Weekly Portfolio Summary

Did someone yell "FIRE!" in a burning theater?  If so, apparently I didn't hear it and am getting trampled by everyone that did.  Yep, I'm getting beat up pretty bad here lately.  That biotech stock that I've held to help me beat the S&P last year has been crushing me, and I've had my heels dug in for a mighty long time now.  I'll save more on that for another post, though.   We have entered the next round of earnings season.  Man, I swear I just got done with the last one!  I guess that confirms my suspicions that my portfolio is a little larger than it should be.  I will need to focus on paring things down.  In the meantime, I have conference calls to listen to and they should help me decide what I'm going to do.  Next week, in particular will be a huge amount of work, so let's break down what we're looking at.  

Monday will be Citigroup's call.  Today we had bad numbers by JP Morgan and decent numbers from Wells Fargo.  People have been saying that announcements for bad quarters have been priced in, but JPM got hammered and took most of the banks with it.  I don't expect anything good from Citi, and it's possible the stock goes below the $45 I thought would be held.  If we get bad numbers but a good stock response, we may have set a bottom in that stock for now at least.  

Tuesday doesn't have any stocks in my portfolio reporting, however, Pepsico's biggest competitor, Coca Cola does.  I'm expecting a poor report from Coke as there have been numerous reports out lately regarding how soda sales are down pretty significantly in the US.  Whatever happens to KO, expect to see PEP hit similarly.

Thursday has 2 stocks reporting earnings.  First will be Pepsi.  Coke's conference call will give you a pretty good idea how the soft drink sales will go for the company.  Fortunately, that's only a portion of this business, though.  They also have a snacks division which has been strong and bolsters the company during bad times.  Normally, that's great for a company.  For Pepsi, that could be a double-edged sword.  Activist investor Nelson Peltz wants to break this company up into a soda and snacks business to "unlock value."  It's exceptionally likely we're going to hear plenty from Mr. Peltz and his Trian hedge fund lamenting about the need for Pepsi to break up and if we get strong snacks numbers and weak soda, it will only fuel all that much more into the discussion.  This one will be tough to play, however if Pepsi refutes the breakup like they did last quarter and there's no further pressure from Peltz, I'm willing to wager that the stock takes a hit like it did last quarter.  The second earnings call is Honeywell.  With one quarter past, I expect this company to report better than expected bottom line numbers on near expectation levels for the top line.  Their call will be strong and it's possible they'll start to bump up what I believe are conservative estimates for the year.  This will be one of the best times to see just how well the world economy is starting to act and as such, I expect this to be a strong push to an up day based on a growing economy outlook.  If you're looking to buy Honeywell, history says you'll be better off buying before they announce.

Lots to watch next week, lots to report on.and a portfolio to reassess.  No shortage of work!

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.

Home Depot (HD, 75.70) - This company still has long term prospects.  It's earnings have been accelerating and the economy continues to show signs of strength. It has pulled back to 16 times it's guided 2014 earnings (I'm actually expecting them to earn $4.50 instead of the 4.32 they've guided).  Great management team that knows how to take the competition on.. 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. Target price is $86.  HD is 10.5% of my portfolio.

Broadwind Energy (BWEN, 11.71) -  I have decided to upgrade this stock and take a chance on it if it pulls back from $11.50.  With international turmoil continuing to be a theme, a pure American play will be helpful with an economy that's strengthening.  Considering I wasn't entirely impressed with the last conference call, the stock has performed well in a distinctively weak tape, pulling back just a little before charging ahead again.  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 international 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.  I'm setting a $13 target price on it right now.  BWEN is 2.6% of my portfolio

Citigroup (C, 45.68) - The disappointments continue.  Earnings weren't strong, the Fed beat them down their capital plans so there are no buybacks or dividends in the next year, there's potential to be in line for federal charges and the financial bell weather, JP Morgan posted a weak quarter that really hurt most financials today..  Citi is now the worst house in an unstable neighborhood.  Economy seems to be getting better, yet interest rates have been dropping.  The rate drops could fuel more mortgage activity, however, the banks lose out on Net Interest Margin profits.  This might be a bad time to be in financials yet, but I'm not expecting this to last a long time.  The only strength I see from this company in the next few months is if the sector improves.  I find myself questioning CEO Michael Corbat and his team.  I'd have downgraded this to a 3 if it wasn't for the fact that I don't see much more downside to the stock under current conditions.  They announce earnings next week and I anticipate a disappointment.  How the stock reacts will be key.  Expect this stock to do a lot of nothing for the next year.  Don't touch this stock unless it goes below $47 and don't be afraid to move on if you don't want to wait for results.  Citi is 9.5% of my portfolio.

Deere & Company (DE, 92.01) - Deere beat on earnings and revenues last quarter.  Recently, the stock has been on the rise.  Commodity prices are trending upwards - particularly corn - and that is helping give reason to the stock's rise.  Monsanto also reported strong results for the Ag sector appear to provide more fuel to the bull case.  There is still more upside potential, with my price target of  $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 appears to be a stock that is an industrial value play - benefiting from rotation from high priced growth stocks to high value industrials.  DE is 12.7% of my portfolio.

Encana Corporation (ECA, 22.42) - I have updated and upgraded Encana based upon further analysis of the company and where it gets its profits.  Encana 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.  These prices approached $5 over the quarter and have spent much of its time in the mid-$4 range.  This has provided an opportunity for the company to hedge much of 2014's supplies at levels unseen in the last few years and it is appearing that the prices are likely to stay above $4 with the tighter supplies in the market (compared to the $3.75 prices they guided at).  I feel I've seen the needed sustainability in gas prices and am waiting to see the same results from management to maintain my conviction.  They continue to focus on the Nat Gas liquids, which provide good returns while Nat gas prices work to increase and the glut is decreased.  Encana should be having a strong quarter, given the higher than expected prices and this should translate into a stronger year, providing they locked much of the year's production prices in.  If so, it's reasonable to believe that they can post earnings of $1.25 this year. That would be a 13% increase in earnings from 2013.  The company is trading around 18 times those forward earnings estimates.  With a PEG ratio of 1.3 and potential that these earnings increases are accelerating right now, I think things are reasonably priced..  The earnings release in May is likely going to be important for this stock.  Analyst average is currently at $.40 earnings for the first quarter.  That's a 29% year over year increase and may be tough to beat, but the company could still be on pace for $1.25 earnings if it doesn't reach the expectations.  ECA is 12.7% of my portfolio.

Honeywell (HON, 90.40) - 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.  Stock has already pulled back a bit and with them reporting on earnings next week, I don't think we'll see much more down side to this.  My target is $100.  HON is 18.7% of my portfolio.

On Semiconductor (ONNN, 9.58) - On Semi has been performing well since it last reported and those numbers were strong too.  The company expects decent growth, but we're also entering a slow time of year for this cyclical company.  On also announced an acquisition this week which it expects to close during this second quarter.  Earnings should be accretive immediately.  I am estimating it will add about 10 cents on top of the analyst-anticipated 62 cents earnings for 2014.  The stock has now popped up to $10, but was pulled on the bad market tape. I missed the sell at my price point and with earnings a few weeks away, I'm thinking it might be worth waiting until earnings before making a sale.  My price target is 11.50 after their acquisition, though the stock seems more likely to pull back for awhile before it ever gets there.  On Semiconductor is 6.6% of my portfolio.

Pepsico (PEP, 83.15) - Earnings for Coke and Pepsi next week will be key factors to how this moves.  The market seems to want slow growth dividend stocks which Pepsi qualifies for.  If we continue to see the economy improve, this will only last for so long.  The Battleground that Peltz makes this stock also complicates things.  I have great faith in the ability and consistency of the Pepsico management team and am sticking with the stock for now, however, when the evidence of a growing economy takes hold of the market, this may not be the right stock to hold at this stage of the cycle..  It has room for short-term growth as people will add it's shares as a safety stock while things remain uncertain.  PEP is 8.6% of my portfolio and my price target is $87.

NPS Pharmaceuticals (NPSP, 23.84) - I've gotten this stock completely wrong since I started doing these summaries.  The stock was yet again obliterated this week.  I haven't bought on this constant pullback, but I haven't sold either (shame on me for being greedy).  This stock is clearly a part of the big growth winners being sold to rotate into something else.  The question now is how much more will they sell off and what happens after they're done selling?  The stock broke below my $25 range - what I expected to be the absolute bottom for this stock.  It jumped to $24 six months ago after a good earnings report on how sales of Gattex have grown faster than anticipated and have been received well by patients.  At this point, anything is possible so I don't want to call another bad bottom.  Buy/Sell at your own risk.  I need to understand more before I take any actions on this.  NPSP is 11.5% of my portfolio.