Your Bull Market Alert portfolio had a solid week, with six of your holdings trading up, including big gains in both Sina Corp (SINA), up 7.66%, and Bank of Ireland (IRE), up 14.44%. Recall that you also took 71% gains on half of your Nabors Industries (NBR) options last Thursday. And with your options in Alliance Resource Partners L.P. (ARLP) nearing reaching triple-digit percentage gains, keep your eye out for a "Special Alert" this week that may recommend you lock in some of these gains.
This week’s Bull Market Alert pick is a terrific example of an American manufacturer that is able to compete — and win — on the global playing field. Milwaukee-based Joy Global (JOYG) is a major supplier of mining equipment for some of the biggest mining operators in the world, including BHP Billiton (BHP), Rio Tinto (RIO) and Vale (VALE).
The big picture case for Joy Global could hardly be stronger. As the global economy recovers, and China and India gear up for major infrastructure projects, demand for coal, copper and iron ore is soaring. And as commodity prices soar, global mining companies are ramping up production, as well as buying heavy-duty draglines, electric and hydraulic shovels, surface drills, conveyors and other equipment.
Barclays’ mining outlook predicts that 2011 should be a record year with a stunning 60% year-over-year growth in capital expenditures by the seven largest global miners. The mining giants are also looking to expand from single projects to multiple expansion projects that span four to five years. All of this adds up to a license to print money for Joy Global.
Joy Global’s recently announced first-quarter profit of 96 cents a share missed Wall Street estimates, largely due to the effects of the Australian floods. Despite that headwind, earnings were still up 32%, and revenue in the quarter rose 19% over the prior year to $870 million. And the future looks bright. Joy Global’s bookings in its first fiscal quarter jumped 52% from the earlier year to $1.2 billion, and were 18% higher compared to Q4 2010. Analysts see 2011’s earnings growing 22% over last year to $5.39, and increasing 19% in 2012.
Trading at a forward P/E of 15.8, Joy Global is not a dirt cheap stock. But it has got a lot a momentum behind it. On Friday, April 1, it hit a record high, on double its average trading volume. That means some big investors are piling in and driving the stock higher.
So buy Joy Global (JOYG) at market and place your stop at $86.00. After the recent run-up in the stock, the options are quite expensive. So I’ll be recommending options in the coming week or so, once the stock consolidates its recent gains.
Portfolio Update
Alliance Resource Partners L.P. (ARLP) ended the week slightly down — though the stock is up 22.11% since my initial recommendation. You also still have 82.78% gains in your outstanding options. With the bull market in coal intact, this remains a BUY.
Cognizant Technology Group (CTSH) jumped 2.97% last week, hitting a record high. The stock is up a solid 9.27% since my initial recommendation. On Thursday, I recommended that you sell your April options at a small loss. Given that the options had been down over 80%, I’ll chalk that up as a moral, if not financial victory. CTSH remains a BUY.
Bank of Ireland (IRE) soared a whopping 22.29% on Friday after the results of the latest stress tests and the bank outlined plans to avoid state control after it was ordered to raise 5.2 billion euros ($7.4 billion) of capital. This is a wild, wild ride. Until the stock consolidates its recent gains, IRE remains a HOLD.
Ivanhoe Mines (IVN) traded flat last week. The company narrowed its net loss last year as revenue doubled from 2009. Ivanhoe lost $211.5 million, or 42 cents per share, in 2010, compared with a loss of $280.2 million, or 69 cents per share, in 2009. Revenue rose to $79.8 million from $36 million. The company also said construction of the first phase of the Oyu Tolgoi copper, gold and silver project in Mongolia is progressing toward its scheduled start of commercial production in 2013. The “Mongolian Miracle” remains a BUY.
Nabors Industries (NBR) rose 2.74% during the past week and you took 71% profits on half of your options. With oil prices rising, this onshore oil driller remains a BUY.
National Bank of Greece SA (NBG) dropped 7.29% last week, as Standard & Poor’s cut the credit ratings on four Greek banks and put the country’s banking system as a whole into a higher risk category on “heightened economic and industry risks for the Greek financial system.” I still believe that with NBG making money, it will emerge a big winner once the crisis passes. NBG stays a BUY.
Novo Nordisk A/S (NVO) ended the week up 4.57% higher. The company confirmed that it is continuing its share re-purchase program. Back up near record highs, NVO remains a BUY.
ELEMENTS Rogers Intl Commodity Agri ETN (RJA) rose 0.98% last week, rising for three consecutive weeks. With food inflation rampant and soft commodities bouncing strongly over the past two weeks, RJA is a BUY.
Sina Corporation (SINA) zoomed another 7.66% last week. “China’s Twitter” closed at $114.45 Friday to reach a new 52-week high. Like the energizer bunny, this one keeps going and going. I will be recommending some more options in this one on the next pullback. Raise your stop to $85.00. SINA remains a BUY.
Toyota Motor Corp. (TM) was flat this past week. Toyota got some good news on Friday as a New York jury ruled in its favor in a sudden-acceleration lawsuit, after deliberating only 45 minutes. The company called the federal court victory a key test of numerous “unintended acceleration” claims that have been filed against the company alleging flaws with its electronic throttle control system. TM is a BUY.
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