A lot is being made of the number of 52-week highs and all-time highs which are occurring in the market lately. We are not close to the level hit earlier in the year when the market's highs were set and we believe that there are enough unanswered questions out there to provide further upside should we get good news. We are not buying into that technical argument right now, but to be fair we are also not blind buyers in this market. We continue to try to be as disciplined as possible, which is why we are taking profits on one name today.
Chart of the Day:
As the market has rallied this past week so too have the emerging markets and even more importantly many of the emerging market currencies which were coming under attack. Below you can see the Indian Rupee bouncing back strongly and erasing many of the losses from August. This should alleviate some of the issues the country was facing, but they still have a lot of work to do.
Source: Yahoo Finance
We have economic news today and it is as follows:
- Retail Sales (8:30 a.m. ET): Est: 0.4% Actual: 0.2%
- Retail Sales - Ex Auto (8:30 a.m. ET): Est: 0.3% Actual: 0.1%
- PPI (8:30 a.m. ET): Est: N/A Actual: 0.2% Actual: 0.3%
- Core PPI (8:30 a.m. ET): Est: N/A Actual: 0.1% Actual: 0.0%
- Michigan Sentiment (9:55 a.m. ET): Est: 82.0
- Business Inventories (10:00 a.m. ET): Est: 0.3%
Asian markets finished mixed today:
- All Ordinaries -- down 0.45%
- Shanghai Composite -- down 0.86%
- Nikkei 225 -- up 0.12%
- NZSE 50 -- up 0.20%
- Seoul Composite -- down 0.49%
In Europe, markets are also mixed this morning:
- CAC 40 -- up 0.02%
- DAX -- up 0.06%
- FTSE 100 -- down 0.19%
- OSE -- down 0.03%
Goldman Sachs lit a fire under the shares of Walgreen (WAG) yesterday after saying that the stock was "underappreciated". Those comments mirrored our longstanding belief that there was value here and was one of the reasons we recommended it for readers' retirement portfolios at lower prices. Although the shares were up $2.54 (5.00%) to close at $53.29/share yesterday we still think that there is considerable upside in this name and would approve of its addition to retirement portfolios focused on the long-term. We are not deterred by the fact that the shares hit a new 52-week and all-time high yesterday.
WAG is a name that simply has to be bought on dips for those looking for long-term exposure to a great business, great real estate assets and general retail exposure.
Source: Yahoo Finance
We noticed after hours that Ulta Salons (ULTA) was rocking and rolling after reporting a solid quarter. The company saw its shares close down $2.00 (1.96%) to close at $100.16/share during the session and after hours they were up $14.33 to $114.49/share. The company beat on their EPS figure by $0.03/share, beat on the top line and reaffirmed their full year guidance. The only bit of bad news was that the company guided lower on the next quarter's EPS, but based on the full year it appears that they believe it will have been made up in other quarters. This is a name which we were early to and then exited when their CEO left, but apparently the company still has some growth left so we will begin to watch this name again and see if an entry point presents itself. To be clear though we are not buyers here though.
We recommended Boeing (BA) all the way back at $75.04/share in anticipation of the company launching new plane models and building back orders which would ensure profits for years to come. As of yesterday the company's share price was $109.80/share, meaning that excluding dividends the position has returned a bit over 46.3% for those who followed our advice. We received a question of whether it is now time to sell after such a great run since the buy and our answer is a resounding no. The company is just getting started cranking out planes and orders continue to pour in, which means that profits will continue to rise and dividends shall continue to be increased. The shares are reasonably priced and should have some upside both in the short-term and long-term so long as the world's economy does not turn. Owning great American blue chip companies in one's portfolio is great, but it's even better when the name is trading at an all-time high, which Boeing is in fact doing.
There was a bunch of sideways movement before this took off from the runway, but the gains have been tremendous. Watch for this name to head higher though.
Source: Yahoo Finance
Sometimes we give readers long-term investment ideas and sometimes we have to play what the market gives U.S. and play short-term moves. That is exactly what we advised with Pandora (P) after the company was getting hit hard after disappointing news and said that one should not be buying at that time but to wait for more of a pullback which did in fact happen. As we were buyers on that pullback we are sellers on this recent surge with $23.97/share appearing to U.S. to be a fair exit price. The company rose $2.59/share on news of their new CEO and it was bullish, but we would rather not stick around to see how it all plays out. This was a trade to start with and it shall remain a trade as we close it. One must have that type of discipline when investing, and today we must exercise it.
Otherwise one might get trapped in a situation like EZ Chip (EZCH) which saw its shares fall by nearly 21% yesterday. Volume surged to 6.5 million shares as the stock closed at $24.52/share on the session after Cisco announced that it had developed a new custom chip. EZ Chip said that the new chip will not hurt business, but what readers need to know is that Cisco represents somewhere in the neighborhood of 40% of EZ Chip's total revenue so if this new design leads to a family of chips or the technology improves it could have serious repercussions for EZ Chip going forward. Short-term the underlying business might be just fine, but longer-term it would seem that the company has some serious competition which also happens to be from their largest customer. That is our take, but as some pointed out yesterday this has all happened before and not had a serious impact upon EZ Chip's business. Our only point is that the fact of the matter is Cisco continues to develop the chips and they continue to get better...so there has to be something there. We are obviously not buyers on this dip.