RCII operates 2075 company-owned stores, as of 12/99,providing home electronics, appliances, furniture and accessories. The company also is a franchisor of 365 rent- to-own stores though its ColorTyme, Inc. subsidiary. For the 9 months ended 9/00, revenues rose 14% to $1.19B. Net income applic. to Com. rose from $34M to $71.7M. Revenues reflect increases in the number of items on rent. Earnings benefitted from the $22.4M in litigation settlements.

March 25, 2001

As the market continues to deal with the bloodbath in technology stocks, money continues to flow into defensive sectors that have kept up steady earnings. One such company is Rent-A-Center (RCII), which has notched a 31% increase in annual earning over each of the past five years. As a result, this rent to own corporation has levitated an amazing 200% from its low of March 2000. This move has created a strong uptrend on the chart, and when combined with the solid fundamentals of the company, has put the stock in a great position for further gains. What’s more, we like RCII as a split candidate play. The company currently has 24.69 million shares outstanding with 50 million shares authorized, enough for a 2:1 stock split. Getting back to the chart, RCII shares retreated from a mid-week rally to all time highs ($47.44) and finished lower by 1.22 points or 2.63% on Friday. Volume of 521,900 shares accompanied Friday’s decent, which came in slightly more than the 3-month average. We are encouraged, however, by the fact that the stock managed to bounce from support at the $45 mark and finish the day above this level. In addition, On Balance Volume and Money Flow remain strong and provide us with further evidence that RCII remains poised for higher highs. So, in the upcoming week we’ll look for another new high or a quick bounce off support at $45.00 when considering a position in the stock. Volume will be a key component for further gains, so we'll look for the stock to trade at least 150,000 shares by mid-day. Past breakout volume from RCII has exceeded 500,000 shares on a daily basis and we should expect no less here. We’ll keep stops at $42.25 for now.

Picked on March 25th @ $45.13
Change since picked 0.00
Stop Loss @ $42.25

March 29, 2001

It looks like RCII may have hit a near-term top with its recent rally to the $47.44 mark. Starting with a slow pullback from this level, shares gathered selling momentum on Tuesday and stopped us out at $42.13 with Wednesday’s gap lower at the open. A triple digit loss in the NASDAQ Composite Index (COMPX) was likely the biggest contributor to Wednesday’s fall. We will continue to watch RCII for better opportunities in the future.

Picked on March 25th @ $45.13
Profit/Loss = -3.00 (-7%) (Stopped Wednesday @ $42.13)
Best Profit = +2.00 (+4%)

March 27, 2001

Rent-A-Center has been struggling to re-establish an uptrend after hitting an all-time high of $47.44 on March 21. On Monday, however, shares of RCII did see some strength and traded to an intra-day high of $47.13. This rally came within 31 cents of hitting the all time high before sellers pushed shares to a lower close at $45.31. RCII fell below this level on Tuesday, as the stock gave up 3.44% on the day. Shares did, however, give a sharp intraday bounce off previous lows at $43.13, to finish at $43.75. We would have liked for volume to come in under the three-month average, but the stock nearly doubled this number at 504,700 shares traded. Nevertheless, we are encouraged by the fact that OBV remains at year-high levels. Going forward, RCII has support at last Thursday’s intra-day low of $43.13, bolstered by the 30-dma of $43.17. Resistance is Monday's intra-day high of $47.13 and then the March 21 intra-day high of $47.44. A bounce off of the 30-dma or a breakout above $47.13 on midday volume greater than 150,000 shares may present possible entry points. Our stops will remain firm at $42.25.

Picked on March 25th @ $45.13
Change since picked –1.38
Stop Loss @ $42.25