It was a mixed week in global stock markets last week with the Dow Jones down 0.20% and the S&P 500 rising 0.60%. The MCSI Emerging Markets Index ended the week 0.37% higher.
Your Bull Market Alert portfolio did much better, however, with the Bank of Ireland (IRE) soaring 21.64%; Apollo Global Management, LLC (APO) jumping 7.75%; the iShares MSCI Spain Capped Index (EWP) leaping 6.91%; and Trina Solar Limited (TSL) adding 5.93%.
With your Apollo Global Management, LLC (APO) March $32.50 call options up 50% in just five days, sell half of your options to lock in these big, quick gains.
You sold half of your Bank of Ireland (IRE) April $15 call options on Friday for a 66.67% gain. Sell your remaining options for another 103.70% gain.
This week’s Bull Market Alert recommendation, AbbVie Inc. (ABBV), takes you back into the red-hot pharmaceutical sector.
AbbVie was spun off from medical device maker Abbott Laboratories (ABT) a little over a year ago, on January 1, 2013. Since then, the stock has been on a tear, rising 49.71% over the past 12 months.
Despite this already substantial rise, here’s why I expect AbbVie (ABBV) to move still higher in the weeks ahead.
First, AbbVie sells a wide range of popular, branded prescription drugs, including the blockbuster anti-inflammatory drug Humira, used to treat rheumatoid arthritis, psoriasis and Crohn’s disease. Humira also happens to be the world’s best-selling prescription drug, with sales of $7.6 billion in just the first nine months of 2013.
In addition, Abbvie is also developing a wide range of treatments in the areas of neuroscience, oncology and autoimmune diseases. Several of Abbvie’s drugs are in the midst of the FDA approval. The company’s strong drug pipeline ensures that the company will be delivering a steady stream of consistent positive short- to medium-term news, which in turn should continue to support consistent share-price appreciation.
Second, AbbVie boasts both strong fundamentals and an attractive valuation. In 2012, AbbVie generated a return on assets base of 19.5% — a very high figure. By way of comparison, GlaxoSmithKline (GSK) eked out return on assets of 11.4% and Johnson & Johnson (JNJ) a mere 8.7%. Yet, AbbVie trades on a forward price-to-earnings (P/E) ratio of 15.96, a discount to both the pharma sector and the broader S&P 500.
Third, AbbVie is currently technically oversold by all of my favorite measures like MACD and slow stochastics. It has likely bottomed over the short term and should bounce strongly over the next few weeks.
So buy AbbVie inc (ABBV) at market today, and place your initial stop at $45.00.
Analysts at Jeffries just raised their target price on the stock to $68.00. That’s 34.65% above Friday’s closing price of $50.50.
Note that you can expect Abbvie to drop today to the tune of 40 cents per share — the amount of its most recent dividend — as the stock goes ex-dividend.
If you want to play the options, I recommend the May $52.50 calls (ABBV140517C00052500).
Disclosure: Abbvie Inc. (ABBV) is the second-largest stock holding in my firm Global Guru Capital’s ”American Alpha” Investment Program, though it is held indirectly through exchange-traded funds.
Bank of Ireland (IRE) soared 21.64% last week as the stock rose to a new three-year high. IRE shares have doubled in value over just the last six months. The latest news highlighted IRE’s positive five-year bond issue last week, raising 750 million euros. IRE jumped back above the 50-day moving average (MA) and is now a BUY.
Google Inc. (GOOG) added 2.28% after hitting a new 52-week high earlier in the week. Deutsche Bank put GOOG on its “must own” list recently, keeping the stock as a “Buy” and targeting $1,220. Even CNBC’s Jim Cramer said on-air that he was a buyer. With the Google news commentary heating up, expect Google to run higher through its earnings announcement. GOOG will report earnings on Jan. 30, after markets close. GOOG is a BUY.
iShares MSCI Spain Capped Index (EWP) jumped 6.91% to hit a new 52-week high. Nearing the $40.00 mark, EWP is now comfortably above the $38.00 range it has struggled against since mid-October 2013. EWP appears well primed for future gains. EWP is a BUY.
Trina Solar Limited (TSL) added 5.93%. Jefferies initiated coverage on TSL last week, setting a “Buy” recommendation and a $23.10 price target — a whopping 42% above Friday’s close. TSL will mount an assault on the $18.00 price level over the coming weeks as it tries to push up past this significant resistance point and 52-week high. TSL is a BUY.
db X-trackers Harvest China ETF (ASHR) fell 2.99% last week. Chinese markets suffered overall last week on fears that a wave of new initial public offerings (IPOs) could hurt delicate market balances, pushing the Shanghai Composite index down 3% as well. However, some traders see Friday’s weaker-than-expected U.S. jobs report as a boost to Asian markets, as capital may begin looking for greener (and less overbought) pastures. ASHR is a BUY.
Apple Inc. (AAPL) dipped 1.49% over the last five trading days. Personal computer (PC) sales just closed out the worst year of declines ever. With Apple still leading as the world’s premier tablet maker, and tablets being the number one replacement device for the PC, Apple likely has a lucrative growth channel it can mine for many years to come. Apple will report earnings on Jan. 27, after markets close. AAPL dipped below the 50-day MA and is now a HOLD.
Apollo Global Management, LLC (APO) jumped 7.75% for its first week in your portfolio to hit a new 52-week high. APO also managed to break a significant resistance level stretching back to October of 2013. APO may take a breather at the $35 price level but appears well positioned to move higher. APO is a BUY.
Be sure to sign up for my private, subscribers-only meeting if you plan to attend The World MoneyShow Orlando. The room for my private meeting is St. George 108, and my gathering is scheduled for Friday, Jan. 31, beginning at 1 p.m. I encourage you to sign up for my private meeting today. To attend The World MoneyShow Orlando, Jan. 31-Feb. 1, register today and attend free as my guest.
Latest Special Report
As a courtesy, I want to bring to your attention my latest special report, the newly updated version of The Top 12 Stocks You Should Buy Right Now, which features three of my top investment recommendations, as well as bonus picks from each of my fellow investment newsletter editors at Eagle.