A Favorite Growth Stock: Akamai (AKAM)

As to the stock market, here’s the way I see it.

By the end of last week, the market had become ripe for a powerful bounce.  That bounce began yesterday, and continued today.

The correction, which had the indexes down 14.5% at the bottom, was sharp, swift and accompanied by plenty of bad news, including a volcano (now two), a massive oil leak, continued high unemployment, a troubled euro zone, and more.

All that is pretty normal for a correction.

But what was unusual was the action of leading stocks, many of which simply refused to participate in the correction!

These stocks were held tight by institutional investors still expecting a brighter future at these firms.  And whenever individual investors scared by the market’s plunge sold and headed for the safety of cash, these institutional investors bought more, supporting these stocks and keeping the positive chart patterns intact.

So now these stocks are in stronger hands than previously, and they’re primed to resume their previous advances as the pressure comes off the broad market.

One of my favorites is a company called Akamai (AKAM), which recently earned a spot in Cabot Top Ten Report.

Here’s what editor Mike Cintolo had to say.

“Akamai delivers roughly 20% of all Internet traffic, acting as the main intermediary between you and content providers like Adobe, Clear Channel, EMC, Fox Interactive, MTV Networks, MySpace, Nasdaq, NBC, Sun Microsystems, Starz Entertainment and Verizon Wireless. Using a global platform of thousands of servers, it delivers content and applications on demand, always working to stay ahead of the world’s appetites, which continue to grow rapidly, thanks in part to the explosion of high-definition (HD) video and music from companies like Netflix and iTunes. Also driving demand are HD sports (the Masters golf tournament generated traffic exceeding 3.4 terabits per second over Akamai’s network), cloud computing, and the boom in smart phones. After 10 years in business, Akamai is poised to top $1 billion in revenues this year. Profit margins are very good, and the future is bright.”

When that recommendation appeared on May 10, AKAM was trading at 38.  In the weeks that followed, it continued to build a base under 40.  But yesterday it broke out above 40, on good volume.  This is a classic sign of a leader; even though the general market is only a few days off its lows, AKAM is hitting new price highs!

Just beware; if you buy AKAM, you should have a sell discipline in place, and the best way to get that is to become a subscriber to Cabot Top Ten Report, which provides regular updates on all past recommendations until they are sold.