Mixed Emotions

Hello all out there. If you have followed our ride this year, you will quickly note that Maximus (NYSE: MMS) has been a crowd pleaser and a favorite of mine. I have written about MMS a number of times and since the beginning we've enjoyed great returns. But now I am at a point where I am struggling with Maximus and I would like a little bit of help. Here's the problem there is currently good and bad news out there about this stock and I will start with...

The Good:

I was alerted to additional comments today on Maximus, which were GOOD. Zacks.com, an investment website has listed MMS on its Zacks Buy list again. The first time it was listed as an Agressive Growth Play at the end of May this year. Now MMS is listed again on their buy list as a Value Play and still considered a buy. Here is an excerpt from Zacks.com's most recent write up:

MAXIMUS, Inc. is doing all the right things. Business is doing well, the company is buying back its own stock and staying friendly to shareholders. Valuations are attractive for the stock. MMS is trading at less than 12x next year's estimates of $3.27 per share. Over the past month, this year's numbers have risen 21 cents to $2.68 per share (Zacks.com)

The Bad:

I also can't believe that I missed something so obvious about 15 days ago by not analyzing volume and chart patterns. Run a one month chart for Maximus and you will see some disturbing trends. The volume on MMS is alarming but I missed the fact that indicators where sounding off all around us. Case in point: On 11.14, you will notice very unusually high volume which is an indicator...and the volume was unusually high selling volume. Ding, Ding, this creates pressure on the stock which caused it to drop from its high of 47 on that day and reached a low of 40. Now this date coincides with Maximus's earnings release so this can be brushed off as understandable volatility on a meaningful day. But even on days of good news, 11.19, when MMS disclosed new contracts they had won for their business and when "TheStreet.com" upgraded the stock, it continued its downward pressure due to high volumes of investors selling the stock. This piece of information is not good b/c when good info comes out you want to see the stock rise. Further, today when the market is up over 1% you want to see you stock rise...MMS was down again today. This tells me that the stock cannot hold up from the current selling pressure and will trend downward for a period of time...which could be short. Finally, I dug even deeper and found the culprit of the large selling volumes was none other than PRIVATE EQUITY...this final indicator tells me what all true 'Contrarians' believe. Its time to sell when the rest of the world is upgrading the stock but Private Equity is bailing.

Urbanomics Easy Read: Its time to sell MMS because some smart money is exiting. I believe the this stock would be a good long term hold if you were in it for a large position. Remember earnings are increasing and in a matter of months this has gone from an aggressive growth play to a value play which means it could be held for a long time but it may not provide the aggressive returns like it once was. For us here at Urbanomics we will get off the ride, but if this stock drops a lot (which I don't believe it will) then get back on.

I am officially telling you to sell Maximus even though there is positive news and recent upgrades on this stock. Get out with the smart money, lock in our over 25% points of gains and wait for another rainy day to build your portfolio with this stock if it drops.