It was another tough week for global stock markets this week. The S&P 500 dropped 1.67%, the Nasdaq dipped 1.15%, and the MSCI Emerging Markets Index fell by 3.36%. You were also stopped out of Companhia de Bebidas Das Americas (ABV) and Altisource Portfolio Solutions S.A. (ASPS). Your holding in Dick’s Sporting Goods (DKS) moved to a HOLD.
There was, however, some terrific news in your Bull Market Alert portfolio. Your positions on Monster Beverages (MSTR) continued to soar, thanks to a combination of strong earnings and continued speculation about a take-over bid from the likes of Coca-Cola (KO). With your September $65 call options up 92.73% in the last three weeks, I’m recommending that you sell half of your options here to lock in your big gains.
In the spirit of our slogan, "there’s always a bull market somewhere," this week’s Bull Market Alert pick takes us to the unlikely shortes of Colombia through the Global X/InterBolsa FTSE Colombia 20 ETF (GXG). You’ll be surprised to learn that Colombia has been the best-performing stock market in the world year-to-date.
For most investors, it’s hard to imagine Colombia as anything but a "Scarface"-style narco state. Yet, this popular image of Colombia does not do the country justice for the progress that it has seen since the ascension of Álvaro Uribe, the country’s tough and popular former president, in 2002. The infamous drug-trafficking cartels that once strangled cities like Medellín have been dismantled.
Colombia also introduced economic reforms that have turned around its economy, shrinking its national debt and kick starting its economic growth. Foreign direct investment has risen almost tenfold since 2003 to $13.2 billion in 2011. The economy grew 6% last year and is now South America’s third-largest and is rapidly closing in on Argentina at No. 2. Colombia also recently secured a free-trade agreement with the United States and may soon be pumping a million barrels of oil per day.
The current President Juan Manuel Santos — who enjoys an approval rating close to 80% — recently graced the cover of the latest issue of TIME magazine where he spoke about a "changed reality completely out of anyone’s imagination." His hosting of the sixth Summit of the Americas on April 14-15, in the Caribbean city of Cartagena, marked a comeback for Colombia and its goal of becoming Latin America’s new economic and diplomatic player.
With a population of 47 million, and an economy the size of Indiana, Colombia never will have the economic heft of its larger BRIC rivals. But Colombia is now a place where you can make money as a stock market investor.
So buy the Global X/InterBolsa FTSE Colombia 20 ETF (GXG) at market today, and place your stop at $20.70. There are no options on this one. A word of warning: this is a relatively illiquid exchange-traded fund (ETF), so you may want to limit the size of your investment accordingly.
Portfolio Update
Bank of Ireland (IRE) lost 6.15% last week. Investors are unhappy with recent election results in Greece and France as the winning parties are not being perceived as strong on austerity. Investors see this as a threat to Europe as a whole — including Ireland. The good news is that IRE’s chart is coming upon support at $5.25 and technical indicators are at the extreme low end of their range. IRE is a HOLD.
National Bank of Greece SA (NBG) fell 13.51% over the past five trading days. My IRE commentary says it all for NBG, as well, as weekend talks failed to yield solid results on the formation of a new Greek government. A Greek recovery may stall if the new government is not willing to make necessary fiscal moves to right the Greek financial ship. However, the recent bounce off of the 200-day moving average is encouraging. NBG is a HOLD.
Intuitive Surgical, Inc. (ISRG) dipped 1.10%. ISRG recently touched the 50-day moving average and appears to be holding. Third-generation da Vinci robotic surgical systems sell for nearly $2 million each. However, it is the $1,500 worth of disposable and single-use items needed for each operation that really sweeten the “recurring income” pot for ISRG. ISRG is a BUY.
Monster Beverage Corp. (MNST) jumped 7.21% last week on a monster earnings report. MNST reported Q1 earnings per share at $0.41 vs. a $0.38 estimate on revenue of $454.6 million vs. an estimated $447.14 million. This sent shares skyrocketing and prompted several analysts to boost price targets. Stefel Nicolaus raised its price target to $80, and UBS upped its target to $82 — just $2 from a recent $84 spike on the Coca-Cola buyout speculation. By way of comparison, the stock closed at $71.55 on Friday. MNST is a BUY.
Dick’s Sporting Goods (DKS) lost 3.80% last week. With several other retail stocks, such as the Gap and Sears, up more than 35% for 2012, expectations for a better-than-expected earnings report from DKS are high. DKS will report earnings May 15 and is a HOLD.
Novo Nordisk A/S (NVO) gave back 0.99% over the previous week. NVO was another stock to suffer a dip last week, based upon the fiscally unpopular European election results. However, NVO wasted no time moving back above the 50-day moving to remain a BUY.
Digital Realty Trust Inc. (DLR) was nearly even last week, losing just 0.78%. DLR did touch the 50-day moving average Friday on a downwards move from the 52-week high. With its current one-year projected earnings per share growth rate at 28.21%, I would not bet against DLR maintaining the 50-day moving average. DLR is a BUY.
3D Systems Corp. (DDD) gave back 3.95% last week. DDD is a finalist in the 2012 TechAmerica Foundation American Technology Awards. DDD was the first company to offer a “home 3D printer”, named the Cube®, and confiirmed its status as a leader among many other high-caliber technology companies. DDD is a BUY.