Markets recovered their mojo in the final week of summer, with the Dow Jones up 0.52%, the S&P 500 rising 0.50% and the NASDAQ up 0.59%. The MCSI Emerging Markets Index also recovered 1.77%.
Big gainers in your Bull Market Alert portfolio included Healthcare Services Group, Inc. (HCSG), which rose 3.16%; Allete, Inc. (ALE), which moved 2.59% higher; and Drew Industries Incorporated (DW), which gained 2.45%. In addition, ABM Industries Incorporated (ABM) jumped 2.31% and B&G Foods Inc. (BGS) rose 2.29%. B&G Foods also moved back to a BUY.
Raise your stop in Drew Industries Incorporated (DW) to $98.00 to lock in at least a 25% gain in this stock.
No fewer than five of your Bull Market Alert positions hit a new 52-week high: Drew Industries Incorporated (DW), ABM Industries Incorporated (ABM), Cirrus Logic, Inc. (CRUS), ProAssurance Corporation (PRA) and Masimo Corporation (MASI).
This week’s Bull Market Alert recommendation — Take-Two Interactive Software, Inc. (TTWO) — returns us to the world of fast-growth small-cap stocks.
Founded in 1993 and headquartered in New York, New York, Take-Two Interactive develops, publishes and markets interactive entertainment solutions for consumers worldwide.
Well-known in the world of video games, Take-Two Interactive has produced popular games such as “Grand Theft Auto,” “Red Dead Redemption” and the “NBA 2K” game franchise. The company’s products are staples on several console gaming systems such as Sony’s PlayStation 3 and PlayStation 4, and Microsoft’s Xbox 360 and Xbox One.
Take-Two’s spate of market-leading products have allowed it to grow its top line rapidly, and the company is now on track to achieving profitability.
In the most recent quarter, Take-Two posted revenue of $311.6 million in Q1, trouncing forecasts of $259.4 million. The company posted an adjusted loss of 21 cents per share, much narrower than the loss of 29 cents per share that analysts had expected. Last year, the company had a loss of 40 cents per share over the same period.
Take-Two upped its revenue expectations to be in the range of $375 million to $425 million for the fiscal second quarter, forcing analysts to increase their previous consensus. Take-Two now expects full-year earnings in the range of $2 to $2.25 per share, with revenue ranging from $1.75 billion to $1.85 billion.
Options traders are also looking for Take-Two Interactive Software to rally in coming weeks. Traders purchased more than 6,000 September $45 calls. These represent massive new option positions, as open interest was a mere 19 contracts before these latest trades.
Finally, Take-Two Interactive is now in no fewer than eight top-performing small-cap investment strategies that I track, making it one of the favorite picks of strategies that invest in the fastest growing small-cap stocks on the market.
So buy Take-Two Interactive Software Inc. (TTWO) at market today, and place your stop at $39.70.
I am going to hold off on an options recommendation today as the sharp rally in the stock price on Friday has made these call options very expensive. I will be very likely recommending options for this position in the coming weeks.
Healthcare Services Group, Inc. (HCSG) rose 3.16%. After taking a hit from its earnings report back in mid-July, HCSG has regained its mojo as of late and broken out higher on strength. Now up 8.48% in your portfolio, HCSG has been making higher highs nearly every day on increasing trading volume. This pattern has remained in place since HCSG broke a sideways trading pattern back on the stock’s Aug. 17 dividend date. HCSG is a BUY.
Drew Industries Incorporated (DW) gained another 2.45% last week, keeping DW moving higher on its unbroken run upwards. DW stands as the biggest winner in your Bull Market Alert portfolio — currently up 30.77% since its recommendation in mid-June. Drew Industries is one of the top 10 finalists in the 2016 Indiana Public Company of the Year. The winner will be named on Sept. 15. DW hit another new 52-week high last week and remains a BUY. Raise your stop to $98.00 to lock in at least a 25% gain in this stock.
ABM Industries Incorporated (ABM) gained 2.31% last week and hit a new 52-week high. ABM will report earnings on Wednesday this week after markets close. The consensus estimate calls for third-quarter fiscal-year July 2016 earnings of $0.38 per share on revenue of $1.31 billion. ABM is a BUY.
Masimo Corporation (MASI) added 1.58% last week, joining four other positions in your portfolio that hit new 52-week highs. With the Zika virus remaining in the headlines, Masimo is offering a 50% discount on its noninvasive SpHb sensors, which allow for real-time monitoring of hemoglobin levels. MASI is a BUY.
iPath S&P 500 VIX Short-Term Futures ETN (VXX) fell 5.41% for its first week. In an environment ripe for a significant move lower, and with volatility at extremely low levels, VXX is the perfect instrument to profit from a fast market correction downward. Be ready to exit this position quickly when a sharp market movement does occur. VXX is a BUY.
Nicholas A. Vardy