The week ended on a positive note with the Dow Jones up 0.79%, the S&P 500 rising 0.78% and the NASDAQ up 0.83%.The MCSI Emerging Markets Index flatlined to end the week down 0.15%.
Big gainers in your Alpha Investor Letter portfolio included Skyworks Solutions Inc. (SWKS), which added 4.00%; the PureFunds ISE Cyber Security ETF (HACK), which climbed 3.27%; the iShares MSCI Philippines (EPHE), which jumped 3.21%; and Markel Corp. (MKL), which added 2.74%.
Illumina Inc. (ILMN) and the PureFunds ISE Cyber Security ETF (HACK) each hit a new 52-week high.
Several positions moved back above their 50-day moving averages to a BUY.
These include the Global X Guru Index ETF (GURU), Market Vectors Biotech ETF (BBH), First Trust US IPO ETF (FPX) and AdvisorShares TrimTabs Float Shrink ETF (TTFS).
This past week, Actavis plc (ACT) has closed on the acquisition of Allergan, Inc. (AGN) in a cash and equity transaction valued at approximately $70.5 billion. The combination creates one of the world’s top 10 pharmaceutical companies by sales revenue, with combined annual pro forma revenues of more than $23 billion expected in 2015. Actavis plc had announced that it would adopt Allergan’s corporate name and, for its global-branded pharmaceutical portfolio, will retain the Actavis name for select geographic regions and product portfolios, such as the generics business in the United States.
In terms of your investment in Actavis, the only difference is the change in name to Allergan, Inc. (AGN). You should see no change in the stock price or the number of shares you hold. Bank of America now has a $350 target price on the stock — over 17% upside from yesterday’s closing price.
Both U.S. and global markets endured a pullback in the past few weeks, and investor sentiment actually hit “extreme fear” by the measure of the CNN Money “Fear and Greed” Index. Despite a market that has held up relatively well, only 20% of investors like you surveyed by the American Association of Individual Investors are expecting higher prices over the next six months. Shockingly, this is the second-lowest reading since the bull market began.
Markets are oversold both from a technical and market sentiment standpoint. From a contrarian standpoint, this suggests that we should see a bounce in the markets over the next week. That said, we are in a weak time of the year, and any bounce will hardly signal a breakout to the upside in what has been a frustrating trading range for most of 2015. It remains a stock and sector picker’s market.
Vanguard Global ex-US Real Estate ETF (VNQI) added 0.59% last week. VNQI’s sister fund, Vanguard REIT ETF (VNQ), has a strong U.S. real estate weighting and trades at an expensive 39x price-to-forward earnings ratio. However, VNQI’s non-U.S. approach trades at a cheap 14x forward earnings ratio. With the threat of rising U.S. interest rates never far out of investors’ minds, VNQI remains an attractive investment. VNQI is currently a HOLD.
Global X Guru Index ETF (GURU) rose 0.82%. With the 2015 U.S. market nearly flat for the year, GURU’s gurus have managed to turn out a 3.67% gain. Coming off of a very recent 52-week high, GURU ended the week above the 50-day moving average (MA) to become a BUY.
Vanguard Russell 2000 Index ETF (VTWO) gained 1.52%. VTWO is a play on small caps and another 2015 market-beating fund in your portfolio. This position has been on a bull run for the past six weeks and now stands just below its 52-week high. VTWO remains a BUY.
Skyworks Solutions Inc. (SWKS) continued its winning ways to add another 4.00% last week. SWKS touched down to its 50-day MA one week ago — a rare occurrence when looking at the price history of this stock — and immediately jumped back up. Northland Securities reiterated its “Outperform” rating on SWKS last week and raised its price target to $115. SWKS remains a BUY.
Union Pacific Corporation (UNP) dipped 0.82%. Despite its underperformance so far this year, UNP occupies the number one spot for revenue among railroad stocks. UNP’s trailing-12-month revenue is $23.96 billion. This figure is roughly double the next three stocks on the listing, which report revenues of $10-$13 billion. UNP is a HOLD.
Google Inc. (GOOGL) rose 0.50%. News agencies have been buzzing lately about Twitter’s CEO, Dick Costolo, stepping down — or being ousted — due to stagnation at the company. However, of much greater interest to Google stock holders is the speculation that Google is now in a position to acquire Twitter. Should this acquisition occur, Google’s stock price could see significant appreciation — with one market guru even saying Google could go to $700. GOOGL is a HOLD.
iShares MSCI Philippines (EPHE) jumped 3.21% last week. Although EPHE has not performed well since joining the ranks of the Alpha Investor Letter portfolio, last week’s trading action could be a bottom for this exchange-traded fund (ETF). EPHE is a HOLD.
Illumina Inc. (ILMN) added 0.16%. After hitting another new 52-week high late last week, ILMN took a breather and traded sideways to close the week flat. ILMN is up more than 13% in just the past two months and the outlook remains positive. ILMN is a BUY.
PureFunds ISE Cyber Security ETF (HACK) climbed 3.27%. HACK continued its winning ways last week, bringing quick gains to your portfolio. As I outlined in last week’s newsletter, this ETF typically trades a bit more than 500,000 shares daily. However, with all the hype surrounding “hack attacks” lately, daily trading volumes have been spiking over the past two weeks, hitting the two and three million mark. HACK is a BUY.