Last week saw U.S. markets bounce with the Dow Jones up 0.69%, the S&P 500 rising 1.74% and the NASDAQ climbing 2.11%. Global markets were less robust with the Emerging Markets Index (MSCI) down 0.38%.
Your Bull Market Alert portfolio had a big week, as well. 3D Systems (DDD) recovered an eye-popping 19.18%. Monster Beverage Corp. (MNST) also had a solid week with the stock up 4.34%. With the $65.00 August call options up 96.36%, you are at the cusp of your 10th triple-digit percentage gainer for 2012.
Last week was all about Facebook’s (FB) disappointing debut on the markets, with the stock dropping 17% from its issue price. This week’s Bull Market Alert pick uncovers a much more profitable bet on the Internet — a play that I call the “Ebay of Surplus Goods.”
Liquidity Services, Inc. (LQDT) operates online markets for thousands of commercial and government customers. LQDT’s main website is liquidation.com, a website that enables corporations and selected government agencies in the United States to sell surplus and salvage consumer goods and capital assets. LQDT’s other websites include govliquidation.com, govdeals.com, secondipity.com and truckcenter.com.
Although the business does not have the high public profile of Facebook, the company’s earnings are growing even faster with its earnings per share growth accelerating for five quarters. Most recently, earnings per share for the company’s fiscal year 2012 Q2, ended March 31, rose 136% vs. a year earlier, following a 118% rise in Q1. Revenue has also climbed 41% year over year in each of the last two quarters.
LQDT’s stock price has also been on fire this year. Shares shot up more than 13% to a new high on May 3 on the back of its Q2 results, which far outpaced expectations.
But the stock sold off sharply 21% during the recent correction. That said, it never fell below its 50-day moving average and it is already is back to within 5% of its all-time high.
So buy Liquidity Services, Inc. (LQDT) at market today and place your stop at $52.40. If you want to play the options, I recommend the September $65.00 calls.
Portfolio Update
Bank of Ireland (IRE) managed to post a gain of 5.68% last week, even in the face of continued European negativity. Although IRE may be subject to negative news from the euro zone, the short interest in IRE is a mere 0.1%. This confirms essentially no investor feels this position is set to decline much further. IRE is a HOLD.
National Bank of Greece SA (NBG) was unchanged over the past five trading days. NBG is making a stand at the $1.50 level, and building support. The stock may be set to rally as Greek lenders received an 18 billion euro bailout Monday from the Greek bank rescue fund. NBG is a HOLD.
Monster Beverage Corp. (MNST) added 4.34%. Monster’s chart has consistently stayed above its 20-day moving average since the beginning of 2012. Short-term traders frequently use this line to watch for momentum breakdowns. Add this short-term indicator to your chart for a little more comfort while watching MNST ascend to new heights. MNST is a BUY.
Novo Nordisk A/S (NVO) was flat for the week. The Food and Drug Administration (FDA) approved NVO’s Levemir insulin drug for use in patients as young as age two on Monday, leading to a huge volume spike in NVO’s trading last week. Levemir is the first and only insulin drug approved for use in patients this young. NVO is a HOLD.
3D Systems Corp. (DDD) soared a whopping 19.18% last week, and the recommendation to buy at the 50-day moving average last week was spot on. The bevy of positive news last week didn’t hurt either. 3D Systems Corp. announced the acquisition of San Francisco-based Bespoke Innovations, Inc. — an early pioneer in the 3D printing space that produces custom-fit prosthetics, orthotics, and orthopedic devices. These devices are particularly well-suited to 3D printing, and the sky-high profit margin of prosthetics makes this acquisition particularly interesting. DDD is a BUY.
ProShares Ultra S&P500 (SSO) gained 3.67%. SSO performed exactly as I expected, generating some quick gains to your portfolio last week. SSO is a leveraged, opportunistic play on the S&P 500 to capitalize on a quick rebound in the S&P 500 from the recent market pullback. I expect the market to continue its bounce and SSO remains a BUY.
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