Last week was an historic one for U.S. markets. The S&P 500 index closed on Friday at 1,404.17, its highest level since May 20, 2008. The Nasdaq rose to a 12-year high. The Dow ended comfortably above 13,000, its highest level since December 2007.
Your Bull Market Alert portfolio also had a strong week. The Bank of Ireland (IRE) popped 8.99% — not an unusual move for this stock that often acts more like an option. Melco Crown (MPEL) added 4.49%. Alexion Pharmaceuticals (ALXN) was another top performer for the week, ending 5.05% higher. Recall that you also took 100% gains on your Alexion May $85 call options for your fifth triple-digit percentage gainer for the year last Wednesday.
This week, I want to focus on three additional option plays, all based on your existing holdings in Bull Market Alert.
Historically, April has been a strong month for the markets. With the market experiencing such strong momentum, I can see the market heading up toward 1,440 — a high it last made in January 2008. So, I recommend that we strike while the iron is hot — and before we hit the traditionally weak “sell in May and go away” season of the year.
With that, here are my three new option picks for the week:
1) Buy the Companhia de Bebidas Das Americas (ABV) July $43.00 call options (ABV120721C00043000).
2) Buy the Melco Crown (MPEL) July $14 call options (MPEL120721C00014000).
3) Buy the National Bank of Greece (NBG) August 2012 $4.00 call options (NBG120818C00004000).
I’ve listed these in order of riskiness — that is, from lowest to highest.
The National Bank of Greece (NBG) option recommendation is particularly aggressive, as this is a very volatile stock in an uncertain sector. That said, as Greece fades from the headlines, I think there is a huge potential upside in this pick. But this pick is definitely more of a “lottery ticket” than the other two recommendations.
Portfolio Update
Alexion Pharmaceuticals (ALXN) gained 5.05% last week. Alexion currently holds the #1 spot on the Investor’s Business Daily (IBD) listing of top 50 stocks overall. It has also managed to achieve a “99” IBD Composite Rating — the highest score possible. ALXN is a BUY.
Bank of Ireland (IRE) popped 8.99% over the previous week, and is now trading back near its high for the year. Even though the Irish economy has fallen off the mainstream media’s radar lately, the Irish recovery is continuing. IRE pushed higher and managed to end the week on accelerating buying volume — which may push buying momentum into next week. Billionaire Wilbur Ross starting buying up IRE shares just five months ago and reports a $138 million gain already. IRE is a BUY.
National Bank of Greece SA (NBG) added 0.61% over the past five trading days. The $3 price has emerged as a significant support level for NBG since the stock started its recovery. In fact, NBG has spent the past month testing this level and building support. Even better, the 50-day moving average has finally risen to the $3 level, and NBG has already started a nice swing upwards from this key intersection point. NBG is a BUY.
Companhia de Bebidas Das Americas (ABV) came in flat for the week. ABV hit yet another 52-week high at $41.85 early last week as HSBC raised its price target to $44.87 — 10% above the current price. ABV is a BUY.
MasterCard Inc. (MA) remained nearly unchanged. The economic recovery has made significant gains as of late, and consumer credit card use has increased respectively. A recent credit card study found U.S. consumers charged 424% more in 2011 than in 2010 — and all those additional card swipes were good news for MasterCard. MA is paying a hefty $0.30 dividend on April 4 — double its last dividend payment. MA is a BUY.
Ford Motor Co. (F) dipped 0.56% last week. Ford reported that 1,700 workers took early retirement packages and will no longer be on the company’s payroll as of June 1. Although Ford plans to replace nearly 250 of these workers, the new labor will come at a much cheaper price — and that is good news for Ford’s improving bottom line. F is a BUY.
Intuitive Surgical, Inc. (ISRG) added 1.13% over the past five trading days. There are over 300 da Vinci systems in use today in the United States alone. Demand continues to grow as surgical centers recognize the huge benefits in increased surgical safety and decreased patient recovery times. As the success of the da Vinci system continues to proliferate, so will the fortunes tied to ISRG’s stock price. ISRG is a BUY.
Melco Crown (MPEL) continued its rise last week, adding 4.49%. MPEL has continued to gain consistently since the start of 2012 in spite of the negative China news earlier this year. With gaming revenues rising an average of 30% year-over-year in Macau, MPEL remains a strong play in the China, gaming, and emerging market sectors. MPEL is a BUY.
Life Technologies (LIFE) traded flat over the past five trading days. One of LIFE’s strengths as a competing medical research company is its $865 million war chest of cash. A recent report placed LIFE in the #1 spot for mid-cap laboratory technology companies in terms of cash holdings. LIFE is a HOLD.
Altisource Portfolio Solutions (ASPS) gave back 0.93%. ASPS continued to trade sideways as the bulls and bears battle to find direction. Lenders One Mortgage Cooperative, a large subsidiary of ASPS, recently named Jeffrey McGuiness as its new CEO. McGuiness brings a wealth of industry experience to the ASPS lineup and has good support from the departing CEO and other corporate allies. ASPS is a BUY.
Monster Beverage Corp. (MNST) remained flat for the week. Last Monday, Bloomberg called MNST potentially “the most expensive takeover in the industry’s history.” Potential buyers include some of the biggest industry names, such as the Coca-Cola Co. Valuation estimates come in at a $74 per share — nearly 12% above the current share price. MNST is a BUY.
Dick’s Sporting Goods (DKS) was unchanged. Wells Fargo recently initiated coverage on DKS and issued a “market perform” rating. Wells Fargo based this upon Dick’s Sporting Goods’ “multiple growth opportunities” and good online positioning against Amazon.com. DKS is a BUY.
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