In the IPO MasterClass last year, developed with TraderLion and the Lifecycle Trade team, I shared the details of my favorite screen, the Power Screen, to use after a significant correction or bear market.

Today I’m going to share several of the top percentage gainers from the lows of the recent bottom on August 5th, 2024 and hone-in on newer names, those that have gone public in the last 4 years. I omitted lower revenue names as well.

Anecdotally, over the years, I’ve found the Power Screen tends to identify at least a couple of the leaders of a new rally. I run this screen frequently for several weeks after a market reversal to identify leading price movers. It’s important to note that we are now 8 weeks into the rally and some leaders are extended.

Symbol	% Move from 8/5 Lows	Average Daily $ Volume	Revenue Growth Last Qtr	IPO Date
APP	111%	$548M	44%	4/15/2021
DUOL	92%	$173M	41%	7/28/2021
AFRM	85%	$389M	48%	1/13/2021
PLTR	74%	$2,273M	27%	9/30/2020
CAVA	72%	$405M	35%	6/15/2023
HOOD	71%	$339M	40%	7/29/2021
ARM	51%	$1,242M	39%	9/14/2023
ZIM	49%	$130M	48%	1/28/2021
ZETA	48%	$102M	33%	6/10/2021
IOT	48%	$169M	37%	12/15/2021
ONON	45%	$260M	27%	9/15/2021

This list is not a buy recommendation but rather a great starting point for further research. I’m looking for exceptional companies with factors like:

• Visionary founder-led teams
• Superior products
• Strong revenue growth
• Huge total addressable market
• Favorable macrotrends
• Years ahead of the competition
• Liquid with strong technical action (e.g., super gaps and high volume)
• Starting the Institutional Advance Phase (or IPO Advance Phase)

I currently hold several of the names that appear on the list above including CAVA, PLTR, APP, ONON and HOOD. Let’s take a closer look at CAVA, a Late Bloomer that had its IPO in June 2023, and is currently in the I-AP (Institutional Advance Phase).

The following 2 daily charts of CAVA show where I established my initial position on 12.12.2023. I like to trade around a core, so along the run, I’ve added and reduced multiple times while maintaining a minimum core position. I learned this from one of my mentors, William O’Neil, to have a minimum core position size in mind for a leading stock held in my portfolio (otherwise it’s too easy to sell off the entire position when reducing size).

On the buy day, volume surpassed the IPO first trading day, and the stock regained its key moving averages with a powerful price move breaking out of a Hook pattern. I remember the day well since it was an expectations breaker on CAVA’s lock-up expiration day (I had expected it to sell off). The stock was already on my watch list as it had been consolidating in the Institutional Due Diligence Phase (I-DDP) for over 4 months. The stock started moving up quickly on huge volume triggering a buy. CAVA subsequently staged a breakout near the Turbulence Zone (the prior high from the IPO Advance Phase) with a Super Gap on 2.27.2024 which started its Institutional Advance Phase.

The Hook pattern and Super Gaps are covered in detail in the IPO MasterClass.

The next chart is the current weekly chart of CAVA that also shows some of the fundamentals including last quarter’s revenue growth of 35% and triple digit earnings growth for several quarters.

The following table summarizes some of the key factors using the LIVES framework from our IPO research findings. And yes, we did go visit the Cava restaurant that recently opened in Wicker Park (we had our weekly PM meeting there). As many of you may know, I love conducting market research and testing out new products (my Peter Lynch influence). We saw many people lined up for lunchtime and enjoyed the Mediterranean-style meal.

The Lifecycle Trade	CAVA
Lifecycle Phases	I-AP (Institutional Advance Phase)
IPO Patterns	Late Bloomer
Volume	Liquidity: Avg Daily $Vol of $45M prior to breakout. Higher volume than IPO day on 12.12.2023 on lock-up expiration is a positive expectations breaker.
Exceptional companies	35% revenue growth last quarter and triple-digit EPS growth last 5 quarters. Increasing popularity of Mediterranean-style diet. Brett Schulman is Co-Founder and CEO. Company is targeting 1000 locations by 2032 (currently has 341 restaurants or 22% year-over-year increase). 18 net new locations last quarter.
Sell rules	Longer-term hold rules at start of I-AP. Super Gap on 2.27.2024 signaled the start of a big move. Using MCP (Mental Capital Preservation) hold rule for core position. This draws a line in the sand for the percent of profits to retain during the run.

There are many companies to choose from but I’m looking for the very best. While finding a leader is important, handling it well (particularly the choice of how long to hold) is also key to top performance. In the book I co-authored with Kathy Donnelly, Eric Krull and Kurt Daill, The Lifecycle Trade, we take a deep dive into the characteristics of IPOs and Super Growth Stocks as well as top performing hold and sell rules.

Just one Super Growth Stock handled well could turn into a life-changing lifecycle trade.

Note, while this article discusses a trade in CAVA that shows a profit, I am often stopped out particularly during the volatile IPO Advance Phase. For example, I recently attempted to position in TEM several times after trading the initial move but ended up getting chopped up a bit. Hence, why it’s so important to honor your stops.

Happy Trading!

Eve Boboch
@EBoboch
thelifecycletrade.com

Disclaimer

This article is for informational and educational purposes only and is not financial advice. Please do your own due diligence or contact a licensed financial advisor, as participating in the financial markets involves risk.

We are not recommending any particular stocks or investments. If mentioned, they are purely for illustrative purposes. Past performance is no guarantee of future results. Your success depends on your experience and the strategies you apply. Seek advice from a registered financial professional before making any investment decisions.

Trade examples are not meant to demonstrate skill in selecting securities but instead were selected to show how IPO stocks behave—both good and bad trades are discussed to depict the lessons learned.