Each of the major indices have something to brag about on Friday, as we closed out a positive week for the market that saw each of the Big 3 advance by at least 1.5%.
Let’s start with the Dow since it had been the laggard when trade headlines were taking a big bite out of stocks. On Friday, it closed above 25K by rising 0.38% (or about 95 points) to 25,019.4. Most impressive though, it led its counterparts for the week with a 2.3% jump. Last week it was up only 0.8%.
After numerous attempts, the S&P finally closed ahead of 2800 for the first time since February. It advanced 0.11% in the session to 2801.3, completing a weekly uptick of 1.5%. The editors had been waiting for the index to recapture this milestone. The question now is: Can it go even higher or is this a one-day event?
The NASDAQ only advanced by 0.03% to 7826…but that was enough to secure a new all-time high for a second straight day. It was up 1.8% for the week.
Trade concerns have taken a backseat lately, except on Wednesday when the market sold off on President Trump’s plan for 10% tariffs on $200 billion worth of Chinese goods. Otherwise, stocks have gained in six of the seven sessions since the Fourth of July. Of course, it only takes one trade headline to send this skittish market on a tailspin.
Fortunately, earnings season may be able to keep some of the focus off trade concerns next week. Big banks such as JPMorgan (NYSE:JPM), Citigroup (NYSE:C) and Wells Fargo (NYSE:WFC), among others, announced today to unofficially kick things off. While most of them beat expectations, they didn’t provide a lot of fuel for the rally. In fact, each of them were down today.
Nevertheless, the market is expecting big returns this earnings season, including a more than 19% jump in total earnings for the S&P compared to last year on 8.2% higher revenues.
The editors were in a buying mood on Friday. It was one of the busiest sessions we've seen since….well, since last earnings season. Eight portfolios bought stocks today. Let’s get right to all the action:
Today's Portfolio Highlights:
Surprise Trader: Make it five buys in five days for the portfolio...and earnings season has just begun! For the final buy of the week, Dave is betting that this strong economy will have people heading to the water. The portfolio bought a 12.5% allocation in MarineMax (HZO), the nation’s largest recreational boat and yacht retailer. The editor likes its high Earnings ESP of 9.32% for the quarter coming the week of July 23rd. Plus, it has blown earnings out of the water the past three times. Read the full write-up for more.
Value Investor: All signs point to another solid earnings season and Tracey wants to get the portfolio fully invested. She thinks that the highly-cyclical rail car manufacturers are finally getting back on the right track, so she bought The Greenbrier Companies (GBX) on Friday. It topped earnings expectations by 14% in its most recent report and also announced a surprise of 6,000 new orders worth $600 million. In addition to being a “classic” value stock, earnings for GBX are expected to rise 12.5% in fiscal 2018. Learn more about this new addition in the full write-up.
TAZR Trader: Everybody is worried about China stocks these days because of all the trade turmoil...and Kevin plans to take advantage of it. The editor took big profits on part of Alibaba (NYSE:BABA) Friday to make room for two smaller Chinese hotshots. He got out of the chunk of BABA bought back in February 2017 and secured a nice gain of 81%. However, co-founder/executive chairman Jack Ma probably has some good news up his sleeve heading into the mid-August report, so Kevin will hang onto a bit of BABA in hopes that estimates will be headed back up.
The portfolio also bought three names on Friday. It added a 7% allocation in the Chinese social networking and gaming platform Momo (MOMO) and another 7% in its rival YY Inc. (YY). Fears of a trade war has made these stocks attractive, though Kevin warns they will still be volatile. The editor also picked up a domestic name on Friday with a 7% allocation in Mellanox Technologies (MLNX), a Zacks Rank #1 (Strong Buy) player in the HPC/Supercomputing space. It reports earnings next Tuesday. Read the complete commentary for more on all of today’s moves.
Technology Innovators: With software names contributing to the market’s recent rally, Brian Bolan thinks this is a good time to pick up a cyber security name like Rapid7 (RPD). The company has a pretty good history of beating the Zacks Consensus Estimate and has also traded higher after five of the last six reports. Plus, there are three weeks until it is scheduled to report, which provides a lot of running room to move higher. Read the full write-up for more.
Momentum Trader: This is a “buy high, sell higher” sort of market, so Dave added a “buy high, sell higher” type of stock. On Friday, he picked up a 12.5% allocation in AxoGen (AXGN), a Zacks Rank #2 (Buy) advanced medical equipment and technology company. Despite all the market pressures of late, the stock hasn’t been under its 50-day moving average since February when it was at $24. These days, the stock has pulled back from $55 to about $52, giving Dave a chance to jump in before the next leg higher. Read the full write-up for more.
Insider Trader: Most insiders are in their “quiet period” before earnings season, but Tracey has noticed a lot of buying from those who are able to. This impatience from insiders is telling the editor two things: 1) This is going to be a HOT earnings season, and 2) It’s time to make some changes to the portfolio. She sold three names on Friday to make room for these three buys:
• Apollo Endosurgery (APEN): This provider of obesity treatments recently had a director, the CFO and the CEO buy shares. With the price up 41% in the past month, this is a momentum play.
• GMS Inc. (GMS): Shares of this wallboard and ceiling systems company plunged more than 15% after disappointing Q4 results. However, the insiders believe it was an overreaction, leading to buys from a director, the general counsel and the VP of Operations.
• Curtiss Wright (CW): Shares of this engineering company are also down of late, but that didn’t keep the VP & Controller, the VP & Treasurer, and two other VPs from buying shares. These insiders bought through a unique employee stock plan that Tracey explains in the full write up.
The cash was split evenly between these three names, which comes to allocations of about 8% each. Read the complete commentary for a lot more on these moves.
Blockchain Innovators: Xunlei (XNET) is a Chinese cloud computing company that has an innovative and cool-sounding product called ThunderChain. This platform can handle over 1 million transactions per second! Dave was looking for more exposure to small-cap blockchain companies and decided that XNET fit the bill. Read more about this new addition in the complete commentary.
ETF Investor: The medical technology field is the epicenter of some truly impressive and life-saving innovations of late. Neena wanted some exposure to this area, and so she picked up SPDR S&P Health Care Equipment ETF (NYSE:XHE) on Friday. This fund is equally weighted and provides exposure to the healthcare equipment & supplies space. Its focus on small caps has helped it outperform broader market cap weighted healthcare funds. Read the complete commentary for more.
Have a Great Weekend,
Jim Giaquinto
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