Weekly Portfolio Summary
Not a great week for the portfolio, as it was down around 1% while the S&P500 was up around 1%. The primary driver for this is my holding of NPSP, which was one of my top holdings and took substantial losses this week, plunging over 11%. The biotech industry as a whole was hit hard last week and I can't help but feel that the extreme selling on Friday was more of the "whoosh" effect you get when a sell off reaches its climax. That doesn't mean stocks will start going up or will stop going down, but if I'm right, this is the "near bottom" stage. For the next week, the biggest thing for my portfolio will be the releasing of the CCAR results for Citigroup. This is where we'll likely see if and how much capital can be returned to shareholders in the forms of dividends and share buybacks. With the Fed chair saying that the economy continues to improve earlier this week, odds are we won't be seeing interest rates going down a lot from here. This means opportunity for increased profit margins in the banking sector. Outside of that, nothing big is going on. The week should be focused on watching the portfolio and many other key stocks to determine what is happening. I need to understand how the market is reacting and if/how it impacts my stocks so I can determine if I must make changes.
Notes:Stock Ratings: 1 = buy at current stock prices, 2 = buy on a 5-10% dip in stock price, 3 = sell on a 5-10% increase in stock price, 4 = sell at current stock prices to raise cash. Ratings are based upon 12-18 month outlook on stock direction and not necessarily related to moves I make due to financial positioning.
Citigroup (C) - Citi had a disappointing earnings report for the fourth quarter compared to their peers, interest rates are down, and now there's a case of fraud in their Mexican division and the SEC is probing price manipulation in the bond markets. China and Crimean events have people running to treasuries for safety and this puts pressure on the banks to profit more. This stock seems to be under performing other institutional banks, primarily due to its international exposure. The global economy's perceived weakness right now could continue to put stress on this stock, however, comments made by the Fed of the US' strengthening, and the stress test results could be a boost. Buying below 50 is good, but I think below 47 is even better. Citi is 10.1% of my portfolio.
Home Depot (HD) - Home Depot recently reported numbers that beat expectations despite lower traffic and lower than expected guidance. This management team is known for conservatism, though, and I expect them to raise guidance through the year. A strong jobs number for February will result in mixed results in the housing market. More people have jobs and are likely to buy/repair homes, but at the same time interest rates are on the rise. This stock has pulled back recently near the price it was at when it announced the quarter. At the same time, interest rates have been falling. I think if this gets below 79, you could dip your toes into this stock. HD is 10.8% of my portfolio.
NPS Pharmaceuticals (NPSP) - Currently impacted as a part of the entire biotech cohort, It was crushed this week and is in an area I think you can start buying. There's still 10-15% downside risk, I believe, however, technicals are showing numerous signs that the stock is over sold and reaching various points of historical support. I don't necessarily expect a big bounce, but this could be a point where things hover and rest before rising again. I believe this stock may have found a stability point around $30. You need to keep tight reigns on this right now because with no catalyst on the near-term horizon, this one can make large moves in any direction based upon how big investors want to move the sector. I'm also going to call out that though I do believe this company has upside ahead of it, I'm now starting to question my ability to understand where this stock should be priced and where it's heading. Nearly 25% loss in this stock is testing my conviction and pain thresholds. Knowing I was going to take some profits at $40 shows what a difference a judgement call of a few cents can make (stock peaked at $39.68). NPSP is 14.1% of my portfolio.
Deere & Company (DE) - Deere beat on earnings and revenues a few weeks ago and as is typical, the stock has done nothing since - staying about flat since the Feb 14 announcement. Commodity prices are on the rise - particularly corn and that is pushing this stock higher as well. The stock's downside has increased as we approach $90, but still more upside potential taking it to $100 or more if priced fairly with industry/peers, however, history states you have to watch it closely as it approaches $95 as that seems to be a relative ceiling it's struggled to break through. This isn't moving as slowly as I thought. DE is 12% of my portfolio.
Honeywell (HON) - This is a stock I can't say enough about. Great management who deliver again and again, as they did when they announced fourth quarter results a few weeks back. Guidance was a little lower than expected, but this team is known for conservative estimates which they increase or beat through the year. Expect this company to continue to be a strong performer as the economy improves. HON is 18.7% of my portfolio.
Pepsico (PEP) - I admittedly struggle some with this stock. It recently posted in-line earnings and revenues, earnings growth is in the high single digits, they dramatically increased return to shareholders through dividends and buybacks. Stock movements since then appear directly related to activist investor actions - either by the actions themselves or investor reactions to it. I have great faith in the ability and consistency of the Pepsico management team and am sticking with the stock. It has room for short-term growth as people will add it's shares as a safety stock while things remain uncertain. PEP is 8.3% of my portfolio
Broadwind Energy (BWEN) - Broadwind announced its fourth quarter results and 2014 guidance. Results were lower than expected, primarily off of one-time charges and guidance seemed in line. Watching this stock will be interesting. It could get hit hard if sector indexes are beaten down or it can hold it's own as a pure American play. Either way the economic and political events won't drive this company's stock price, but I believe the extension of government subsidies that is due for discussion in the last part of the year will be key. BWEN is 2.3% of my portfolio
Encana Corporation (ECA) - Encana recently reported a beat on earnings and revenues for the fourth quarter. Additionally a combination of both weather and the Crimean events have lifted both natural gas prices as well as natural gas stocks. The outlying question is how long will this run last? I will need to see sustainability in both gas prices and the results from management to maintain my conviction. What happens to the stock price when political tensions are eased will be key. It's now at my $20 price target and needs close watching. This is a stock that has me feeling I need to sell into strength to meet my goals. ECA is 11.2% of my portfolio.