Taking Profits, Tightening Stops… and Yet Another Option Play

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.
With both the Dow and the S&P 500 notching only slight gains last week, it was an unspectacular week in the markets. But it was a good one for your Bull Market Alert portfolio, which booked its most profitable week of 2012.
As you saw in two special alerts last week, you notched three triple-digit percentage winners in the span of three days with 143.94% gains in your Intuitive Surgical (ISRG) April $470 call options; 130% gains in Companhia de Bebidas Das Americas (ABV) July $43.00 call options in a mere six days; and a 116.22% gain in Alexion Pharmaceutical (ALXN) May $85 call options. With 13 current holdings in your Bull Market Alert portfolio, all but one of your positions is profitable since January 1, 2012.
This week, let’s spend some time taking some well-earned profits, tightening your stops on some recent big winners, and placing yet another potential big options bet.
First, say goodbye to Life Technologies Corporation (LIFE) with a gain of close to 5%. Do the same with Ford Motor Co. (F) for gain of more than 10%. These picks have served you well. But it’s time to make room for some newer, more profitable picks.
Second, raise your stops in Alexion Pharmaceuticals (ALXN) to $85.00; Intuitive Surgical (ISRG) to $516.00; Companhia de Bebidas Das Americas (ABV) to $39.50; MasterCard Inc. (MA) to $405; Monster Beverage (MNST) to $58.90; and Dick’s Sporting Goods Inc (DKS) to $45.00.
Note that these stops are relatively tight. This situation means you can expect to stop out of these positions on any sustained market pullback. But with the market proving to be more robust than I expected, rather than calling a market top, I want to let your profits run.
Finally, last week’s pullback in Altisource Portfolio Solutions (ASPS) has provided you with a solid buying opportunity. With insiders buying the stock at an average price of $64.39, and my technical indicators showing that the stock is oversold, now is good time to add to your position, as well as to buy some options for the first time. I recommend the July $65 calls (ASPS120721C00065000).

Portfolio Update

Alexion Pharmaceuticals (ALXN) lost 1.02%, after making a 52-week high. Alexion reported Thursday that Phase 2 testing on its asfotase alfa drug revealed significant positive results, and Oppenheimer raised its price target to $100. Among 21 analysts covering ALXN, only three analysts hold a “Neutral” rating and just one analyst considers it a “Sell.” Alexion is scheduled to report earnings on April 19. ALXN is a BUY.
Bank of Ireland (IRE) lost 3.15% over the previous week. The European Central Bank (ECB) made a surprise move recently and allowed a slight “rescheduling” of the 31 billion euro injection Ireland is receiving. This change effectively cuts Ireland a little slack on some of the harsh spending cuts and gives it more time to recover. IRE is a HOLD.
National Bank of Greece SA (NBG) dropped 13.87% over the past five trading days. The European Union (EU) decided to boost the aid ceiling for the European recovery to 940 billion euros on Thursday and set firewall funding at 800 billion euros. These are big numbers and hopefully will deliver big results in the quarters to come. NBG is a HOLD.
Companhia de Bebidas Das Americas (ABV) fell 3.25% after ABV announced it will issue 7,246,641 shares of common stock and 5,654,356 shares of preferred stock. Although investors did not like the dilution of outstanding stock, the injection of new capital will help boost profits in the long run. ABV is a BUY.
MasterCard Inc. (MA) was nearly flat for the week, losing just 0.82%. The small loss MA incurred this week is actually quite remarkable, in light of the initial reports regarding the loss of MasterCard account-holder data. However, the loss was much smaller than previously believed, and limited to a single third-party card processor. MA will pay a $0.30 dividend on April 4. MA is a BUY.
Intuitive Surgical, Inc. (ISRG) added 1.57% over the past five trading days. ISRG announced an agreement to extend development work with partner company Luna Innovations Inc (LUNA). LUNA provides shape and position sensing technology that ISRG uses in its medical robotics. ISRG is scheduled to report earnings on April 17 and is currently a BUY.
Melco Crown (MPEL) was flat for the week, losing just 0.66%. Options traders appear to be expecting a rise in MPEL over the coming weeks. Call volume doubled Wednesday on bets that MPEL will be breaking its strong $14 resistance level by May. Gambling revenue in Macau, the world’s largest casino gaming destination, surged 24.4% in March to $3.12 billion, government figures showed on Monday. MPEL is a BUY.
Altisource Portfolio Solutions (ASPS) lost 4.34% last week. ASPS continued to trade lower last week as it approached its 50-day moving average. However, technical indicators are showing positive signs that a bounce off of the 50-day moving average is likely. ASPS is a BUY.
Monster Beverage Corp. (MNST) added 2.58%. MNST continued upward on strong momentum last week making higher highs each day. UBS also reaffirmed its “Buy” rating on the stock and bumped its price target up to $70 — 10% above the current price. MNST is a BUY.
Dick’s Sporting Goods (DKS) fell 2.18% over the previous week. Oppenheimer maintained its “Outperform” rating on DKS last Thursday and raised its price target to $57. And, good ole’ Jim Cramer even noted a great buy point based on a positive outlook for sector partners Nike and Under Armor. This dip is likely a great buying opportunity. DKS is a BUY.
Novo Nordisk A/S (NVO) dipped 0.80%. NVO’s stock fell slightly last week as a few major competitors in the diabetes drug market worked through a bid-for-acquisition process. Bristol-Myers Squibb Co. made a strong bid for NVO competitor Amylin Pharmaceuticals Inc. However, Amylin rejected the bid offer late last week and trading should get back to normal this week. NVO will report earnings on April 27 and is a BUY.
P.S. I’ve just launched my first new investment product in five years. It’s called Nicholas Vardy’s Dividend PRO. This trading service focuses on low-risk, high-dividend-paying stocks, but with two twists. First, Dividend PRO employs a "secret," income-boosting strategy that’s proven effective more than 90% of the time. Second, Dividend PRO regularly features an options play related to a dividend-paying stock, allowing subscribers who don’t mind a little more risk the chance to pull down huge gains. If you’re interested in dividends and blockbuster option gains, click here for more information on Dividend PRO.

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