CARB has only been in our portfolio a few weeks so it is too soon to start keeping score. We waited until after its most recent quarterly earnings report was released on February 9 to buy it to avoid the possibility of a surprise to the downside. That caution proved prophetic, as the stock dropped almost 6% the next day, temporarily driving its share price below $20.

That’s when we swooped in and bought it, and since then CARB has bobbed back above $20 but appears to be in a holding pattern pending further news on its expected conversion to profitability sometime during this quarter. We weren’t expecting a fast move out of this holding, but we wanted to get in it before any positive news drove its share price considerably higher. With a market cap of only $550 million and 52% growth in revenue during the most recent quarter, CARB could also be a takeover target once it proves its business model is profitable.

I put a four-month target holding period on CARB to get us through the next earnings cycle plus an extra month for the market (and potential acquirers) to react to that news. Until then it may trade in a fairly tight range between $20 – 22, but could quickly break out of it if any potential M&A activity becomes known. For that reason CARB is not a classic trading stock, so you need to be patient and let this position play out at its own pace.