Markets continued their post-Brexit recovery, with the Dow Jones up 1.10%, the S&P 500 rising 1.28% and the NASDAQ up 1.94%. The MCSI Emerging Markets Index ended the week 0.55% lower.
Big gainers in your Bull Market Alert portfolio included Dycom Industries, Inc. (DY), up 6.59%; Drew Industries Incorporated (DW), which gained 3.25%; and The TJX Companies, Inc. (TJX), which rose 2.60%.
No fewer than five positions hit new 52-week highs: Avista Corporation (AVA), Allete, Inc. (ALE), Drew Industries Incorporated (DW), Spire, Inc. (SR) and Dycom Industries, Inc. (DY).
Sell half of your remaining October $75 call options (DW161021C00075000) in Drew Industries Incorporated (DW), which last traded at $11.45, to lock in a 63% gain. Hold on to the rest for potentially bigger gains ahead. Also, raise your stop to $86.20 to lock in at least a 10% gain in the stock.
This week’s Bull Market Alert recommendation, B&G Foods Inc. (BGS), is yet another targeted U.S. small-cap bet.
B&G manufactures, sells and distributes a diversified portfolio of high-quality, shelf-stable and frozen foods across the United States, Canada and Puerto Rico.
Although you may not have heard of B&G itself, it sells familiar brands like Cream of Wheat, Green Giant, Ortega and Polaner.
B&G’s stock has been a big winner 2016 thanks to a combination of a smart acquisition strategy, better-than-expected results and the stability offered by a strong dividend.
Late last year, B&G acquired Green Giant, a move that helped the company deliver a blowout Q1 earnings report. The stock soared 23% after the company reported its impressive fiscal Q1 results with a 71% year-over-year increase in earnings and a 63% jump in revenue.
The company is expected to benefit further from the Green Giant acquisition and deliver earnings growth of 36% in the upcoming quarter. Analysts are expecting earnings of $0.46 a share on $316.6 million in sales. B&G has a history of surprising on the upside, with earnings beating estimated by an average of 5.7%. We’ll learn more when the company reports second-quarter earnings on or about July 20.
In 2016’s choppy markets, investors have flocked to safe dividend plays like B&G. Earlier this year, the company increased its quarterly cash dividend by 20%. This was 46th consecutive quarterly dividend since their initial public offering (IPO) in October 2004. Despite its strong recent performance, the stock still boasts an attractive dividend yield of 3.5%.
Finally, B&G is held by 11 separate small-cap specialist strategies that I track, making the company one of the big favorites among Wall Street’s smartest small-cap money managers,
So buy B&G Foods Inc. (BGS) at market today and place your stop at $42.00.
If you want to play the options, I recommend the BGS November $50 calls (BGS161118C00050000), which last traded at $2.15 and expire on Nov. 18.
The TJX Companies, Inc. (TJX) powered higher over the recent holiday-shortened week, rising 2.60%. TJX is just a few cents short of its 52-week high, after taking a quick bounce from the 200-day moving average (MA) that started two weeks ago. TJX is a BUY.
Healthcare Services Group, Inc. (HCSG) rose 0.77% for the week. This health care play started last week off at a new 52-week high, only to drift lower throughout the week. HCSG handles health care facility services and management — a sector that is primed for growth. And, HSCG focuses on domestic businesses, and is less exposed to the current gyrations of the global financial world. HCSG will report earnings on Tuesday, after markets close, with consensus estimates at $0.27 earnings per share (EPS) on revenue of $392.09 million. HCSG is a BUY.
Allete, Inc. (ALE) dipped just 0.34%, despite making a new 52-week high early last week. ALE is covered by seven investment analyst firms. Four firms hold positive Buy ratings, and three have either a Neutral or Hold rating. ALE is a BUY.
Dycom Industries, Inc. (DY) was recommended for a second time early last week, and then proceeded to soar 6.59% for its first week in the portfolio. DY also made a new 52-week high. DY announced last week that it has completed its acquisition of Goodman Networks Incorporated for a cash purchase price of $107.5 million. DY is a BUY.
Nicholas A. Vardy