Weekly Portfolio Summary

To begin with, I sold out of my holdings in John Deere (DE) this week, though not at the prices I wanted to.  By doing this, I've raised some needed cash (now 12.9% of my portfolio) and have lowered the number of holdings so that I'm closer to where I'd like to be.  I anticipate some difficult times ahead for that stock, but we may revisit it again later.

Outside of this, the week was rather spectacular.  Very solid earnings from Home Depot launched that stock on the week and we finally saw much stronger results from On Semi and Citigroup.  The various plots of political unrest continue to play games with the market.  For the upcoming week, there are no conference calls to be prepared for and no other key information.  In fact, this will likely be the lightest volume week of the year as investors of all types prepare for the long labor day weekend.  Low volumes really don't indicate price action.  The market can be just as volatile as it has been.  That being said, I don't think the direction that stocks take this week will necessarily be indicative of direction unless it holds to a much longer trend that has been building.  

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.


Broadwind Energy (BWEN, 9.23) - 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

Home Depot (HD, 91.03) - Second quarter results were fantastic, proving just how strong this management team is.  Guidance was raised and everything appears to be going as Home Depot's leaders have modeled.  Though a change in the CEO has been announced, I do not expect this to hurt the company or stock as it's been expected for some time and the new CEO has been getting groomed for awhile.  At this point this is a company with 20% growth trading at 20 times earnings.  That is rather cheap for any growing company, much less the industry leader and I expect we'll start seeing price target raises by the analysts.  Need to continue to watch housing data as well as reports from other housing related stocks for signs of change, but don't let those figures sway you too much until you see something from Home Depot itself.  This company and stock has earned a chance to speak before you sell.  I've raised my earnings guidance for 2015 to $4.55 and have what I believe is a conservative estimate for 2016 of $5.23.  I'm also expecting them to raise the dividend by at least 20% next February to $2.26, or more depending upon earnings.  All of these factors have me raising my price target price $110 with an 18 month outlook.  HD is 12% of my portfolio.

Honeywell (HON, 95.56) - Honeywell had some of the best earnings among their peers.  After a fallout with industrial stocks, this one has been on a nice comeback since hitting ninety dollars and change.  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 18.9% of my portfolio.

NPS Pharmaceuticals (NPSP, 27.24) - 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 12.6% of my portfolio.

On Semiconductor (ONNN, 9.47) - After announcing solid earnings results that beat expectations and keeping guidance in line, the stock sold off hard.  This week it has made a comeback as it is now just under 6% below its 52-week high.  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 is a potential for raising cash.  That being said, we're starting to enter into the time of year that tech stocks start getting strong.  Perhaps this is affirmation of that trend falling into place.  My price target remains at 11.50.  On Semiconductor is 6.2% of my portfolio.

Pepsico (PEP, 91.6) -  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% of my portfolio and my price target is $102 for 2015 on an estimated $5.10 of earnings.

Citigroup (C, 50.93) -   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.  While growth in the economy does give better prospects for the future, the truth is that current issues are putting more pressure on the 10-year treasure yield, and therefore Citi's margin rates as well.  All of 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 10% of my portfolio.

Encana Corporation (ECA, 21.98) - 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.  I could also sell out for another stock with more yield protection and upside potential.  ECA is 11.8% of my portfolio.