regarding book value. Anyway, let's save this scan just to make the navigation among and between these companies that we found a little bit easier. So right up here, we can click on this little menu icon. It's the second one from the top. And I'm going to choose save scan. Scan query. That just means let's save this scan that we just built. Okay. And I'm just going to give it a simple name. Let's just call it growth stocks. Okay. Let's click save. I already have one. Yeah. Let's go ahead and overwrite that one. I had a scan query that I'd built previously called growth stocks. That's okay.

This is the one that I want now. So the nice thing about this is if I were to then clear these results, and let's say I come, go back here. I want to rerun a scan. I don't want to have to go back and reenter all five criteria and try to remember what exactly, how did I build that last time? Well, we can actually just go up here, load that scan query. And it's just going to be a personal scan query. Let's choose our growth stocks. And there it is. There are our scan criteria. And we can run that scan and get new results. Now, obviously they're going to be the same because we just ran this scan a few minutes ago. But another nifty thing about this.

If I go to my charts, I don't, I don't typically share my scans, but you, if you're following along at home, reconstruct in a paper money account. Yeah. Let's let's come to the left column on the charts. And I'm going to go up to the watch list and you can see, I already have one growth stocks, but let's suppose we were looking at a different watch list. I just want to point out that when we save a scan, we can go back to the chart. And I'm going to go back to the chart. And I'm going to go to the watch list. Now go to the personal area in the pop-up menu. And there's our scan. You can, you know, that it's a scan because it has this little, this little circular purple icon.

I'm going to choose growth stocks. And there are those 22 companies, and this is going to update itself. So if I, if I loaded the same watch list tomorrow or the next day, it's going to be a different list of stocks because it's just running a scan and then showing those stocks too. So now let's talk about if we have companies that seem to meet fundamental criteria for a growth investor, what if a growth investor concerns, concerns themselves with the timing of entry using stock charts? How might they do that if they do it at all? Well, they're, they're among, among other ways, there are a couple of basic approaches, a growth investor, very commonly, though, is looking for a stock that has been going up.

And you're going to see, as you run these sorts of stocks, it will still find companies that have been going down recently. Now, down doesn't necessarily mean bad. It may actually mean a better price in the near term, if it starts to go back up again. But for some, they might prefer something like DHI. Okay. DS Greg says, how often does it update? Every day. Yeah. Constantly. Heather says, if you save the content, it's going to go back up. Yeah. That's a good point. That's a good point. That's a good point. So the scan is a watch list will automatically update. Well, you're having to run the scan again. Exactly. Yep. Heather. Yeah. If I come and look at this list next week, it'll be a slightly to very different list.

Okay. But there's DHI. So let's put ourselves in the shoes of that hypothetical growth investor. Again, they have a company that meets all their criteria, but there are times, even meeting all those criteria where the stock decides to go down. And for some, they don't like to buy. It's stocks that are going down. They see that as sort of the opposite of growth. That's shrinkage. Yeah. Maybe instead they're looking for a stock that has recent momentum and maybe a left to right, just upward trend. Okay. Just being within an upward trend may be enough for some, or they might look for very specific developments where a stock is, let's say, breaking through a recent price ceiling or bouncing off a recent price floor. Sure.

So using DHI as examples of both, you can see that there was a price ceiling transitioning to a potential price floor right around that 166 level. And so maybe our growth investors, if they were finding this stock a few weeks ago, and that stock were starting to rise, giving some white candles coming off that price floor, for some, that might be an entry. For others, or even the same traders, if they're looking to buy, they're going to be looking for a price ceiling that's going to be around that 166 level. For a separate entry, it might be as we push through previous highs. Okay. Oh, Eva, thank you for pointing that out. There is a survey. So let me hit the pause button on the presentation for just a moment, just to give a quick solicitation.

Okay. There's a survey in the chat window for those that are here for the live stream. I always appreciate it if you take the time to fill out the survey. It's only two multiple choice questions and a comments box and a suggestion box. So if you have any questions, please feel free to reach out to me. I'll be really quick to do these surveys. But if you take the time to fill it out, I'll take the time to read it. Definitely helps. And sometimes I structure entire webcasts around that survey, that survey feedback. So thanks for doing that. So go ahead and click on that survey link right now and then fill the survey out after the webcast is over when we're done. Okay. Thank you, Eva. But let's get back to this discussion.

So here we have one example of maybe a stock that's pushing through, a resistance level today. And so an investor might say, okay, I found a stock that meets my growth criteria and the timing appears to be in alignment. And maybe they go ahead and make that purchase. It's not the only potential timing element. As I mentioned for others, they might look for a stock that's more of like it's bouncing off a price floor. And as we look through this list, you're going to see others like MPC. This is, more contraction than growth, right? Maybe it's starting to show signs of turning back up, but there are some others. So like, what about Lenar? Here's a stock left to right.

It's not pushing up through the price ceiling just yet, but it did just recently start to move off an apparent price floor. This price ceiling here at about 170 seems to have acted as a pretty fair support. So let's look at this stock. It's not pushing up through the price ceiling just yet, but it did just recently start to move off an apparent price floor. So let's look at this stock. We consolidated around that level, and then we've just been rising off that level for the last few days. So for some, that might be just the timing element they're looking for. What's another one? PHM doing something very similar. So here's Pulte Group. Old resistance acting as an apparent new support, very similar to Lenar. And similarly, we had, well, this is somewhat similar.

Earnings announcement right around the corner on this company. But here's William Sonoma. This company meets all five of the growth investors' preferred metrics. But instead of pushing up through a price ceiling, which appears to be up around 160, maybe this investor sees things bouncing off a price floor. If they're comfortable buying right before the end of the year, they're going to be pushing up through an earnings announcement. They might look for an entry on this sort of an event. Now, Will says the home builders are up today. We're seeing that. Mark, you like this? I know I'm trying to cover quite a bit of territory when I say, hey, we're going to find time and buy. That's quite a bit to cover in 45 minutes.

So there are two example potential entries, breaking through price ceilings, bouncing off price floors. In what appeared to be already upward trends. And in this one, it was an upward trend that's kind of gone sideways. Sideways for some is still quite tradable. As a matter of fact, to some, that is the precise definition of buy low and sell high. If we have a stock that's bouncing back and forth between 135 and 160, 135 and 160, 135 and 160, maybe we buy at 135 and sell at 160 conceptually, if it can just manage to do that one more time, right? But there's one more. What the heck? I thought if we have time, I want to talk about one other that was interesting to me, technically regarding timing. And it looks very different from these other stocks that have been going up or going up and then sliding sideways. And this one is Ulta. I think I've been actually inside an Ulta store once, right? It's a bunch of hair curlers. And blow dryers and stuff that I don't use, obviously.

That's interesting, Eva. You say, 'I can't in good conscience buy a stock where the product is junk.' So, can someone have convictions about a stock? And can that inform the way they approach that stock? Yep. Does that always guarantee that the stock is later going to perform as they expected, either negatively in the case of thinking their product is junk or positively if they think a product is spectacular? Nope. But there are plenty of investors out there whose maybe their final filter is, 'do I even like this company or the products they supply?' For example, Ulta. There's probably nothing wrong with the company at all. It's just that I never go in the store because I don't buy those sorts of products.

But I sat in the parking lot plenty of times for my wife going in and buying stuff. Okay. What is interesting? What do you think caught my eye about Ulta? What do you think? Well, Ulta has this tendency to gap and then run. Gap and then run. You'll notice here on this earnings announcement, gapped up and then ran in the direction of that gap. Here it gapped and then ran in the direction of that gap. As a matter of fact, oftentimes gap traders will apply empty sounding names to these. When a stock has been going in one direction and it gaps the opposite direction, they might call that a breakaway gap. It means it's breaking away from the previous trend and starting into a new trend.

If it gaps again within that trend, they call that a runaway gap. It's like a runner who is running away from the rest of the pack in that new direction. So in this case, we have a stock that's been going down and down and down. We know that it qualifies according to our preferred metrics because it showed up in our search results. So it meets those five metrics at least. But just recently, it has gapped in a new direction. And so for some, for a growth investor, that newfound enthusiasm that is counter to the previous enthusiasm may be enough to take an entry. So let's take a look here. It is a little bit different. Looks like we have, hold on a second. I'm going to block somebody here.

I have somebody in the chat. There we go. Just filling up our chat. There we go. So we've taken care of that. Anyway, yeah, gap in a new direction, counter to a previous direction, may spur the stock on. I will say, though, there is an earnings announcement here. So not every investor is, even if something meets all their criteria, they're not comfortable buying right before an earnings announcement. And in the case of a gap, if the gap proves to be wrong, how would an investor typically define time to admit that it's wrong and get back out? Well, if we re-enter that gap, so we've seen something driving price up, in this case, creating brand new enthusiasm for a stock where previously little enthusiasm existed. Now, all of a sudden, there is a big rush of enthusiasm.

If that fades enough, that price re-enters that gap, for some, they might see that as a sign that we're just going to reverse and go right back on down. Other than that, maybe they stick with that stock and let it run. Anyway, I saw that that was an interesting technical development. None of these are a guarantee of performance, but it's time to buy a stock. Which stock should we buy? How about if we use our first example, DHI? If you're new to Thinkorswim, let's make sure you know how to buy a stock. It's actually a really, in my view, a very straightforward function. It's this $186-ish stock. So we want to bear in mind, we want to buy the number of shares that we could consider that we can afford, that are appropriate for our portfolio, our meaning, whoever the self-directed investor is.

Let's say our investor here is, is willing to spend maybe, you know, $10,000 on a new stock. Well, $10,000 divided by 180. I'm just going to round it. It's close enough. $187 per share gets about 53 shares. Okay. So we're going to go to our trade tab and let's buy 53 shares of D.R. Horton. So I'm going to click on, this is the way that a stock order is placed. We go to the trade tab, enter our symbol here, click on the trade tab, and we're going to go to our trade tab. And we're going to click on the ask price. And that creates a buy order right down here. The default is going to be for a hundred shares, but we don't have to stick with that. Let's just buy 53 shares.

And we can choose a limit order. If we want to put a cap on how much we want to spend per share, taking the risk that we obviously, if we can't get it at that price, the order doesn't fill, or we can put in a market order saying, 'Hey, we're willing to pay whatever the market price is.' Just get us in. I'm going to submit this as a market order. And we can see here that we have 53 shares at the market price. Whatever that happens to be when our order gets to the front of the line, when markets resume trading tomorrow. So that could exceed the, you know, the type, this, the example, $10,000 limit that I just gave. Anyway, let's click confirm and send.

And we're going to put it in order to buy 53 shares. If we get it for current prices, that would be about $9,900. But just remember with market orders, prices can change quickly. In fact, it's a little bit more expensive now, but it's not going to be market conditions, especially if you give it all night to change, resulting in execution prices that can be different from the quotes displayed, this quote, at order entry. Okay. I'm going to send that order off. That's it. So guys, we have, I said we're going to be finding, timing, and buying growth stocks today. And that's precisely what we've done. All for example purposes, this is just to provide one potential process that a growth investor might implement as they're out there trying to add some growth stocks to their portfolio.

Okay. Everybody, I'm Naresh says, don't you have to set it to GTC? Won't it expire at midnight? Good question, Naresh. No, any market order that's placed after market close, it's good till the close of the next day. Okay. Good question. If we leave it as a day order. All right. So everybody, we've found, we timed, and we bought an example trade. So I hope you enjoyed that. Thanks for letting me come in as the interloper. I always like these opportunities to step in, to fill in when someone else needs some help. So if I get the opportunity to do it again, I'll be back to talk about more growth and value investing. In the meantime, I certainly want to invite you to join me in my other regularly scheduled webcasts.

I have something Monday, Tuesday, Wednesday, and Friday of each week on a scheduled basis. So look for me on the calendar. Also, make sure that you are following Brent and me on X. Okay. If you're not doing this, it doesn't cost anything to follow us, but this is the best place to connect with us in between our webcasts. So, you can find Brent on X at BrentMorrisCS. You can find me here at CameronMayCS. As a matter of fact, I'd love to get your thoughts just on this most recent post. I'll see you next time. Bye. I'm doing an emoji poll. Give me an emoji about what you think about what's going on with the S&P 500. We just raced up. Does that make you excited? Does it make you nervous?

Express your emotions to me in an emoji there. I like that. Anyway, another thing that I would definitely strongly recommend you do is subscribe to our Trader Talks channel. You can go down and click on the subscribe button right now. It doesn't cost anything, but YouTube is the best place to find our previous webcasts. They've been organized for you by topic, by series. You can find those right there in a playlist. You can also join our live streams right here. Okay. And two final observations. Thank you to everybody that's already clicked the like button. I'm looking over in the left column - 38 people already have already clicked the like. Thank you. That's always appreciated. And it always helps.

So if you're watching the live streams or you're watching the archives, webcasts, always make sure if you enjoy the webcast to click that like button because it always helps us. Okay. And finally, there is a survey for those in the live stream. So if you would now go click that survey link, fill it out, give me your honest feedback. I'll read that feedback and that helps as well. Okay. All right, everybody. Go enjoy the rest of your day. I will see you in a future webcast. I'll also look for you on X, but whenever I see you again, until that moment arrives, I want to wish you the very best of luck. Happy trading. Bye-bye.