It was a mixed week for U.S. stock markets. While the Dow Jones was down 0.82%, the S&P 500 was flat and the NASDAQ rose 0.39%. Global markets recovered strongly as the MCSI Emerging Markets Index rose 1.40%.
Big gainers in your Bull Market Alert portfolio included Vipshop Holdings Limited (VIPS), which added 7.49%, and The Bank of Ireland (IRE), which bounced 4.47%.
Several of your positions hit new 52-week highs. These include ProShares Ultra Real Estate ETF (URE), iShares MSCI BRIC ETF (BKF), Alcoa Inc. (AA) and Vipshop Holdings Limited (VIPS).
3D Systems Corp. (DDD) dropped below its 50-day moving average and is now a HOLD.
This week’s Bull Market Alert recommendation is a classic, if unsexy, growth stock that is poised to continue delivering strong returns over the coming months.
Greenwich, Connecticut-based United Rentals (URI) is the largest equipment rental company in the world. The company offers leases on about 3,400 classes of equipment and operates in two segments: General Rentals, along with Trench Safety, Power and HVAC (heating, ventilating and air conditioning).
Here’s why I see plenty of upside for this stock.
First, the company is growing by leaps and bounds. Its recent acquisition of National Pump catapulted URI to the position of the second-largest provider of pump rentals in North America. Rising demand from energy and petrochemical companies capitalizing on the booming shale gas market in the United States make this acquisition a money maker from Day One. URI’s acquisition of Blue-Stream Services, LLC will also help expand its footprint in the Gulf region.
Second, URI is in the midst of a $500-million share repurchase program and has repurchased common stock worth $228 million during the first half of 2014. This is a virtual guarantee of a rising stock price.
Third, URI is inexpensively priced based on its future earnings growth. URI’s forward price-earnings (P/E) ratio is low at 13.54 and its Price Earnings to Growth (PEG) ratio is only 0.51 — a very low number suggesting plenty of upside in the stock.
No wonder a slew of analysts have been raising their price targets on URI to $125 per share.
So buy United Rentals (URI) at market today and place your stop at $101. If you want to play the options, I recommend the December $115 calls (URI141220C00115000), with an expiration date of Dec. 20.
Portfolio Update
The Bank of Ireland (IRE) gained 4.47% last week. IRE will report earnings on Friday, before markets open. The numbers should reflect the strength of Ireland’s broader economic recovery. IRE pushed up through its 50-day moving average (MA) last Friday, only to dip back slightly below. IRE remains a HOLD.
Visa Inc. (V) gave back 2.47% over the past five trading days. Visa reported an earnings “beat” last Thursday, unveiling a $2.17 earnings-per-share (EPS) gain vs. a $2.09 EPS estimate from analysts. However, Visa lowered its outlook, causing its shares to dip. Friday’s share volume was quite heavy, and the bulls managed to beat the bears, suggesting this pullback may be short-lived. Visa is a BUY.
Flextronics International (FLEX) pulled back 1.09% last week. FLEX announced earnings on Thursday of $0.25 EPS vs. an estimated $0.22 EPS, reflecting a 39% jump from the same quarter last year. Revenue came in at $6.64 billion vs. an estimated $6.29 billion. Sales also rose 15% year over year. FLEX is a BUY.
3D Systems Corp. (DDD) fell 8.03%. Analyst firm Piper Jaffray released a positive report last week on the 3D-printing sector, stating it was long on the sector over the next few years. DDD will report earnings on Thursday, before markets open. DDD moved below its 50-day MA to become a HOLD.
Vipshop Holdings Limited (VIPS) added to the gains of its initial week in your portfolio to move another 7.49% higher last week. VIPS also hit a new 52-week high. Citigroup initiated coverage on VIPS last week, setting a “Buy” rating along with a $248.90 price target. This is a potential 17% move above Friday’s closing price. VIPS is a BUY.
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