Weekly Portfolio Summary

So we've completed another week midst worldwide turmoil.  Putin continues to play "I love them, I love them not" with Ukraine, Israel and Hammas continue to declare moments of peace, only to have one side or the other fire rockets before the period completes pointing their fingers at the other side while they tell the world who did it, like 2-year olds.  Finally you have ISIS playing the school bully to all of the Kurds in Iraq to the point that they were stranded in the mountains and the US is using air attacks to help get them out of there.  All of this and somehow the market goes up over a percent and at the same time the 10-year treasuries climb (dropping yields) as well.  My portfolio continues to under perform as both Deere and NPS Pharmaceuticals are the driving reasons to my drop in value.  I'm starting to understand what the times look like and how/why my portfolio is under performing.  What I don't seem to know yet is whether I just deal with this under performance and hold the majority of what I have, or if I need to do a more wholesale change in my direction.  There would need to be some dramatic changes for me to see the Treasuries turn around before the last couple months of the year, at the earliest.  As long as the turmoil continues, I'm guessing the US will be a popular place to stash cash and this is what will keep rates down.

Meanwhile, looking at the week ahead, I have one quarterly result to be on the watch for this week.  Tuesday, Home Depot reports.  Earnings estimates are at $1.45 on $23.6 Billion in revenues.  Honestly, this one has me bothered at this point.  The stock has climbed over 8% since reporting last quarter and though I expect this quarter to have solid results (after all, when they reported last quarter, they were seeing "robust" sales), I'm more afraid of what their guidance will be like.  The company is known for being conservative, but if there are indications that sales are slowing here like they are in most of the rest of retail, this stock could get hurt bad.  At the same time, this company has been a premier performer in the retail sector, it's a purely US play - where most risk is coming from overseas - and it's related to a housing sector that, while not exploding with growth, has tail winds in both the lowering of interest rates as well as housing prices tapering off just enough to keep things from feeling too expensive again.  As is normal for me when it comes to training myself to sell stocks properly, I'm fighting between fear of losing unrealized gains and the fear of missing out on more upside.  At this time, I'm going to hold the stock through the quarter and see what happens.  The stock is barely under its 52-week high and is barely up on the year.  I don't believe home improvement and building is dying off, though it may not be growing as fast as it once was.  It feels too early to sell right now and unless there's something utterly shocking and appalling (not something to ever expect from such high quality leadership), I highly doubt any poor quarter will kill my profits in the stock.  School will be in session on Tuesday.  It's time I learn the value of strong management vs. risks and fears in the market and how to determine which of my fears is right.

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, 8.78) - 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 6.4% of my portfolio


Home Depot (HD, 83.69) - 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. US based stocks appear to be gaining favor in the midst of all the international turmoil, but the retail sector is clearly shaky.  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 11.3% of my portfolio.

Honeywell (HON, 94.23) - 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.  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, 26.97) - 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 12.8% of my portfolio.

On Semiconductor (ONNN, 8.81) - 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 6% of my portfolio.

Pepsico (PEP, 91.85) -  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 9.3% of my portfolio and my price target is $102 for 2015 on an estimated $5.10 of earnings.

Threes:
Citigroup (C, 48.72) -   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 9.9% of my portfolio.

Encana Corporation (ECA, 21.53) - 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 11.9% of my portfolio.

Fours:
Deere & Company (DE, 84.80) - The company's third quarter announcement results were as I expected, however the forward guidance was a bit of a slap in the face.  I've also finally put everything into perspective not just against analyst expectations, but against previous reports, the market as a whole, and other factors facing the company at this time.  As such, I've decided enough is enough with this stock for the time being.  Maybe we can take a better run at it at a more appropriate time and hopefully I don't find myself bailing at the time I should be getting in.  DE is 11.5% of my portfolio.