A Bet on Cybersecurity

Nicholas Vardy

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

The Santa Claus rally continued last week, as the Dow Jones closed up 1.40%, the S&P 500 rose 0.88% and the NASDAQ gained 0.87%. After many long weeks of negative returns, even the MCSI Emerging Markets Index (EEM) ended the week higher, bouncing 1.49%.

Big gainers in your Bull Market Alert portfolio included Euronet Worldwide (EEFT), which jumped 4.85%, and The Rubicon Project, Inc. (RUBI), which gained 3.52%. Norwegian Cruise Line Holdings (NCLH) also hit a new 52-week high.

Raise your stop in NCLH to $45.70 to lock in at least a 10% gain in the stock. Also raise your stop in RUBI to $16.30 to lock in a double-digit percentage gain in this position as well.

We did run into some bad luck in the biotech sector after the largest U.S. prescription-management company dropped Gilead Sciences’ (GILD) expensive Hepatitis C drug to use a competitor’s cheaper medication. As a result, the stock price tumbled, and you were stopped out at a loss. You were also stopped out of India’s HDFC Bank (HDB) on Dec. 16 at a loss. The Bank of Ireland (IRE) fell below its 50-day moving average and moved to a HOLD.

This week’s Bull Market Alert recommendation taps into the headline-grabbing world of cybersecurity.

Palo Alto Networks (PANW) is a Santa Clara, California-based company that provides an enterprise security platform to companies and government agencies worldwide.

With major hacking attacks on Sony and other corporations making news lately, it’s little wonder that security software stocks are doing well.

Palo Alto, in particular, is set to benefit from enterprises needing comprehensive portfolios to beef up their cyberdefenses amid a rising number of high-profile breaches.

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That’s because it has one of the most comprehensive security portfolios in the industry and it now is capable of addressing 46% of the $34 billion market.

No wonder Piper Jaffray increased its price target on Palo Alto Networks’ stock to $150 from $130 and reiterated an overweight rating. That’s 17.7% upside from Friday’s closing price.

So buy Palo Alto Networks (PANW) at market today, and place your stop at $110.

If you want to play the options, I recommend the March $130 calls (PANW150320C00130000), which last traded at $8.54 and expire March 20.

Portfolio Update

The Bank of Ireland (IRE) dipped 1.14% over the four-day Christmas holiday week. Moody’s upgraded Bank of Ireland UK’s (United Kingdom) deposit rating last week due to a recent similar upgrade at IRE’s primary Ireland division. Moody’s cited increases in asset quality and capital levels, as well as IRE’s improving profitability trend, as positive factors supporting the upgrade. IRE closed last week just below its 50-day moving average (MA) to become a HOLD.

ProShares Ultra Nasdaq Biotechnology ETF (BIB) fell 6.93%. You were stopped out of Gilead Sciences Inc. (GILD) last week as the largest U.S. prescription-management company dropped its expensive Hepatitis C drug to use a competitor’s cheaper medication. This sent a slight shock wave of drug-pricing fears throughout the biotech sector last week, as reflected by the recent volatility in BIB. Still above its 50-day moving average (MA), BIB is a BUY.

Euronet Worldwide (EEFT) gained 4.85% last week. Although EEFT spent much of early December in a mild correction down to a recent support level, it appears that a bit of a “Santa Claus rally” is pushing EEFT back towards its recent 52-week high of $59.75. If this second attempt breaks above this level, EEFT could extend gains throughout at least the first quarter of 2015. EEFT is a BUY.

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Norwegian Cruise Line Holdings (NCLH) added 1.32% last week to hit a new 52-week high. This bet on one of the best cruise lines continued gains last week as investors begin to kick around the notion of cruises to Cuba. Although time will tell whether U.S.-Cuba relations ever return to normal levels, Cuba could become a hot travel destination for cruisers interested in an entirely new experience. NCLH is a BUY.

LifeLock, Inc. (LOCK) closed the week flat. A Canaccord Genuity analyst called LOCK one of the firm’s two favorite small-cap picks for 2015, calling for 15% to 50% appreciation next year. Canaccord Genuity rates the stock as a “Buy,” with a $23 price target — a potential 31.88% gain from Friday’s closing price. LOCK is a BUY.

The Rubicon Project, Inc. (RUBI) gained 3.52% over the week, bringing its total gain to 13.25% since my pre-holiday recommendation. It appears that RUBI may have been the perfect gift, and one that I do expect will keep on giving. RUBI is a BUY.

Latest Special Report

As a courtesy, I want to bring to your attention the newest version of The Top 12 Stocks for 2015, which features three of my top investment recommendations, as well as bonus picks from each of my fellow investment newsletter editors at Eagle. This report and others are available FREE on my website to you.

NEW FEATURE — Receive your alerts via text! You now can receive a text message on your cell phone to inform you whenever a trading alert is sent. To add this free new benefit to your service, please send an email to CustomerService@NicholasVardy.com with the following information and mention in the email that you want your cell phone added to your account:

  • Your Name
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Nicholas Vardy

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