You never count your money when you’re sittin’ at the table,
There’ll be time enough for countin’ when the dealin’s done.
–Kenny Rogers, “The Gambler” (See VIDEO)
You’ve had quite a run in your Bull Market Alert portfolio in Q1 2012, booking no fewer than eight triple-digit gainers in your option trades. I remain bullish for the year ahead — and still expect the U.S market to end about 15% to 20% higher at the end of the year, compared to where it is today.
Yet, the market tone has shifted toward the negative over the past few weeks. I’ve seen this situation on several fronts. Global markets have been pulling back even as the S&P 500 has been eking out gains. Negative news from Europe is again weighing on the markets. And the Fed’s reluctance to augment its Quantitative Easing programs and worst-than-expected U.S. payroll numbers announced on Friday may have been just enough to tip the market into a short-term correction.
That’s why I think it’s time book some big profits on some of your Bull Market Alert positions. So, this week’s Bull Market Alert is not a recommendation on what to buy. Rather, it’s about what you should sell to lock in your 20%-plus gains.
1) Sell Alexion Pharmaceuticals (ALXN) to lock in profits of 36.81%;
2) Sell Companhia de Bebidas Das Americas (ABV) for a gain 21.64%. Also sell your options for a profit. based on Friday’s close;
3) Sell MasterCard Inc. (MA) for a gain 24.13%;
4) Sell Melco Crown (MPEL) to lock in gains of 25.93%. Sell your July $14.00 options at a loss.
Even after selling these positions, you still have some extremely strong stock positions in your portfolio. After all, Monster Beverage Corp. (MNST) and Novo Nordisk A/S (NVO) both hit 52-week highs last week.
But for now, I think it’s best to take some risk of the table — until we’re dealt a better hand in next week’s Bull Market Alert.
Portfolio Update
Alexion Pharmaceuticals (ALXN) gained 2.64% last week. Alexion is scheduled to report earnings next week on April 19 before the market opens for trading. ALXN maintains a robust growth rate as earnings-per-share (EPS) is up 53% over the past three years. SELL ALXN to lock in your profits.
Bank of Ireland (IRE) lost 16.62% during the previous week. Although IRE has lost some ground on negative news lately, the case remains strong for an upward move. When looking for bargains in bank stocks, a general rule of thumb is “Buy when the price-to-book (P/B) ratio is .5, sell when P/B is 2.” IRE’s P/B is currently near 0.34, a bullish entry point for this position. IRE is a HOLD.
National Bank of Greece SA (NBG) dropped 18.45% over the past five trading days. NBG fell victim to a resurgence of negative European news and is nearing its 200-day moving average. Applying the price-to-book ratio indicator I cited above for IRE, NBG’s P/B ratio is 1.07. NBG is a HOLD.
Companhia de Bebidas Das Americas (ABV) fell 2.62%. AmBev boasts a huge “free cash flow” figure of $5 billion — meaning that it generates a lot of cash while debt is low. ABV is also based in Brazil, the home of the 2014 World Cup soccer event and 2016 Summer Olympics. These events will likely produce a surge in demand for ABV’s products, boosting its cash flow to even higher levels. SELL ABV to lock in your profits.
MasterCard Inc. (MA) rose 2.72%. Oppenheimer raised its price target to $475 for MA and cited “strong quarterly volume trends,” as well as “solid U.S. retail sales trends.” MA will report earnings on May 2. SELL MA to lock in your profits.
Intuitive Surgical, Inc. (ISRG) was flat for the week. ISRG’s stock price has been trading sideways for nearly two weeks now — pinned up against the $550 resistance level. This consolidation phase will likely last a bit longer. Intuitive Surgical reported more than $1.75 billion in annual earnings last quarter with more than $3 billion in assets on its balance sheet. ISRG will report earnings on April 17 and remains a BUY.
Melco Crown (MPEL) jumped 4.07% over the past five trading days. With nearly 75% of total Macau gambling revenues derived from the VIP segment — Melco’s area of focus — MPEL is well-positioned to generate a steady stream of profits. SELL MPEL to lock in your profits.
Altisource Portfolio Solutions (ASPS) lost 2.40% last week. Although real estate markets have shown some signs of life in recent months, reports of a “second round of foreclosures” still abound. ASPS is an excellent way to profit from this coming tsunami. ASPS is scheduled to report earnings on April 26 and is a BUY.
Monster Beverage Corp. (MNST) added 1.29%, hitting a new 52-week high. MNST also successfully tested its 10-day moving average last week — a level it has been able to hold since the beginning of 2012. MNST is a BUY.
Dick’s Sporting Goods (DKS) gained 2.14% over the previous week. Callaway, one of the leading providers of high-end golfing equipment, recently announced the sale of its iconic brand name to DKS. Those of you who enjoy hitting the fairways (or the pond) likely realize the potential upside to this popular legacy brand. DKS is a BUY.
Novo Nordisk A/S (NVO) jumped up 4.44%. NVO had a dizzying week as news reports whipsawed this stock’s price. NVO jumped early in the week on news that the FDA approved its diabetes drug Levemir for pregnant women. However, NVO took a minor hit later in the week on news of an analyst downgrade. NVO will report earnings on April 27 and is a BUY.
