U.S. stocks bounced back Friday, starting May on a
positive note. That said, the Russell 2000 index, the
benchmark of the model portfolio, pulled back more than
3% this week.
We used the weakness to add to our positions in Pacific
Sunwear (PSUN) and Unilife (UNIS) this week.
As earnings season pressed on this week, traders had to
digest a lower-than-expected preliminary reading of
first-quarter GDP growth. This caused many folks to
retool bets on a Fed interest rate hike, which we
maintain will likely be pushed into 2016.
Looking ahead to next week, we’ll get a look at the April
jobs data on Friday. Economists are looking for the
addition of 225,000 nonfarm payrolls and for the
unemployment rate to tick down to 5.4%.
Here is a list of companies in the model portfolio that
have confirmed earnings reporting dates:
May 4 -- ON Semiconductor (ON)
May 5 -- Martha Stewart Living Omnimedia (MSO)
May 6 -- Atmel (ATML), SandRidge Energy (SD)
May 7 -- Cott (COT), Vantage Drilling (VTG)
May 11 – Ballantyne Strong (BTN), Unilife (UNIS)
As a reminder:
-- A Game Breaker is going to change the landscape of an
industry, as Intel (INTC), Microsoft (MSFT) and Wal-Mart
(WMT) did in their respective sectors. Investors can make
big money in these stocks by getting in before the crowd.
-- Inflection-Point stocks have a broken business model
that's on the mend but have yet to be recognized by the
market. Investors who recognize a turnaround early can
pocket strong returns.
-- Stealth Stocks are often names unknown to the general
public but can be hugely profitable investments --
especially when they have catalysts to boost their share
Also, Ones are stocks that we would buy at their current
quotes. Twos are stocks that we would buy on a pullback
and Threes are names that we would sell into strength.
Active Power (ACPW; $2.30; 3,050 shares; 3.79% of
the model portfolio; Game Breaker; $4.75 price target):
Active Power's flywheel energy technology keeps its
customers' mission-critical processes up and running. Its
hardware uses half as much space as that of existing
technologies, but it generates twice as much power. The
stock fell 4% this week, even though management posted
better-than-expected quarterly results on Tuesday. The
company is seeing higher product demand and expanding
margins. We'd consider adding to our position on the next
Atmel (ATML; $7.63; 1,000 shares; 4.12%,
Inflection Point; $10 price target): The company makes
microcontrollers used in electronics. The shares ticked
higher this week. Atmel sold its XSense touchscreen
technology on Friday to Unipixel (UPXL). The shares
dropped 2% this week, ahead of the upcoming quarterly
report on Wednesday. We believe management can continue
to expand margins and the stock can trade up toward the
double digits by the end of the year.
Ballantyne Strong (BTN; $4.66; 2,500 shares;
6.29%; Stealth Stock; $6.25 price target): The company
distributes digital movie projectors and manufactures
screens and lighting equipment for theaters. The stock
dropped fractionally this week on little news. We
maintain that Ballantyne deserves to trade at a premium
to its tangible book value of $4.65 a share.
Sonus Networks (SONS; $7.89; 660 shares; 2.81%;
Inflection Point; $26.25 price target): The company makes
communications equipment, including session border
controllers and diameter signal controllers. The shares
declined 6% this week. Even so, management is cutting
costs and we believe Sonus can move back into the double
digits by the end of the year.
Standard Pacific (SPF; $8.20; 750 shares; 3.32%;
Inflection Point; $11 price target): This homebuilder
generates the majority of its revenue in California. The
stock ticked lower this week, as management posted lower-
than-expected quarterly results on Thursday. That said,
pricing and order trends remain strong. We continue to
believe shares can trade up toward the double digits in
the coming quarters.
Synovus Financial (SNV; $27.53; 264 shares; 3.92%;
Inflection Point; $33.25 price target): This Georgia-
based bank operates branches throughout the Southeast.
The shares ticked lower this week. We believe the company
can continue to deliver above-average growth in the
Yamana Gold (AUY; $3.81; 1,350 shares; 2.78%;
Inflection Point; $12.50 price target): This gold-and-
copper exploration company operates seven mines and
several ongoing development projects in Brazil, Argentina
and Chile. It was a volatile week for the stock, which
traded fractionally lower. Yamana posted quarterly
results on Tuesday and core production continues to grow.
Management is paying down debt and we maintain that
shares can move up toward $5 in the coming quarters.
Builders FirstSource (BLDR; $12.91; 600 shares;
4.18%; Inflection Point; $17 price target): The company
distributes materials to homebuilders in the southern
U.S. The shares rebounded fractionally this week. As
management integrates the ProBuild acquisition over the
coming quarters, we believe the stock can move up toward
Cott (COT; $8.93; 950 shares; 4.58%; Stealth
Stock; $10 price target): Cott produces and distributes
soft drinks, noncarbonated beverages and bottled water,
primarily focusing on private-label items for major
retailers. The stock ticked higher this week, ahead of
the upcoming quarterly report on Thursday. We continue to
favor the company for its 2.7% dividend yield.
Huntington Bancshares (HBAN; $10.89; 600 shares;
3.53%; Inflection Point; $13 price target): This Ohio-
based bank operates more than 600 branches across six
states. It was a quiet week for the shares, which ticked
higher. We believe the company can continue to take
market share from its larger competitors in the coming
McDermott (MDR; $5.24; 800 shares; 2.26%;
Inflection Point; $11.50 price target): This engineering-
and-construction firm focuses on building and designing
offshore oil and natural gas facilities. The stock
bounced back nearly 5% this week. We believe management
can continue to turn the business around in the coming
ON Semiconductor (ON; $11.81; 500 shares; 3.19%;
Stealth Stock; $13.50 price target): The company makes
analog, standard logic and discrete semiconductors for
use in data and power management. The shares rebounded
fractionally this week, ahead of the upcoming quarterly
report on Monday. We maintain that ON Semiconductor is
attractively valued at 12x expected full-year earnings.
Pacific Sunwear (PSUN; $2.02; 3,550 shares; 3.87%;
Inflection Point; $4 price target): This specialty
retailer operates more than 500 stores in the U.S.,
selling surf- and skating-style apparel to teens and
young adults. We bought 300 shares on Wednesday, as the
stock fell 18% this week. The company was downgraded at
DA Davidson, from Buy to Neutral. That said, we continue
to believe Pacific Sunwear can drive traffic to its
stores with exclusive and private-label brands.
SandRidge Energy (SD; $1.92; 1,600 shares; 1.66%;
Inflection Point; $8 price target): The company explores
for natural gas and oil in the U.S., primarily onshore.
The shares bounced back more than 4% this week, ahead of
the upcoming quarterly report on Wednesday. It was a
volatile week for the energy sector, which moved higher,
along with underlying commodity prices. We maintain that
SandRidge is better hedged and has relatively less debt
than its peers.
TherapeuticsMD (TXMD; $6.62; 1,000 shares; 3.57%;
Game Breaker; $9.50 price target): The company develops
hormone-replacement medicines for women. The stock was
hit with some profit-taking and fell 7%. We continue to
believe TherapeuticsMD has an attractive clinical
pipeline, with multiple potential catalysts.
Unilife (UNIS; $3.32; 2,250 shares; 4.03%; Game
Beaker; $6.50 price target): This manufacturer of
retractable and prefilled syringes offers products with
convenience, safety and comfort advantages. We bought 200
shares on Friday, as the stock lost 6% this week. That
said, we believe the company can ramp production and will
sign more pharmaceutical partnerships in the coming
Vantage Drilling (VTG; $0.39; 6,000 shares; 1.27%;
Inflection Point; $2.25 price target): This offshore
driller contracts its rigs for the exploration of oil and
natural gas. The stock rebounded 3% this week, ahead of
the upcoming quarterly report on Thursday. We believe the
company's prospects can continue to improve with
underlying commodity prices in the coming quarters.
Whiting Petroleum (WLL; $37.68; 123 shares; 2.50%;
Inflection Point; $51 price target): The company explores
for oil and gas in the Permian Basin, Williston Basin and
Green River Basin. The shares added nearly 6% to recent
gains this week, as management posted solid quarterly
results on Wednesday. We'd consider paring back our
position above $40, as Whiting has rallied significantly
from its recent lows.
Zix (ZIXI; $4.47; 2,250 shares; 5.43%; Stealth
Stock; $5.75 price target): Zix is a leading producer of
email-encryption software that enables doctors to
automatically send information to pharmacies. The stock
was hit with some profit-taking and fell fractionally.
That said, the company has strong sales momentum and we
believe that shares can move up through $5 in the coming
Martha Stewart Living Omnimedia (MSO; $5.71; 600
shares; 1.85%; Inflection Point; $7 price target): The
company operates in the home-goods segment, publishing
magazines, producing broadcasts and licensing products to
retailers. The shares dropped 4% this week, ahead of the
upcoming quarterly report on Tuesday. We believe
management can continue to unlock value from Martha
Stewart's core brands in the coming quarters.
David Peltier & TheStreet Research Team
We believe the company will ramp production and continue to sign new pharmaceutical partners.
Still, we believe the company is trending in the right direction.
Slight increase in EPS is expected.
This week, we added to 2 portfolio positions amid market weakness.
Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.
David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
Every recommendation goes through 3 layers of intense scrutinyquantitative, fundamental and technical analysisto maximize profit potential and minimize risk.
Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
Want more than one service? Sign up to one of our packaged services and take advantage of amazing savings!
After the Bell
Before the Bell
Jim Cramer's Daily Booyah
Winners & Losers