NEW YORK ( TheStreet) -- In today's market, investors must be willing to adapt or die. In fact I can probably drop the first part of that sentence and say simply, "investors must be willing to adapt or die," because the markets have always progressed. Sometimes slowly, and sometimes quickly, but the participants have not changed.Take my trading approach as an example. While I am generally known for my aggressive shorting, I am trading to the long side more than ever. There is a common saying that I imagine goes back to the creation of the Fed. Never fight God or the Fed. We knew QE3 was coming long before it was announced. How did we know? Because there is another common saying, "There are no coincidences on Wall Street." If it's true that there are no coincidences on Wall Street (I believe it's true), we can safely assume that it's not a coincidence the S&P 500 ETF ( SPY) moved higher in front of the QE3 announcement. Take a look at SPY's chart and look at the beginning of the media coverage about a possible QE3. If you believe the SPY increasing is no more than a coincidence in the face of higher unemployment, higher deficit spending, European woes and a Chinese slowdown, I know a guy who will sell you a bridge in San Francisco. So, for now I'm not going to fight the Fed and I will continue to focus my attention toward stocks that hold the ability to maximize shareholder returns inside the current environment. In
HFC) Background: Holly is engaged in refining petroleum. It produces and markets gasoline, diesel, jet fuel, asphalt, heavy products and specialty lubricant products. The company was founded in 1947 and is based in Dallas, Texas. Holly Corp trades an average of 2.5 million shares per day with a marketcap of $8 billion. 52-Week High: $40.87 Holly isn't just making new 52 week highs; the company is making multiyear highs. I went back to 1993 and couldn't find a close above Friday's so as far as I am concerned, this is an all-time high for the company.
Cramer's 6 Stocks in 60 Seconds includes HFC The trend is your friend with Holly. All the major moving averages are bullish and the pace is reasonable. The earnings expected should allow Holly to continue the path higher. The mean fiscal-year estimate price-to-earnings ratio is 5.9, based on earnings of $6.69 per share this year. The average analyst target price for HFC is $46.30. An earnings multiple as low as Holly's is often is a red flag that investors expect a drop in revenue and or earnings. Holly is the exception to the rule. Shareholders receive 60 cents annually in dividends, with an effective yield of about 1.5%. Currently, the short interest based on the float is small and not a big concern at 2.3%. The low short interest is another reason why I expect Holly to continue higher. Please note that I would like to see a pullback before entering into a position. Ideally, a price of about $41 even a share satisfies my hesitation to chase a stock higher.
TJX) Background: The TJX Companies is the leading off-price retailer of apparel and home fashions in the U.S. and worldwide. The company operates T.J. Maxx, Marshalls and HomeGoods stores in the U.S. The company was founded in 1956 and trades an average of 4.5 million shares per day with a marketcap of $34.5 billion. 52-Week High: $46.67
Secrets of Retail Winners by Jim Cramer includes TJX. TJX is building a strong base to move higher from. Combining the strong bullish trends of the 60- and 200-day moving averages along with the consistent upward trend of the share price strongly suggests the next leg higher will trade in the $50 price window. Currently, TJX has 13 buy recommendations out of 22 analysts, and the average target price for TJX is $47.30. The trailing 12-month price-to-earnings ratio is 20.6, which is just slightly above my comfort level of 20. The forward expectations are almost equally as bullish. The mean fiscal year estimate price-to-earnings ratio is 18.9, based on earnings of $2.47 per share this year. Investors are receiving 46 cents in dividends for a yield of 1%. Over the last five years, the dividend has expanded quickly by an average of 21.7% per year. The dividend appears about as safe as a clothes retailer's dividend can. The payout is under 25% and expected to stay low. Even without the nice trend, TJX is attractive in my opinion based on the current and expected dividend yield. Yes, I know 1% is far from a "high payer," however, the rate of dividend growth and low payout rate suggests a bargain.
EBAY) Background: eBay enables trade on a local, national and international basis with local sites in numerous markets in the U.S. and country-specific sites in the United Kingdom, Canada, Germany, Austria, France, Italy, Japan, Korea and Australia. The company was founded in 1995 and is headquartered in San Jose, Calif. eBay trades an average of 10 million shares per day with a marketcap of $64 billion. 52-Week High: $50.65 eBay is once again flirting with the 52-week high made on Friday. Shares are trading for over $50 as I write and even if you expect eBay to trade around the round number of $50 for the immediate future, there is no reason not to expect the upward trend to continue. The average analyst target price for eBay is $49.79. What does that mean now that we are above it? It means to expect analysts to raise their price targets, which of course will put the ticker in the news. The shares are becoming a bit heated though and I would hold off until we see a dip in the price back under $50. As I stated, I expect the share price to float around $50 before moving higher. No reason not to wait and buy under $50. If it turns out that eBay never looks back and keeps going, no biggie, there are others here to pick from. Analysts expect eBay to make about $2.03 a share for fiscal year 2012. That makes the price-to-earnings ratio about 24 and while it can go much higher, I don't believe the extra risk is worth it. The last reported short interest is 1.3%. That's about as good as it gets for a website stock.
XOM) Background: Exxon Mobil's principal business is energy, involving exploration for, and production of, crude oil and natural gas, manufacturing of petroleum products and transportation and sale of crude oil, natural gas and petroleum products. Exxon trades an average of 11.9 million shares per day with a marketcap of $426 billion. 52-Week High: $91.56 Exxon is the second-highest valued company by market capitalization. Exxon's integration into every facet of energy is very attractive. Exxon has bets on every number and regardless of where the wheel stops spinning, Exxon shareholders can expect to get paid. The average analyst target price for Exxon is $93.64, and we are close to seeing the target reached. With that being said, I would hold off for now and let a dip happen. Buying above $90.50 feels too much like chasing it higher, something that I don't believe is warranted. The breakout above the $89 price range is solid, but even the nine-day moving average is only $90. It's at $90 or lower that an investor can buy and not feel like they are "paying-up" to gain exposure. Exxon's current estimated earnings of $7.58 per share this year means that investors buying on dips don't have to "pay up." It works out to a price-to-earnings ratio of only 12.2. Even if Exxon is making new highs, there is a lot of room for the shares to move higher. Shareholders even receive $2.28 annually in dividends. That works out to a yield of 2.47%. With a payout ratio of less than 25% and enough cash to fully pay off debt, the dividend looks almost as good as money in the bank. 0.9% of the float is sold short. It's not enough to raise concern, and I believe such a low rate of shares shorted indicates a bullish bias.
AAPL) Background: Apple designs, manufactures and markets personal computers and related personal computing and communicating solutions for sale primarily to education, creative, consumer, and business customers. Apple trades an average of 14.4 million shares per day with a marketcap of $648 billion. 52-Week High: $685.50 Read my previous article,
Apple and Google Dominance Extinguishes Hope For RIM . Like almost everyone else writing about Apple, I am bullish. I have not always been bullish, but I am happy to report that I caught the best part of the leg when I moved from neutral to bullish. I think Apple trades above $700 this week, but like a other companies in this article, I don't believe buying right here at highest prices makes sense. One of the true wonders of Apple is that if you wait a week or two there is likely to be a dip in price. Buying dips in Apple is almost a strategy in of itself. Of course, simple strategies like that work until they don't, which is why it's "almost" a strategy. What makes Apple buying on dips so effective is a combination of several factors. Firstly, Apple's per share price is relatively high for retail investors. While price shouldn't matter because in today's computerized marketplace, buying odd lots (less than 100 shares of a stock in one trade) is easily executed. Secondly, some analysts like Rocco Pendola think the loss of Steve Jobs will result in a relatively quick decline in the company. Even with hit after hit, the mean fiscal year estimate price-to-earnings ratio is 15.7, based on earnings of $44.18 per share this year. I get why people are fearful that the growth story will end, but the market has already discounted the growth. Even if Apple doesn't growth much more than a couple of percentage points a year, shares are not overvalued. AAPL is sporting 39 buy or strong buy recommendations from a total of 40 analysts covering the company, only 1 hold, and none of the analysts give a sell rating. The average analyst target price for AAPL is $780.39. Shareholders receive $2.65 for a yield of .38%. The last reported short interest is tiny. Short interest is 1.2%.
WFC) Background: Wells Fargo trades an average of 21 million shares per day with a marketcap of $190.8 billion. 52-Week High: $35.63 Wells Fargo and US Bancorp ( USB) are my two favorite banks. Don't get me wrong, I like the others as trading vehicles, but these are two solid banks to invest in for the long haul. I am not alone in my view, 21 out of 25 analysts rate Wells Fargo a buy or strong buy. The average analyst target price for WFC is $38.64. Wells Fargo has traded sideways for the last few months and the new leg higher is accompanied with large amounts of volume. Analysts are probably going to be proved correct, but before Wells Fargo rises to $38.64, I expect one or more small speed bumps along the way. Look for $35-ish to enter a long. Wells Fargo pays shareholders a lot more than depositors. The current yield is 2.44%, and because all the banks are more or less treated the same, the mean fiscal year estimate price-to-earnings ratio is 10.9. Very cheap for a big name company. Short sellers are next to impossible to find. Short interest is so low I only include it to demonstrate the smart money is not betting against this company. 0.8% of the float is short based on the last reported numbers. At the time of publication, the author held no positions in any of the stocks mentioned. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.