It was another solid week in the markets, with the Dow Jones up 1.40%, the S&P 500 rising 0.95% and the NASDAQ gaining 1.85%. The MCSI Emerging Markets Index also jumped 1.23%.
Big gainers in your Bull Market Alert portfolio included Paycom Software, Inc. (PAYC), which rocketed 18.07%, hitting a new 52-week high. Big Lots, Inc. (BIG) jumped 4.21%.
Three of your current positions — Alaska Air (ALK), Ultra Nasdaq Biotechnology ProShares (BIB), and Big Lots, Inc. (BIG) — moved back above their 50-day moving averages and are back to a BUY.
Two Options Trades
1) With your Paycom Feb 2016 $40.00 call options (PAYC160219C00040000) up 85% in just a single week, sell all of your options here to lock in these quick, double-digit percentage gains.
2) With Big Lots (BIG) resuming its uptrend, I am recommending that you buy January $47.50 options (BIG160115C00047500), which last traded at $1.98 and expire on January 15.
New Stock Recommendation
This week’s Bull Market Alert recommendation is Luxoft Holding (LXFT), which develops and implements very specialized software for several industry segments including financial services, automotive and telecom. Based in Zug, Switzerland, Luxoft has over 10,000 employees across 27 offices in 15 countries, including North America, Mexico, Western and Eastern Europe, Asia-Pacific and South Africa.
Here’s why I expect Luxoft’s stock to rise in the coming weeks.
First, Luxoft is a hot stock in a hot sector. Luxoft’s CEO expects to maintain sustainable growth of 20% or more in the company as far as the eye can see. The company was also named a Top 10 Outsourcing Service Provider by Information Services Group (ISG), a leading technology insights, market intelligence and advisory services company.
Second, Luxoft has delivered strong double-digit percentage gains in both its top- and bottom-lines recently. Earnings grew 23% to 50% in the latest four quarters, while sales climbed 28% to 32% over the same period. Luxoft reports earnings Tuesday after the market’s close. Analysts polled by Thomson Reuters are expecting earnings of 71 cents a share, up 22% from a year ago. Sales are expected at $159.9 million, up 28%.
Third, Luxoft is trading near a technical buy point as it emerges from a flat base, approaching a new high. Small-cap stocks in general are also breaking out of a trading range, and seasonality is in our favor.
So buy Luxoft Holding (LXFT) at market today and place your initial stop at $58.00. There are no options on this one.
Portfolio Update
ULTA Salon, Cosmetics & Fragrance, Inc. (ULTA) dipped 0.75%. Zacks released a report late last week detailing the collective analysts’ ratings for ULTA. Zacks’ findings show 10 analysts rating ULTA as a “Strong Buy,” one analyst rates the company at a “Buy” and six analysts rate it at “Hold.” ULTA will report third-quarter earnings on Dec. 3. ULTA is a BUY.
Alaska Air (ALK) gained 2.40%. ALK declared a quarterly cash dividend of $0.20 per share. The dividend will be paid on Dec. 3 to all shareholders of record as of Nov. 17. ALK moved above its 50-day moving average (MA) last week to become a BUY.
Ultra Nasdaq Biotechnology ProShares (BIB) added 2.52% over the past five trading days. BIB pushed above its 50-day MA early last week, moving from a “Hold” to a “Buy.” BIB now rests right on its 50-day MA, and an expected bounce in the coming days will be excellent confirmation of a likely sustained move higher. BIB is a BUY.
Big Lots, Inc. (BIG) jumped 4.21%. Collectively, brokerage firms have a price target of $55.25 for BIG — a potential 15% gain from Friday’s close. This includes the opinions of 12 analysts, with the lowest estimate at $47 and the most bullish analyst at a whopping $61. BIG will report earnings on Dec. 4 before markets open. BIG moved above the 50-day MA to become a BUY.
NetEase, Inc. (NTES) rose 1.58%. NTES will report earnings on Nov. 11 (Wednesday) after markets close. Analysts expect $1.75 earnings per share (EPS), up 21.53% ($0.31) from last year’s $1.44 per share. NTES is a BUY.
Paycom Software, Inc. (PAYC) launched 18.07% last week after a stellar Tuesday earnings report to hit a new 52-week high. PAYC reported $0.08 earnings per share (EPS) vs. a $0.07 EPS analysts’ estimate, up $0.05 year over year. Third-quarter sales rose 51% year over year to $55.3 million vs. an estimated $51.52 million. Fourth-quarter guidance pegs sales between $59.5 million to $61.5 million. PAYC is a BUY.
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