Weekly Portfolio Summary
As expected, the biggest thing about this week was the jobs number we got today, which was better than expected. Generally, markets shrugged the good news off as the market had run up nicely going into this week. Additional factors are the Russian/Ukraine events that continue to take the advice of Katy Perry and go "Hot and Cold," creating a more volatile market. Going into next week, the Eastern Block drama will continue and lurks as a factor to market events. Keep in mind what should or shouldn't be impacted by these events because the market tends to play to sectors more than individual stocks. Also a key watch for me will be the fourth quarter earnings announcement for Broadwind Energy. I hadn't watched this stock like I should and it's moved incredibly over the last year. I want to know more about what I'm considering adding onto here, but in the course of waiting, the stock has risen over 10% this week. That's a big run going into earnings, so it'll be best to wait things out and see what we learn. If what they announce is strong either we're jumping in when it's really early, or it might already be priced in with the move we've had. Additionally, there are conferences for Honeywell, NPS Pharmaceuticals, and John Deere. I don't expect any of these to be real needle movers. Honeywell laid out their 5 year plan this week and though the stock moved up, it wasn't the reaction I really expected considering they expect double digit growth through 2018. Other things to note are the goals I have for my portfolio. I need to reduce my number of holdings because it's gotten too large. I'm spread out and buying any new stocks would make keeping track of them too difficult. I need to sell out of at least a couple positions, I believe. Knowing I will have to do this before I even consider infusing more capital will force me to manage my portfolio to my capabilities and force me to make decisions to sell. In the mean time, I will also get my shopping list ready so I know what I want to buy and when.
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. The jobs report was strong and is likely to start pushing interest rates higher, which is an added benefit to banks. The stock has started to move, but is still a good buy below $50. Citi is 9.8% of my portfolio.
Broadwind Energy (BWEN) - This is an industrial company that has been expanding from a pure wind play to diversify into a wind + service + gearing/welding company. This reduces the overall wild swings of the wind business and seems to help stabilize the company's balance sheet. Stock has performed well in the last year and appears to be putting in a nice base to build further. This is a stock I've failed miserably on, both in my judgments and actions to date. I have been waiting for their next earnings release, which will be next Tuesday, before I make a move and it may cost me as the stock jumped this week ahead of earnings. If they miss, expect a strong pullback. BWEN is 2.3% 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. This stock has limited down side to about $80 with much 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 11.7% 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. As the 10 year treasury approaches just past the 3% yield mark, investors might try to take this back down due to less mortgage activity. HD is 10.9% 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. A strong jobs number has been a boost to the stock as investors put money into Industrials due to expected economic growth. Take this weekend to fully understand their new 5 year plan. Headlines sounded encouraging, stock reacted somewhat positively. Understanding this will allow you to understand where the company is heading in the long term. HON is 18.8% of my portfolio.
NPS Pharmaceuticals (NPSP) - This stock has taken a dramatic hit over the last 10 days, but has started to rally again today. The biotech sector as a whole has taken a strong hit and this is a part of the move. The sector did get too hot and this pulls things back around a nice position for future moves. The jobs report will has nothing to do with the price to earnings ratio of the company, yet if the rotation out of biotech continues, this could fall a lot more too. 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. NPSP is 15.3% 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, though it will stay underweight in my portfolio with the results of the February Jobs numbers. I believe this stock has the chance to go higher, but you need to be careful as to how the market responds to GDP growth as well as activist actions. PEP is 8% of my portfolio
Encana Corporation (ECA) - Encana recently reported a beat on earnings and revenues for the fourth quarter. Additionally the northern portion of the US has been suffering one of the coldest winters in 30+ years, which has created a spike in natural gas prices. The stock has responded positively due to these actions and is approaching its 52 week high. The outlying question is how long will this run last? The company is taking measures to turn around and it could be a factor to the price increases, but it's really hard to tell. 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 10.8% of my portfolio.
On Semiconductor (ONNN) - On semi reported a strong fourth quarter in the middle of February and gave solid guidance. As this stock nears both my price target as well as spring, I start to get more skeptical of the stock's ability to continue to perform over the next 6 months. A strong jobs number can be good for the tech sector over time, however, it did run up into the number and may take fall into habits where it doesn't perform well until late summer. All of these items have me on watch to make a sale here. I continue to prepare to sell this position so I can reallocate my capital to options I feel will perform better. ONNN is 6.4% of my portfolio.