Global stock markets ended on a high note in April. And they are likely to get at least a short-term boost from news of Osama bin Laden’s death. The S&P 500 has risen in eight out of the past nine sessions and now stands at levels last seen in the middle of 2008. Technology has been a particularly strong sector, with the tech-heavy Nasdaq index rising for nine straight days. The Nasdaq is now trading at levels last seen in January 2001.
You can see the strength of the Nasdaq reflected in several of your technology-related holdings, Cognizant Technology Group (CTSH), Chinese portal Sina Corporation (SINA) and last week’s pick, Millicom International (MICC). All three stocks ended the week at or near record highs. You currently have a whopping 166.2% gain in Sina Corporation. And you took 52.4% gains in your Millicom International options just three days after my recommendation last week.
After such a strong April, and knowing that May marks the beginning of a weaker part of the year, I am recommending that you take profits on one of your current positions.
With rival Infosys Technologies (IFNY) dropping 13% after announcing disappointing earnings two weeks ago, I am recommending that you SELL Cognizant Technology Group (CTSH) to lock in your gains of 9.4%, before the company announces earnings tomorrow, May 3. I don’t want to risk a potentially disappointing quarter erasing your hard-earned gains.
The biotech and pharmaceutical sector also took a hit last week, on news that four patients had died during a drug trial conducted by Pfizer. This led to a knee jerk sell-off across the entire sector, including your holdings in Alexion Pharmaceuticals (ALXN) and Novo Nordisk A/S (NVO). As both of these companies just announced better than expected earnings, I believe the sell-off was completely unwarranted. So this is a good time to add to both of your positions.
The sell-off in the biotech positions is similar to what you saw with Alliance Resource Partners L.P. (ARLP) a few weeks ago, when the stock sold off sharply. Since bottoming on April 19, ARLP has rallied over 12%. I expect a similar reaction in both Alexion Pharmaceuticals (ALXN) and Novo Nordisk A/S (NVO).
On a personal note, I am writing this update on a plane over Germany, as I’ve spent the last week looking at real estate opportunities in several secondary European markets. To give you an idea of how desperate some sellers are, I walked into one property, and the seller immediately dropped her asking price by 30%, she was so elated to see a potential buyer. The sad thing is, by my calculations, the property is still overvalued by 50%. Only by halving the price yet again would the property be selling at the level at which rental properties are selling for in Florida today. Bottom line? In my estimation, the property bust in peripheral markets in Europe still has a way to go. That is in sharp contrast to Central London, where 350 square feet (yes, that’s about the size of your large living room) is again selling at about $1 million.
Finally, I will be writing the next Bull Market Alert from Las Vegas, where I hope to see many of you at the MoneyShow on Tuesday, May 10, 2011, for my private meeting at 10:00 a.m. in room "Forum 7" of the spectacular Caesar’s Palace Hotel and Casino. I know we had an overflow crowd at the Orlando MoneyShow in February, so make sure you register early, as I’m told we have room for only 100 attendees.
Portfolio Update
Alexion Pharmaceuticals (ALXN) ended the week 2.9% lower, dropping on unrelated news from Pfizer. This is a good time to add to your position. Your biotech bet remains a BUY.
Alliance Resource Partners L.P. (ARLP) soared 7.69% this week, rebounding from an unwarranted sell-off a few weeks ago. The company announced a 27.2% climb in first-quarter profit. Net income for the quarter jumped to $95.4 million, or $1.99 per partner unit, from last year’s $74.9 million, or $1.56 per partner unit, to beat consensus estimates of $1.83. Now up 23.1% since Jan. 24, ARLP remains a BUY.
Bank of Ireland (IRE) rose 3.63% this past week, and is now up 9.29% this past month. This will remain an extremely volatile stock. Trading below its 50-day moving average, IRE is a HOLD.
Joy Global (JOYG) continued its rebound, ending the week 2.53% higher. As one of a number of U.S.-based companies benefiting from the U.S. dollar hitting a three-year low against a basket of currencies, JOYG remains a BUY.
Millicom International (MICC) ended the week 1.48% higher, hitting a 52-week high. With the global telecom sector coming back into vogue, Millicom remains a BUY.
Nabors Industries (NBR), the oil rig company in the portfolio, announced Q1 earnings of 29 cents per share last week, missing consensus estimates of 35 cents. I am watching this still-profitable recommendation to find a good time to exit it, along with the remaining half of our call options.
National Bank of Greece SA (NBG) traded flat this week. Subject to the whims of the latest news on Greece’s debt restructuring, NBG is a HOLD.
Novo Nordisk A/S (NVO) dropped back 3.03% this past week. The company reported earnings of $1.29 per share in Q1, 2011, up 25 cents over the prior-year earnings of $1.04 per share. That beat consensus estimates of $1.27. With the entire biotech sector pulling back due to unrelated news from Pfizer, this is a good time to add to your position. NVO remains a BUY.
ELEMENTS Rogers Intl Commodity Agri ETN (RJA) ended the week 1.52% lower. Trading below its 50-day moving average, this bet on agricultural food prices remains a HOLD.
Toyota Motor Corp. (TM) rose 2.42% this past week, and ended the month flat. With global production not expected to resume pre-earthquake levels until the end of the year, I am keeping this contrarian play on the Japanese recovery on a HOLD.
