What a difference a week makes. After bouncing off of its 200-day moving average, the S&P 500 soared 5.6% this past week. That made the last five trading days one of the 29 strongest weeks in the S&P 500 since 1950.
Your Bull Market Alert portfolio had an even stronger week. Danish pharmaceutical company Novo Nordisk A/S (NVO) soared 8.22%. Last week’s pick — Hansen Natural Corporation (HANS) — got off to a strong start with a 7.15% gain, while CROCS Inc. (CROX) leapt 6.89%. Rayonier Inc. (RYN) jumped 5.73% and Alliance Resource Partners L.P. (ARLP) climbed 4.1%. The week’s top performer was the ever-volatile National Bank of Greece (NBG), which skyrocketed 13.74%.
As a result of these sharp upward movements, most of your current Bull Market Alert recommendations are back to BUYS.
With the crisis in Greece receding, your bet against the euro through the UltraShort Euro ProShares (EUO) dropped 4.73% this past week. With the immediate prospects of a Greek default now limited, I am recommending that you sell this position at a slight loss.
This week’s Bull Market Alert continues our recent momentum-based strategy with tech play Avago Technologies Limited (AVGO). Based in Singapore, the company designs semiconductors for the telecom, automotive, computer and other markets.
Avago is a typical high-growth technology story — and its recent blockbuster financial results reflect this.
Avago’s fiscal Q1 net income announced in late May rose by 50% as revenue grew and costs were kept in check. Net income in the three months to May 1 grew to $135 million, or 54 cents per share, from $90 million, or 37 cents per share, a year earlier. Adjusted earnings came to 64 cents per share, above the 62 cents per share expected by analysts.
For Q3, the company expects revenue growth of 5% to 8% from the previous quarter, implying revenue of $588 million to $605 million. That’s higher than the $586 million that analysts were expecting.
Overall, analysts see earnings rising 23% this year. Even better news: estimates for Avago have been revised upward steadily, based on a combination of management-initiated stock buybacks and higher than expected growth in 4G wireless networks. In fact, just over the course of the last two months, Citibank upped its target for shares from $40 to $42 to $45. That’s a 16.4% upside from Avago’s closing price on Friday.
Also, there have been recent reports that Avago will supply power amps for the iPhone 5. With Apple’s new phone expected to hit the streets in the fall of this year, this also should provide a boost for the stock.
Finally, from a technical standpoint, the stock has just broken out of a new trading range and is hitting new highs. In a momentum-driven market bouncing back from a sharp sell-off, this bodes well for the stock’s future performance.
So, buy Avago Technologies (AVGO) at market today and place your initial stop at $32.00. For potentially even bigger gains, buy the $40 January call options AVGO120121C00040000.
Portfolio Update
Alliance Resource Partners L.P. (ARLP) jumped yet another 4.10% this past week. With the stock now up 9.53% over the past month, this has been a solid performer. Trading above its 50-day moving average, ARLP is a BUY.
CROCS Inc. (CROX) soared 6.89% this past week and now is up a whopping 11.89% in just two weeks. Trading above its 50-day moving average, this stock is on fire and remains a BUY. Raise your stop to $23.80.
Hansen Natural Corporation (HANS) soared 7.15% this past week. Lots of options players are betting on a continued jump in the stock, with investors buying 2,885 calls on HANS, compared to just 202 puts. In other words, traders have scooped up 14.28 times more bullish bets than bearish. This stock remains a BUY. Raise your stop to $74.50.
Bank of Ireland (IRE) was flat this week. The Irish government slashed the Value Added Tax from 13.5% to 9% to stimulate its economy. With this bet on the Irish bounce trading below its 50-day moving average, IRE remains a HOLD.
National Bank of Greece SA (NBG) soared 13.74% this past week, as the Greek parliament passed a new austerity package. Here’s my favorite stat of the week about Greece: In a country of 11.3 million, only 5,000 Greeks admitted to a taxable income of more than 90,000 euros ($130,000). Shooting back above its 50-day moving average, NBG is a BUY.
Novo Nordisk A/S (NVO) soared 8.22% this past week. Novo Nordisk is applying for U.S. approval to use its diabetes drug Victoza in combination with long-acting insulin. NVO is back to a BUY.
Rayonier Inc. (RYN) jumped 5.73% this past week. Total log shipments to Asia from the U.S. West Coast last year were the highest they have been in 14 years. Much of this increase stemmed from China’s seemingly never-ending need for wood. RYN is back to a BUY.
Toyota Motor Corp. (TM) rose 2.66% this past week. The world’s largest car manufacturer announced that it is hiring 2,000 new employees in India. Back above its 50-day moving average, Toyota is now a BUY.
