One of the seven criteria in the CAN SLIM method of investing is institutional sponsorship. Institutional investors include major entities such as pension funds, hedge funds, insurance companies and mutual funds. Increased institutional ownership is considered positive for a stock.
A screen called Stocks Funds Are Buying, found in the IBD Stock Screener tab, identifies stocks that are getting more institutional demand.
We are looking for a quarterly increase in the number of funds holding the stock. Increased institutional demand for a stock can help drive up the price with big purchases, as well as provide liquidity in the market.
Driven Brands Near Buy Point
Driven Brands is an automotive services company for consumer and commercial customers. The company specializes in paint, collision, glass and vehicle repair, plus maintenance and car wash services. Its brands include Take 5 Oil Change, Meineke Car Centers, and Maaco Collision Repair & Auto Painting.
The company went public Jan. 14, 2021, on the Nasdaq at 22 a share.
Driven was held by 243 mutual funds in March, up from 239 in December, and 231 in September 2021. The company has an Earnings Per Share Rating of 95 out of 99, and a Composite Rating of 93.
Driven Brand's chart is showing a long base with a buy point of 34.72, although the stock remain near the lows of the pattern. The relative strength line is at a new high, designated by a blue dot on the MarketSmith chart.
Exploration Company Also Sees Buy Point
Equinor is in the exploration and production of oil and gas, as well as refining and marketing of petroleum products.
The Norway-based company was held by 123 mutual funds in March, up from 120 in December, and 103 in September 2021.
Equinor has a Composite Rating of 98 and Relative Strength of 97. The company showed impressive quarterly EPS growth of 300% in the first quarter, and a $1.35 profit in Q4 from a year-ago loss of 17 cents a share. EPS jumped 963% in the September 2021-ended quarter.
Equinor's chart is forming a cup-with-handle base with a buy point of 38.80. The share price is converging with the 21-day exponential moving average and the 50-day moving average. Its relative strength line is at a new high, a positive sign.
Memory Chip Provider To Be Acquired
Silicon Motion is a Taiwan-based designer of microcontrollers, flash drives, and card readers. The company provides negative-AND (Nand) flash controllers for solid state drives (SSD) and solid state storage devices, which are found in smartphones, tablets and personal computers.
Silicon Motion was held by 231 mutual funds in March, up from 225 in December, and 202 in September 2021.
Silicon Motion has a Composite Rating of 96 out of 99, Relative Strength Rating of 96, and an EPS Rating of 91. The company has shown strong but decelerating quarterly EPS growth. It reported 55% EPS growth in March, 122% in December, and 124% in September 2021.
Shares are forming a flat base with a 98.75 buy point. Shares are testing the 50-day moving average, but below the 21-day exponential moving average.
MaxLinear is set to acquire Silicon Motion in a cash and stock deal that's expected to close in the first half of 2023. That means Silicon Motion stock will be trading for at least six more months.
MaxLinear is a designer and provider of radio frequency and mixed signal and analog integrated circuits used in broadband, connectivity and wireless infrastructure. The deal is expected to double MaxLinear's total addressable market. MaxLinear expects increased operating income, EPS and cash flow from the acquisition.
