It was a solid week for global stock markets, with the Dow Jones up 1.11% and the S&P 500 rising 0.88%. The MCSI Emerging Markets Index had its first down market in weeks, falling 1.30%.
Big gainers in your Bull Market Alert portfolio included Krispy Kreme Doughnuts (KKD), which rose 2.04%, and Gentherm (THRM), which added 1.64%. WellPoint, Inc. (WLP), however, fell below its 50-moving average and moved to a HOLD.
You were stopped out of biotech bet Celgene (CELG) for a solid 10.03% gain. You sold out of January $140 call options at $20.35 for 60.87% gain on the remaining half of your options, with a 58.3% gain for the options position as a whole. Remember to sell any related options as soon as possible anytime you stop out of a stock.
You were also stopped out of Melco Crown (MPEL) on Oct. 22 for gain of 5.05%. You sold the calls at $2.09 for a 22.94% gain on that half and a 55.59% gain for the position as a whole. I should add that MPEL represents one of the strongest secular stories in Asia, and I hold it as long-term position in my own portfolio.
One of the booming areas that Bull Market Alert has yet to profit from in 2013 is the red hot solar sector. And here’s why I think this week’s Bull Market Alert recommendation, Chinese integrated solar manufacturer Trina Solar Limited (TSL), has — excuse the pun — more gas in the tank, even after more than doubling over the past year.
First, with annual sales of $1.3 billion, Trina Solar is a member of the “first tier” among both Chinese and global solar companies. After the solar sector tanked last year, the Chinese government introduced a program of subsidies and low-cost loans for new solar projects, lending support to what it deemed to be the sector’s leaders. With the Chinese government essentially “picking the winners,” a handful of companies like Trina Solar are almost guaranteed to gain share in both the Chinese and global solar markets.
Second, the surprisingly robust Chinese economy means that Chinese solar companies’ capacity is sold out through the end of this year and early 2014. Trina Solar itself expects to ship 2.4 gigawatts (GW) of solar cells this year, an amount near its total capacity. 2014 looks even better for the solar sector, with most solar companies expecting global demand to reach 45 GW to 50 GW. That’s particularly good news for a company like Trina Solar. Although it is based in China, Trina Solar also boasts a strong global sales force in other fast-growing markets like Japan.
Third, analysts at Deutsche Bank expect that the bull market in solar will continue at least toward the end of this year. That’s why they recently upgraded Trina Solar to a BUY and raised its price target from $18 to $23. That’s an eye-popping 43% upside from Friday’s closing price.
So buy Trina Solar Limited (TSL) at market today, and place your stop at $11.00. If you want to play the options, I recommend the January $17.00 calls (TSL140118C00017000).
A word of warning: Trina Solar can be a very volatile stock so prepare for a potentially wild ride.
Bank of Ireland (IRE) traded sideways last week, dipping 0.62%. Bank of Ireland is taking aim at the small and medium enterprise (SME) sector in Ireland’s cities through its “Enterprise Town” initiative. IRE is holding meetings with the local business communities in an effort to better understand their needs, to outline Bank of Ireland’s offerings and to energize local business. IRE is a BUY.
WellPoint, Inc. (WLP) lost 2.64% last week. WLP reported earnings last week, with a positive outlook for a future fueled by Obamacare. However, WLP also reported a 5% dip in third-quarter earnings, due primarily to required sizeable investments in preparation for the upcoming rush of new members. WLP also raised its future earnings outlook on the expectation of big revenue gains down the road. WLP dipped beneath its 50-day moving average (MA) last week and is now a HOLD.
Gentherm (THRM) added 1.64%. THRM will report earnings on Oct. 31, before markets open. Analysts’ estimates call for $0.21 earnings per share (EPS) — a 67% increase in THRM’s analyst estimate from third-quarter 2012. Short interest currently stands at just 3.85% of outstanding shares, indicating that traders are not betting on a downside surprise. THRM is a BUY.
Google Inc. (GOOG) ended the week flat on the heels of last week’s huge earnings-related jump. Google just announced the addition of a new, and enormous, user base — the U. S. Army. The Army will begin utilizing Google Apps as its new virtual back-end to facilitate internal communications and, more importantly, its massive and ever-increasing mobile footprint. The Army stated that Google’s rich and extensive ecosystem would reduce costs, allow greater communication ability via Google’s Hangouts application, and greatly increase the ability to disseminate information to its global force. The Army also cited huge cost savings due to Google’s ability to work across major platforms, thus eliminating the need for hardware changes (with the exception of Blackberrys, I’m guessing). The Army went on to say that Google Apps met Army security policy requirements, and cited Google’s 99.5% uptime as a major plus. GOOG is a BUY.
AutoNation (AN) fell 2.03%. AN reported third-quarter 2013 EPS at $0.75 per share vs. a $0.77 per share estimate. Revenue came in at $4.47 billion vs. a $4.44 billion estimate. EPS rose 14% from the same quarter last year. AutoNation also highlighted stronger performance of all its business sectors — including new vehicles, used vehicles, parts and service, finance and insurance. AN dipped below its 50-day MA last week and is now a HOLD.
Krispy Kreme Doughnuts (KKD) gained 2.04% over the past five trading days. Krispy Kreme continued its global expansion last week by announcing plans to open its first store in Taiwan in December. KKD is moving into a vacuum created by the departure of competitor Dunkin’ Donuts earlier in 2013. KKD is expected to report earnings on Nov. 19, after markets close. KKD is a BUY.
MercadoLibre (MELI) dipped 1.03% last week after hitting a new 52-week high the week prior. MELI offers the “eBay experience” to nearly all of Latin America and its surrounding territories — a potential audience of over a half billion users. With e-commerce only accounting for 3% of Latin America’s current retail sales, the potential for growth is enormous. MELI is expected to report earnings on Oct. 31, after markets close. MELI is a BUY.
iShares MSCI Spain Capped Index (EWP) gave back 1.37%. The financial sector suffered like no other during the European economic crisis. Yet, value investors such as Warren Buffett point out when things are looking their worst that is the best time to buy. With EWP holding 44% of its assets in the financial sector, this ETF has terrific upside as Spain recovers. EWP is a BUY.
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