Buffett Disciple’s Automaker Bet Continues to Surge

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.

With the dog days of summer upon us, the U.S. stock market ended the week pretty much where it started.

The S&P 500 fell 0.24% and the Dow Jones dropped 0.05%. The tech-heavy Nasdaq pulled back 0.16%, while the MSCI Emerging Markets Index managed to eke out a 0.83% gain.

Your most recent Smart Money Masters recommendation, Mohnish Pabrai’s Fiat Chrysler Automobiles N.V. (FCAU), soared yet another 10.02% during its third week in the portfolio. Wilbur Ross’ Navigator Holdings (NVGS) recovered 5.53%, while Prem Watsa’s BlackBerry (BBRY) nudged 2.73% higher.

With Fiat Chrysler up 27.54% in just the last three weeks, it’s worth reviewing the reasons for its strong performance.

First, there is the company’s impressive earnings growth. Fiat Chrysler expects earnings to jump almost 26% for the current year on the back of nearly 10% sales growth. Those are bullish forecasts for the automobile sector.

Second, Fiat Chrysler does a good job at underpromising and overdelivering to investors. The company has generated an average earnings surprise of about 23.5% over the past 12 months, beating analysts’ estimates in three of the previous four quarters. Fiat Chrysler also trades at a price-to-earnings (P/E) ratio of 6.48, making the stock a bargain at current levels.

Third, as I noted last week, Fiat Chrysler has jumped higher recently thanks to Chinese buyout interest, and the prospect of the company spinning out some of its valuable brands.

Portfolio Update

Four of your positions — PayPal Holdings (PYPL), Restaurant Brands International (QSR), Liberty Broadband Corporation (LBRDK) and now Fiat Chrysler (FCAU) — all boast double-digit-percentage gains.

Exclusive  Booking 118.3% Option Profits and Three Double-Digit Option Gains

Kraft Heinz (KHC), BlackBerry (BBRY), Restaurant Brands International (QSR), The Priceline Group (PCLN) and Costco (COST) are all trading below their 50-day moving averages and are currently HOLDs.

Sincerely,

Nicholas Vardy

Nicholas A. Vardy

Like This Article?
Now Get Our FREE Special Report:
Alternative Investing: Investing in Timber

Stock Investor editor Paul Dykewicz reveals why investing in timber may be one of the best long-term portfolio strategies you'll find today.

Get Access to the Report, 100% FREE


img
previous article

I. Conservative Recommendation UnitedHealth Group (UNH) UnitedHealth Group is a current recommendation in my weekly trading service, Alpha Algorithm. The company announced the acquisition of Advisory Board Co.'s health care analytics, research and consulting operations for $1.3 billion. On the one hand, this is small beans for UnitedHealth, which has a market cap of $190 billion. On the other, it fits with the company's M&A modus operandi. Un

PREMIUM SERVICES FOR INVESTORS

Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Product Details

LEARN MORE HERE

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

Product Details

LEARN MORE HERE

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:

Product Details

LEARN MORE HERE

Bob Carlson

Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

LEARN MORE HERE

Mike Turner

Mike Turner’s financial, mathematical, computer science and engineering background serves as the foundation for his disciplined, rules-based approach to trading. Mike’s three services include:

Product Details

LEARN MORE HERE

Hilary Kramer

Hilary Kramer is an investment analyst and portfolio manager with 30 years of experience on Wall Street. Since 2010, Hilary's financial publications have provided stock analysis and investment advice to her subscribers:

Product Details

LEARN MORE HERE

DividendInvestor.com

Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

LEARN MORE HERE