It was a strong, if holiday-shortened, week in the U.S. and global stock markets. The Dow Jones rose 1.51%, the S&P 500 gained 1.44% and the NASDAQ jumped 1.45%. The MSCI Emerging Markets Index also recovered 1.91%.
Big gainers in your Bull Market Alert portfolio included The Chemours Company (CC), jumping 4.06%, Avista Corporation (AVA), climbing 3.74%, LogMeIn (LOGM), advancing 3.47%, and Allete, Inc. (ALE), up 3.30%. Avista Corporation (AVA) moved back above its 50-day moving average to a BUY.
You hit your stop price in Littelfuse (LFUS) and recorded a 15% gain on this position.
More than half of your portfolio hit a new 52-week high. These positions include ABM Industries Incorporated (ABM), Cirrus Logic, Inc. (CRUS), Masimo Corporation (MASI), LogMeIn (LOGM) and The Chemours Company (CC).
With these broad-based gains in your portfolio, it is again time to adjust your stops to lock in some profits.
Raise your stop price in LogMeIn (LOGM) to $106.90 to lock in at least a 20% gain in the stock.
Raise your stop in The Chemours Company (CC) to $23.10 to lock in at least a 10% gain in the stock.
With these stop price adjustments — combined with last week’s new stop prices — you now have at least four double-digit percentage gains guaranteed in your Bull Market Alert portfolio.
Small caps continue to dominate the performance of the U.S. stock market.
With the anti-health care stock scare now fully out of the market, Healthcare Services Group, Inc. (HCSG) — a previous recommendation in Bull Market Alert — is back on its bullish path.
As you may recall, HCSG is a small-cap stock in a very unsexy business. The company provides housekeeping, laundry, linen, facility maintenance and dietary service departments to nursing homes, retirement complexes, rehabilitation centers and hospitals in the United States.
Here’s why I expect HCSG to continue to bounce strongly, as well as to hold up well during any market pullback.
On Oct. 11, HCSG announced strong earnings for Q3, with both revenues and earnings increasing 9% year over year. HCSG’s bottom-line growth was driven by a strong increase in revenues, supported by a whopping 70% market share in its sector. The company’s board of directors also declared a quarterly cash dividend of $0.1850 per common share — the 54th consecutive quarterly cash dividend payment, as well as the 53rd consecutive increase since its initiation of quarterly cash dividend payments in 2003.
From a technical standpoint, the stock has been a strong outperformer, rising 12.45% year to date, compared with the S&P 500’s gain of 8.66%. The stock has gained 7.66% over the past month, and 2.75% just last week.
HCSG is also held by 10 small-cap investment strategies focused on factors as wide ranging as growth, low volatility and momentum.
Analysts at Baird put a price tag of $46 on the stock, implying approximately 17.3% upside potential from Friday’s close. I think that’s a target price it could reach quickly in today’s bullish environment.
So buy Healthcare Services Group, Inc. (HCSG) at market today, and place your stop at $34.80.
I’m going to hold off on recommending options on this one until the market pulls back.
Portfolio Update
iShares MSCI Emerging Markets (EEM) added 1.91% over the previous four-day holiday week. EEM has been languishing along its 200-day moving average (MA) over the past few weeks as emerging markets regain their footing after the U.S. election turmoil. EEM’s trading pattern appears to be holding up well, and is stable. EEM is a HOLD.
The TJX Companies, Inc. (TJX) gained 1.94%. TJX had a strong week, pushed higher by the annual retail jump start of “Black Friday.” However, more shoppers were shopping online to beat the rush in brick-and-mortar stores this season. Still, sales are sales and the holiday season is always bullish for retail stocks. TJX is a BUY.
ABM Industries Incorporated (ABM) gained 1.05% and reached a new 52-week high. ABM managed to push higher last week, despite the muted trading of the holidays. Even with its tightened stop at its $56.40 price level, locking in a 15% gain, ABM’s consolidation pattern over the past week could spell continued gains if market conditions hold up. ABM is a BUY.
Take-Two Interactive Software (TTWO) rose 2.46%. BizWireTV published survey results last week regarding the week’s shopping frenzy. A National Retail Federation survey predicted that 137.4 million shoppers were planning to shop last weekend, while a Consumer Technology Association survey revealed that a record number of Americans were planning technology-related purchases. Take-Two’s strong gaming library makes the company a likely beneficiary of last week’s record purchases. TTWO is a BUY.
Home BancShares, Inc. (HOMB) added 2.11% last week for its first week in your portfolio. Despite the shortened trading week, HOMB hit a new 52-week high mid-week. The financial sector has been strong of late due to expectations of an interest rate hike in the coming weeks, which will benefit banks in the coming quarters. HOMB is enjoying this tailwind and remains a BUY.
Sincerely,
Nicholas A. Vardy
