It was a relatively quiet week in global financial markets. The Nasdaq and S&P 500 advanced 0.4% and 0.3%, respectively, while the Dow retreated a fraction. Both the Nasdaq and the S&P 500 have climbed in eight out of nine weeks of the year. That’s a remarkable stretch, but some stocks now are becoming less overbought than they have been for a long time.
The big news in your Bull Market Alert portfolio was Melco Crown (MPEL), which soared 7.55% after a reported a 22% increase in Macau gambling revenue for February year-over-year. With your July $11 call options up 106.9%, book your fourth triple-digit percentage gainer for 2012.
After such a strong run, and a pullback in the markets overdue, I’m recommending that you raise your stops this week to lock in your gains. These tight stops might cull some of the weaker performers in your portfolio on any sustained market pullback. I’ve highlighted these stops in the “Portfolio Update” section below. Keep an eye on Alexion Pharmaceuticals (ALXN) as my sharp-eyed research staff spotted some significant insider selling in the stock over the past week.
This week’s Bull Market Alert pick is a pure momentum play and revisits a profitable and successful Bull Market Alert pick from 2011 — though under a different guise.
Based in Corona, Calif., Monster Beverage Corporation (MNST) is a manufacturer of natural soft drinks, energy drinks and fruit drinks. Up until January 2012, it was known as Hansen Natural Corporation but changed its name to reflect the popularity of its highly popular and edgy Monster Energy brand.
Hubert Hansen and his three sons began selling fresh, non-pasteurized juices to film studios and retailers in Southern California as far back as the Great Depression. But it only has been over the past few years that the company has begun to enjoy national and international success. The company has been experiencing some monstrous growth. Most recently, Q4 EPS rose nearly 30% to 35 cents. Sales jumped 47% to $467.3 million, topping expectations of $411 million. That’s an astonishing 13.7% surprise on the upside — almost unheard of in its sector.
Monster is expanding aggressively internationally and even started selling its drinks in Poland in January. And imagine my surprise when I saw one of the company’s “Monster” trucks on the streets of Paris this weekend. Needless to say, it seemed out of place in the “City of Lights.” But it was also evidence of the Monster’s growing global reach.
No wonder there are always rumors swirling that one of the “big boys” in the soft drink world — like Coca Cola (KO) — may be looking to acquire Monster, much like Dr. Pepper acquired Snapple in 2004.
Goldman Sachs recently upgraded Monster to “buy” on strong sales of Rehab, its newest energy drink. Rehab is a mix of tea and lemonade flavors which are supposed to quench thirst and hydrate like a sports drink. The company claims it helps "bring you back after a hard day’s night." Goldman Sachs has put a $64 target on the stock, a 9.23% upside from its current level.
So, buy Monster Beverage Corporation (MNST) at market today, and place your stop at $51.75. If you want to play the options, I recommend the June $60 calls (MNST120616C00060000).
Portfolio Update
Alexion Pharmaceuticals (ALXN) gained 0.74% over the past five trading days. Although today it relies on its single breakthrough drug, Soliris, Alexion is no “one-trick pony.” ALXN is evaluating Soliris for further additional therapeutic value, and has four other cutting-edge drugs in the pipeline. ALXN is a BUY. Raise your stop to $78.25.
Bank of Ireland (IRE) lost 1.10% last week. IRE’s trading price has leveled off recently and come to rest midway between the 50-day and 200-day moving averages. Bank of Ireland’s position is strengthening and now reports it is clear of the central bank of Ireland’s “emergency liquidity assistance” (ELA) — an expensive emergency funding method. IRE has also reduced its level of European Central Bank (ECB) funding from 33 billion euros last year. IRE is a BUY.
National Bank of Greece SA (NBG) fell 2.12% over the week. Standard & Poor’s forecast that sufficient public funding will be available should NBG need additional capital or liquidity going forward. S&P recently reaffirmed its long- and short-term ratings on NBG, and three other major Greek banks. NBG is a BUY.
Companhia de Bebidas Das Americas (ABV) added 0.68%. ABV took a small dip last week after making a new 52-week high, but still managed to squeeze out a positive weekly gain. AmBev is up nearly 11% year-to-date for 2012. ABV is scheduled to report earnings on March 8 and remains a BUY. Raise your stop to $37.75.
MasterCard Inc. (MA) gave back 0.68%. MA hit another 52-week high last week and UBS initiated coverage on MasterCard last Friday, setting a $439 price target. MA is a BUY. Raise your stop to $389.
Ford Motor Co. (F) gained 4.01%, as U.S. automakers reported strong sales in January. Last week, I noted the 50-day moving average moving up through Ford’s 200-day moving average and recommended a buying opportunity. Right on cue, Ford’s stock price took off from that point and made a valiant attempt at a new 52-week high. F is a BUY. Raise your stop to $11.75.
Intuitive Surgical, Inc. (ISRG) added 0.81% over the past five trading days. ISRG continued its six-week run off of the 50-day moving average and made a new 52-week high just last Friday. Although Intuitive Surgical has had a fantastic run lately, ISRG remains attractive based both on valuation and market sentiment. ISRG is a BUY. Raise your stop to $485.00.
Melco Crown (MPEL) had a great week, jumping 7.55%. MPEL added a good portion of last week’s big move on Friday alone after The Wall Street Journal reported a 22% increase in Macau gambling revenue for February year-over-year. The big jump on Friday occurred on heavy volume, nearly double the daily average. Gains likely may continue well into this week as well. MPEL is a BUY. Raise your stop to $11.25.
Life Technologies (LIFE) came in nearly flat, losing just 0.21%. LIFE issued a “revised” earnings report last week. Although its earnings-per-share fell slightly from $1.06 to $1.05, its revenue was revised upward from $920.5 million to $1.01 million. LIFE is a BUY.
Stratasys Inc. (SSYS) fell 7.66% last week. SSYS pulled back to the $35 support level on Friday — a level it has managed to hold each of the three times it has been tested over the past six weeks. SSYS ended the Friday trading session just shy of the 50-day moving average and is now a HOLD. Limit your potential downside on this one and raise your stop to $34.00.
SPDR S&P BRIC 40 ETF (BIK) had another positive week, adding 1.33%. Trading volume in BIK was extremely heavy last Friday as traders observed the 50-day moving average move up and touch the 200-day moving average. This advance is a very bullish technical movement and traders likely expect BIK to continue higher. BIK is a BUY. Raise your stop to $25.25.
Altisource Portfolio Solutions (ASPS) gave back a little of last week’s huge gain, losing 1.84%. ASPS likely will consolidate its price for a while as it readies for its next leg up. Although ASPS is a BUY, if you are looking to add to your position, wait for a better buy price to emerge in the coming week or so. Raise your stop to $54.50.
P.S. Please join me for the Las Vegas Money Show, May 14-17, at Caesar’s Palace. To register, call 1-800/970-4355 and mention priority code 026655 or go to NicholasVardy.lasvegasmoneyshow.com. I also encourage you to sign up for my hedge fund seminar, Wednesday, May 16, 9 a.m. – 11 a.m.
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