The market was right not to worry about a shutdown. When last we left you on Friday, the government was just a few hours away from closing its doors, which it eventually did on Saturday. As we close out Monday’s session, the doors are set to be opened again after another short-term budget deal. The market can now give its full attention to this solid earnings season.
Without a shutdown clouding the picture (for now), the major indices started the week with a fresh round of new highs. The NASDAQ jumped 0.98% to 7408, while the S&P increased 0.81% to 2833 and the Dow advanced 0.55% to 26,214.6. The Russell 2000 had a nice session as well with a gain of 0.47% to 1605.2.
One of the big earnings winners on Monday was Netflix (NASDAQ:NFLX), which gained more than 3.2% in the session and is currently up more than 8% after hours. The company reported a strong fourth-quarter with more than 8.3 million subscribers added to its streaming service. There were also a couple of big merger announcements in the biotech world, which led to some impressive performances for Healthcare Innovators (see the highlights section below for more).
Also in the portfolios, Dave was all over the place today. Not only did he add two stocks to Surprise Trader and Momentum Trader each, but he is also teaching investors how to buy a breakout in this week’s Zacks Confidential. Counterstrike sold half a position for a double digit return and bought a new stock that could be poised for another breakthrough after its next report. Finally, Black Box Trader swapped three positions this week. See below for more on all this activity.
Today's Portfolio Highlights:
Counterstrike: Government shutdown or no government shutdown, Jeremy has wanted to make a few moves of late and today he made it happen. The editor added Shoe Carnival (LON:CCL) (SCVL), a Zacks Rank #1 (Strong Buy) footwear retailer that watched shares spike $10 after a strong quarterly report in November. Specifically, it beat earnings by 3% and raised its fiscal year guidance for EPS and revenue. The stock had plenty of opportunity to move lower, but just keeps ascending. Jeremy thinks there could be another healthy spike when it reports again in late March.
But that’s not all. ConocoPhillips (NYSE:COP) has stabilized over $60, so the editor thinks this is a good time to take half the position off the table and bank a nice 15.5% profit in about 5 weeks. The portfolio plans to hang onto the other half for a while since its price targets on the oil giant are still well above current levels. Learn more about today’s moves in the complete commentary, especially the limit orders for SCVL.
Surprise Trader: Earnings season keeps rolling on...and so do the buys in this portfolio. Fiat Chrysler (FCAU) reports results this week, and Dave thinks it could ride the Alfa Romeo’s U.S. comeback to strong results. Also, the editor likes the Earnings ESP of more than 10% for Scotts Miracle-Gro (SMG). The company reports before the bell on Tuesday, January 30th, and a positive surprise could set up a strong year for this lawn and garden care staple. Dave added these stocks on Monday with a 12.5% allocation each.
Healthcare Innovators: Whenever a portfolio position gets bought, Kevin says that he considers it “something of a walk-off grand slam – in the playoffs”. So if TWO holdings get picked up on the same day, then that’s a “game” for the ages. Well, it happened on Monday as news hit that Juno (JUNO) and Bioverativ (BIVV) both found suitors in Celgene (NASDAQ:CELG) and Sanofi (PA:SASY), respectively, in a couple of “FAT” buyouts. Subscribers of the portfolio know that Kevin is always on the lookout for potential targets in M&A activity, but a two-for-one is certainly rare. The editor may take profits on these names at any time, but for today he’ll settle for the top two performers among all portfolios…and it wasn’t even close. BIVV was a nearly 62% winner today, and its closest competition was JUNO at 26.8%. Read the full write-up for a lot more on this “Merger Monday”, including links to all the specifics on today’s big deals.
Momentum Trader: Two financial companies...but two very different businesses. That’s what Dave added to the portfolio on Monday. Bank of America (NYSE:BAC) is a banking giant that the editor believes is “off to the races” after its recent earnings report. Schwab (SCHW) is an online broker where business is booming amid this strong economy. Dave wants to be on board these companies as they breakout, so he added them to the portfolio with a 12.5% allocation each. Learn more in the full write-up.
Black Box Trader: The portfolio swapped out three names this week. The stocks that left the portfolio were:
• Sysco Corp. (NYSE:SYY, +3.2%)
• Tyson Foods (NYSE:TSN, +2%)
• Leucadia National (NYSE:LUK +0.3%)
The new buys that replaced these names include:
• Dana Inc. (DAN)
• HollyFrontier (HFC)
• KBR Inc. (KBR)
Read the Black Box Trader’s Guide to learn more about this computer-driven service designed to take the emotion out of investing.
Zacks Confidential: A stock’s breakout doesn't have to be the end of its profit potential. In fact, given the length of this bull market, it could be just the beginning. However, Dave Bartosiak knows that buying breakouts can be stressful. Kevin Matras is also a big believer in the “buy high and sell higher” idea, so he asked Dave to explain the best way to buy a breakout in this week’s Zacks Confidential. Read his detailed article, which includes five stocks that are breaking out right now: Buying the Breakout Like a Pro.
Have a Good Evening,
Jim Giaquinto
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