PC Connection’s stock price may soon overtake others

Pgiam/iStock via Getty Images

Investment thesis

The purpose of market transactions is to determine prices – agreements at the time of exchange between buyer and seller. One, neither, or both, can be satisfied with the result, but both will be satisfied in some way by the transaction.

To bring them to this point sometimes requires the persuasion of less satisfactory possibilities of outcomes, those once rejected by the parties but now made probable and possible by intermediaries known as Market-Makers.

It involves risk, but risk takers – for a price – will participate if they are sufficiently incentivized. This is where the predictions of the extreme prices, up and down, and the means of guessing the direction of the price change, the magnitude of the change and its probability reside. The history of previous extreme price outlooks can provide reliable odds on what will happen next.

This article examines the current outlook for PC Connection, Inc. (NASDAQ:NASDAQ:CNXN) and several stocks from companies competing with CNXN. These prospects, although close in time, are often much more powerful than the “long-term trend” potential gains prospects often offered.

Description of actions

“PC Connection, Inc., together with its subsidiaries, provides various information technology (IT) solutions. The Company operates through three segments: Business Solutions, Enterprise Solutions and Public Sector Solutions. It offers computer products, including computer systems, data center solutions, software and peripheral equipment, network communications and other products and accessories, as well as services related to the design, configuration and the implementation of IT solutions. The Company markets its products and services through its websites including connection.com, connection.com/enterprise, connection.com/publicsector and macconnection.com. It serves small and medium enterprises (SMEs) which include small office/home office customers; government and educational institutions; and medium and large businesses through outbound telemarketing and field sales, and marketing programs targeting specific customer populations, as well as through digital, web, and print advertising. The company was founded in 1982 and is headquartered in Merrimack, New Hampshire.

Source: Yahoo Finance

expectations of street analysts

Yahoo finance

Compare forecasts

The “Street” forecast presented above offers strong growth for CNXN next year, the title’s main support for the next 5 years. What to do with the stock beyond “next year” is left to guesswork.

A contrasting approach using Market-Making price evolution forecasts [MM] community suggests more powerful results from active investing strategy [AIs]rather than the traditional passive investment strategy [PIs]. Figure 1 shows the reward-risk prediction trade-offs of MMs.

Figure 1

Implicit MM hedging forecasts

blockdesk.com

(Used with permission)

This map locates securities at the intersection of potential price gains (green horizontal scale) and potential price declines (red vertical scale) based on the hedging behavior of market makers to protect their necessary endangerment of trading capital. the company because they allow volume transactions. Desirable conditions are bottom and right.

The seemingly most beneficial stocks are along a “boundary” from CNXN to the location [9] to the notion of “market average” SPDR S&P 500 Trust ETF (SPY) to the location [5] at Arrow Electronics (ARW) at [4]. Our focus is on CNXN at [5].

Alternatives to CNXN are explored in more detail in Figure 2, where other conditions contributing to reward and risk are considered. The main questions for all alternatives are “how likely are these outcomes to occur” and “can their impact be improved?” »

Figure 2 presents the MM price range predictions for the top-ranked alternative investment candidates in Figure 1, as well as the daily forecast results for the past 5 years from their previous forecasts with the same proportions of today’s outlook.

This table presents data on the stocks most likely to produce rates capital gain under the portfolio management discipline known as TERMD, as explained in the article titled “How to Better Than Double Your Capital Gains (From Stocks Alone) Using the Discipline of TERMD wallet” in my SA blog.

This discipline seeks the largest, most likely, and fastest net capital gains to capture with the least temporary exposure to price declines on the way to reaching the target reward.

Figure 2

detailed comparative data

blockdesk.com

Contributing to this assessment are the demonstrated chances of a successful profit forecast in the column [H]its complement of 100 – H, or frequency of loss, size of net gain achieved [I] and the size of the worst loss experience [F]so that when properly weighted [O] and [P]they produce the Net of [Q]. Respecting the power of composition, [Q] converted to basis points per day [J] of capital commitment to [R] has a very comparable figure of merit (of) for investment preferences.

Figure 2 is arranged by row on [R]’s figure of merit (fom) and contrasts CNXN’s capital gain outlook with others.

ARW seems to be a strong contender choice in its [R] ranking, but its good performance in [H], [I]and [K] are the product of poor realization of forecasts [E] in the next market earnings achievements [I]. The comparison of [I] at [E] as a test of credibility [N] shows the deficiency of ARW compared to CNXN.

CNXN has an exceptional Win Odds ratio [H] of 16+ out of 18 forecasts made at its current average expectation range index of 54. Its shorter holding period of 18 market days produces a higher CAGR and basis point/day in [R] than those of ARW.

Personal investor preference will likely prevail when it comes to the attractiveness of ARW versus CNXN on a choice of capital commitment. None of the other candidates for alternative electronics supply investment are in their league.

Recent Price Trend Comparisons

Figures 3 and 4 show how these major stocks compare in the trends of their MM price range forecasts.

picture 3

daily forecast trends

blockdesk.com

(used with prior permission)

Figure 4

daily forecast trends

blockdesk.com

(used with prior permission)

Figures 3 and 4 are NOT the “usual” “charts” of technical analysts which only show after the fact the historical background of market actions that have already occurred. Instead, these show day after day occurring forecasts expected price ranges yet to come accompanied in their daily vertical bars by the day’s closing price, which separates the forecast into its proportional upward and downward outlook.

The clear difference today between CNXN and ARW is where today’s market price is relative to the forecast range. ARW has mostly upsides, while CNXN is a pretty even balance, top to bottom.

History shows that both have similar odds of hitting the upper forecast range limits, but because CNXN is closer, it has taken less time in the past than ARW. The greater distance and longer time make ARWs winning rate less attractive to investors who are pressed for performance. Differences in circumstances are what help markets work among well-informed investors.

Conclusion

Investors who need a faster rate of return clearly have more advantages in owning CNXN than in AWR. And in its ownership compared to all but a small handful of the large population of stock investment reward predictions available.

Karen J. Nelson