Last week was a solid one, even though it was shortened by the holiday, with the Nasdaq advancing 2%, the S&P 500 rising 1.3% and the NYSE climbing 1.2%.
Your positions in the Bull Market Alert portfolio did even better, with Sina Corp. (SINA) leading the charge and closing the week with 7.58% gains. You now have a monster 156.53% gain in the stock. But with Goldman Sachs downgrading Sina on Thursday, I’m tightening your stop to $119.50 to lock in your monster gains. I am also moving the company to a HOLD.
Your position on Cognizant Technologies (CTSH) also hit a record high on Thursday. And you are tantalizingly close to closing triple-digit percentage gains in two option positions — Nabor Industries (NBR) and NovoNordisk (NVO). With the slightest push, I’m hoping that you can book these triple-digit percentage gains this week. So keep an eye out for a “Special Alert” later this week.
This week’s Bull Market Alert recommendation is emerging markets cell phone play Millicom International Cellular (MICC).
In the past I have called Millicom the “Indiana Jones” of the cell phone industry — a company willing to enter challenging emerging markets where others fear to tread.
With operations in 13 countries in Latin America and Africa, Millicom’s mobile operations have a combined population under license of approximately 260 million people. That’s about 80% the population of the United States. Providing mobile phone services to close to 40 million customers, Millicom is the market leader in Chad, Paraguay, El Salvador, Guatemala, Honduras and the Democratic Republic of the Congo (DRC). The DRC alone has a larger population than the United Kingdom or France.
After enduring a challenging financial crisis, Millicom recently announced a round of strong earnings that put it back on investors’ radar screens. Revenues rose 19.5% to $1.08 billion year on year. More impressively, net income soared 48% to $230.1 million ($2.17/share) vs. $155.5 million ($1.43/share) from the same quarter the year earlier. Overall, Millicom’s net income has more than doubled year over year, on average, across the last five quarters.
You’d think that with 48% earnings growth, Millicom would be astronomically expensive. Yet based on trailing earnings, this stock is trading at a price earnings ratio of less than 7. That makes Millicom about 50% cheaper than Brazil-based rivals like Vivo Participacoes Ads (VIV).
Up until its recent earnings announcement, investors had largely abandoned MICC. So the stock has a lot of catching up to do. But now that it’s back on the radar screen, I don’t think it will be long before Millicom is trading near its record highs of $120 — a level last seen before the collapse of Lehman Brothers in September 2008.
So buy Millicom International (MICC) at market today, and place your stop at $92.50. If you want to play the options, I recommend the October $120 calls (MICC111022C00120000), which last traded for $2.30.
Portfolio Update
Alexion Pharmaceuticals (ALXN) ended the week 2.34% higher. The company earned 59 cents a share in the first quarter, an increase from earnings of 37 cents a share in the first quarter last year. Total revenue grew 40% to $166.1million. All of these numbers beat expectations. This bet on biotech remains a BUY.
Alliance Resource Partners L.P. (ARLP) recovered 2.16% this week. Earnings are scheduled to be announced tomorrow, April 26. After being severely oversold, this stock is due for a solid bounce. Still up 14.35% on Jan. 24, ARLP remains a BUY.
Cognizant Technology Group (CTSH) rose 2.09% last week, and closed at a record high. I expect another strong quarter from the company, along with positive revision to the 2011 guidance driven by improvement in technology spending. Up 9.35% since my initial recommendation, CTSH remains a BUY.
Bank of Ireland (IRE) dropped 9.81% this week. As part of its restructuring plan, Bank of Ireland has said it will sell its 50% stake in Paul Capital Investments. Below its 50-day moving average, IRE is a HOLD.
Joy Global (JOYG) resumed its upward trend, ending the week 2.59% higher. S&P rates the stock a “four-star buy” and recently increased its price target to $110. With your options up 39.5%, we’re getting close to the point where we’re ready to take our first round of options profits. JOYG remains a BUY.
Nabors Industries (NBR) rose a solid 4.31% this past week, as oil resumed its upward trend. Your options are up 93.59%, close to our goal of booking triple-digit percentage gains in your options. Trading at a new 52-week high, this onshore oil driller remains a BUY.
National Bank of Greece SA (NBG) dropped 5.88% this past week, as talk of restructuring Greek debt re-ignited. I must admit, this is not looking great. NBG is a HOLD.
Novo Nordisk A/S (NVO) rose 3.24%. With the options up 96.97%, we are tantalizingly close to booking triple-digit percentage gains in your options. This Danish pharmaceutical giant remains a BUY.
ELEMENTS Rogers Intl Commodity Agri ETN (RJA) ended the week 1.17% higher. Trading below its 50-day moving average, this bet on agricultural food prices remains a HOLD.
Sina Corporation (SINA) ended the week 7.58% higher — even after dropping sharply on Friday when Goldman Sachs downgraded the stock to “neutral.” That may be true, but “the trend is your friend.” I’m suggesting that you raise your stop to $119.50 to lock in your monster gains on this position. But I’m moving SINA to a HOLD.
Toyota Motor Corp. (TM) ended the week flat, yet again. Toyota says its global production disrupted by last month’s earthquake and tsunami is expected to return to normal by November or December. I am putting Toyota on a HOLD.
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