Boots and Coots and Knowing When to Sell

Knowing when to sell is a tricky part of investing. In our Navellier system, we key in on picking up a rise in a stock’s daily volatility. When the daily fluctuations start to grow unusually high that often tells us that trouble is brewing. An excellent example is Boots & Coots International Well Control (WEL). Incidentally, it also has one of my favorite names of any stock.

I recommended Boots & Coots to my Quantum Growth subscribers in December and the stock had a very nice run. But soon, my team and I noticed that the daily fluctuations in share price were growing larger and larger. I couldn’t be sure but that’s often a sign that institutional investors were dumping the stock.

In March, I told subscribers that it was time to take our profits and leave the stock. All told, we made about 30% in Boots & Coots in a little over three months. After we sold it, however, the stock kept climbing. So did we make a mistake? Not at all! You never make a mistake when you take a profit.

Sure enough, the reckoning came. Last week, Boots & Coots reported earnings that were less than half what Wall Street expected. In three days, the stock plunged over 31% and the shares are now lower than where we sold it. The lesson is that investors should never take any undue risk. I currently rate Boots & Coots a Hold.

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