Weekly Portfolio Summary

For a week riddled with a boat load of geopolitical issues, my portfolio fared decently, gaining half a percent on the week.  Industrials were getting hit hard over the week and had it not been so large a position, I'd be buying Honeywell when it was around $90 after pulling back 7% from its highs.  Other themes that are starting to show some strength is the companies that are national, rather than international.  This should help stocks like Home Depot and Broadwind, though the Russian situation, in particular, adds more risk to the price direction of Pepsico and On Semiconductor.  The former because they have a segment of business in Russia from when they bought one of the largest dairy companies in the country a couple years ago.  The latter because a lot of their business relies on Europe, where economic growth is likely to be hampered by all of the sanctions and tensions with Russia.

Only one company in my portfolio reports this week and that's John Deere & Company.  So far the stock is down around 5% on the year and it's been falling precipitously since mid-May with that drop accelerating in July.  The key factor here is the drop in grain prices as the value of the US Dollar has climbed.  Competitive company AgCo was recently on CNBC's Mad Money and told a story of how the grain prices going down seem to be affecting performance despite the fact that yields are higher - keeping farm cash receipts around the same.  I expect Deere to follow their normal cadence where they announce a decent quarter, but talk an overly conservative future which will send the stock price back down.  Just to keep track, earnings estimates are at $2.23 with $8.8 Billion in revenues.

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.

Ones:


Twos:
Broadwind Energy (BWEN, 8.94) - The company announced strong second quarter results, however forward guidance was somewhat disappointing.  Recent orders placements have been made with more in discussion that could fill out the books for 2015.  Margins are improving and the company is now turning a profit.  The risk here is future growth and we lack a lot of future certainty right now with current revenue estimates being lowered and the PTC extension still in question.  Current price target is $10.50.  BWEN is 6.5% of my portfolio


Deere & Company (DE, 86.98) - The company announces third quarter earnings this week.  I expect them to have decent results and very cautious guidance.  This will likely send the stock lower.  Grain prices continue to be a headwind and with decelerating earnings, it's hard to consider this stock as strong a value play as we once stated..  So far the stock has bounced at $85.  It does have a yield at 2.45, so I see the yield as well as the $80.50 52 week low as potential floors in the stock.  I'll withhold a price target until the quarter is announced for now.  DE is 11.7% of my portfolio.

Home Depot (HD, 82.43) - Despite some reports that housing is slowing, I believe this company still has long term prospects.  It's earnings have been accelerating and the economy continues to show signs of strength. The stock and its retail sector seem to be gaining favor in a market where there is a lot of international turbulence.  They have a great management team that knows how to take the competition on, which helps lead me to believe the upcoming results will be solid.  Need to watch housing data as well as reports from other housing related stocks as they come up over the next few weeks.  If the story is intact, we're fine.  If the story is changing, I need to change and get out with the winnings I have. Target price is $86.  HD is 11.1% of my portfolio.

Honeywell (HON, 92.71) - Honeywell had some of the best earnings among their peers.  Unfortunately, the global industrial sector has fallen out of favor over the last few weeks.  The stock has pulled back around 5% and has been back as much as 7%.  I get a feeling we might be seeing only a pause in selling at this point.  I have too much stock to buy more and my basis is way too low.  I still believe this is a stock worth moving forward with and if you weren't holding any, I'd buy some as we hit around $90 or below.  My 2015 target is $110.  HON is 18.8% of my portfolio.

NPS Pharmaceuticals (NPSP, 27.90) - NPS announced what I felt was a respectable quarter, but based on the stock's action since, I might be the only one.  The stock has pulled back pretty hard in the last 2 days, but it has held the floor of the pennant as I described in my analysis.  The range is still intact and I only expect trading to get tighter for now.  The 200 day moving average appears to be the ceiling traders are focusing on for sell points.  Lately, that's around $30.  From a technical perspective, I believe this stock has to keep bouncing back and forth like this so it can build strength to break through that ceiling.  Long term target remains at $40, but it won't get there until the fourth quarter at the earliest and more likely not until 2015 instead.  NPSP is 13.2% of my portfolio.

On Semiconductor (ONNN, 8.46) - After announcing solid earnings results that beat expectations and keeping guidance in line, the stock has sold off hard.  The stock is priced at a considerably lower P/E value compared to its peers, despite performing better than many.  There's great potential here, but it just doesn't seem to get any love and I don't know how long it will take before it does.  This stock has been difficult and should I decide to raise cash, this will likely be one of the first places I go to get it, despite my feeling that this stock is going higher.  My price target remains at 11.50.  On Semiconductor is 5.7% of my portfolio.

Pepsico (PEP, 90.29) -  Pepsi is in a somewhat precarious position.  It's likely to feel impact due to the political issues in Russia, however, it's yield is still over 2.9% to help people looking for yield protection.  The company has created more shareholder value by raising the dividend from 57 to 65.5 cents per quarter as well as increasing their buyback plans.  Organic growth is on the rise again, but 7% growth isn't a lot in an environment with an improving economy.  Input costs are going down and I expect this and the stock's yield to be a tailwind into the second half of the year, but I anticipate a point where this stock becomes less favorable and replaced for industrial stocks with more growth potential.  PEP is 9.2% of my portfolio and my price target is $102 for 2015 on an estimated $5.10 of earnings.

Threes:

Citigroup (C, 48.45) -   Citigroup is starting to look like it has more long-term potential.  It's getting blessed by a well respected hedge fund manager in Leon Cooperman, it's one of very few banks still priced below book level and has more upside potential as we start focusing on what can happen in 2015 instead of just 2014.  The most impressive piece from Citi was their ability to turn a profit in Citi Holdings - the stuff they want to get rid of - and it's expected that this trend may continue.  All this being said, these were significantly lower expectations that were beat.  While growth in the economy does give better prospects in the future, the truth is that current issues are putting more risk on the 10-year treasure yield, and therefore those margin rates as well.  No new information was shared regarding CCAR findings other than they're preparing for the end of the year.  This makes the stock likely to be somewhat stagnant for a little while yet, while others start catching on to the possibilities in front of us.  Due to the increased book value announced on the quarter, I have to raise the target for Citi to $55, which is still under the tangible book value as of the end of the second quarter.  I'm hoping to hear more in the third quarter that can help me prepare a better picture of what 2015 will look like.  I'm much more in favor of holding Citigroup as it has a strong floor around $47.  It's also been dead money, though, as it stays in this tight $47-53 range so I'm keeping the rating of a three for now.  Trade around your core position, if anything, here.  Citi is 9.8% of my portfolio.

Encana Corporation (ECA, 21.69) - Encana is showing strength and a leadership that is able to under promise and over deliver in terms of their strategy.  Unfortunately, they aren't quite showing the same with their top and bottom lines yet, but they're close.  I'm gaining confidence in the leadership after this quarter, but now commodity prices prove to be a headwind to the stock's performance.  It's a little odd because one of the biggest risks here is that Russia stops shipping oil and gas to Europe.  If that happens, demand for these items from the US, Canada, and Australia are going to force prices much higher.  Because results are so mixed and I don't have any patterns I can model differently than I have, I maintain my $1.50 earnings estimates for 2014 and have a price target of $25 - just under 17 times earnings.  If commodities stabilize and the stock has pulled back a bit, I might be more interested in upgrading/buying..  ECA is 12% of my portfolio.