Weekly Portfolio Summary

After a relatively calm week for my portfolio, things seem to have started to ramp up some going into this weekend.  On Friday, Honeywell posted solid fourth quarter results.  Additionally, tensions between Ukraine and Russian rebels has intensified - and continue to intensify through the weekend.  Yesterday, NPS Pharmaceuticals received approval for distribution of their drug Natpara with no surprises to what label restrictions there will be or other actions required.

Looking ahead, it may be the busiest week of earnings season for the market as a whole, however, there's nothing in particular going on in my portfolio.  During times like this, it's best to sit back, watch what's going on, how the market reacts, and jump if you find opportunities to take advantage of - including protecting yourself from impending dangers, if they get worse.  

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, 48.62) - The stock recovered from last week some, however, I'm not convinced that this is a sustained rally yet.  With low interest rates, oil's drop in price, and new found worries creeping up in the areas of currency and Russian rebel's renewed insurgencies with Ukraine, I feel Citi is going to remain stressed in the very near term.  It has filed for it's capital allocations for this year and it (CCAR) won't be decided/announced until spring.  That's the next catalyst I see unless something dramatically changes interest rate trends.  Given current circumstances, my tangible book value and price target for the stock sit at $59.  Since the stock moved down so much, I feel there is still plenty of value in this stock.  As such, I'm ready to buy more of this stock soon, but am awaiting more technical support to say a bottom is in.  Citi is 9.4% of my portfolio.

Ensco PLC (ESV, 28.66) - Ensco likely has a long year in front of it.  As oil continues to work to find its bottom and as oil drops, this stock is typically impacted as well.  There are still a lot of worries around the need for the company to cut it's over 10% dividend and this weighs on the price as well.  Production estimate cuts are just starting to happen, however we have a long way to go for both production and stock estimates to be cut enough.  At this point, I want to keep my energy holding light and wait for expectations to be so low they can't be missed.  This is when the stock will likely start to rebound.  How fast/far things will bounce is far from known at this point.  I am starting to assess my timeline for this stock, and whether it's worth holding onto the stock while it works to find its footing.  I've done this with Citigroup, with some success, however, some failure as well.  I may determine it would be better to take my losses here and use the money for something more applicable to the current market.  I currently believe both my target price of $52 on 2014 earnings of $6.54 (personal estimate) is high.  At this point, I don't have much other information to go with.  I'll readjust as I get information better suited for my estimates.  Ensco is 7.7% of my portfolio.

Home Depot (HD, 105.37) - Retail stocks have run hard over the last 6 months and Home Depot has been one of the leaders of the space.  The stock has run a lot over the last three months.  Care should be taken with this stock around earnings.  If expectations are too high, the stock will get hit - even if it's a great quarter.  I've reiterated 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% in February to $2.26, or more, depending upon earnings.  The stock is trading around 23 times fiscal year 2015 earnings and currently is growing earnings at about 21%.  Valuation may look a little high, but the PEG ratio is at about 1,which is rather cheap compared to the industry average of 1.4.  My calendar 2015 price target is $110.  HD is 13.5% of my portfolio.

Honeywell (HON, 102.50) - On Friday, Honeywell posted a solid quarter and year, beating the high end of their expectations by a penny for earnings on stronger than expected revenues.  They reiterated their conservative 2015 guidance, keeping it completely in line from December's announcement, and it already appears they were wise to hedge themselves on a strong dollar/low Euro.  This management team has been incredible and I expect them to be the same in the next year.  If the stock manages to pull back to around $95, it should be worth buying.  They provided earnings guidance of $5.95 - $6.15.  My estimate on their 2015 has been $6.12 with a multiple of 18 due to how consistently this company delivers.  This resulted in my 2015 target of $110.  HON is 19.8% of my portfolio.

NPS Pharmaceuticals (NPSP, 45.64) - This company has been purchased by Shire PLC for a price of $46 per share.  While I could sell at a slight discount, I'd rather not.  Therefore, this stock is in my portfolio and will stay basically flat until the deal closes, officially, later this quarter.  Their drug, Natpara, passed the FDA evaluation over this weekend with labeling stating that there has been evidence of bone cancer found in tests with rats as well as patient tracking to catch concerns as early as possible.  These were expected results.  While what this announcement means this wee will be interesting, I really expect no changes to the stock.  If it does jump for some reason, then I may sell out early.  NPSP is 11.7% of my portfolio.

On Semiconductor (ONNN, 10.07) - A few earnings announcements from the tech sector have led to mixed results.  There is more competition in memory segments, but other semiconductor companies like Cypress Semi fared quite well.  On Semi will report fourth quarter earnings in February and I believe the company is well positioned in the semiconductor industry.  They have a lot of auto and consumer product focus, which have been faring well as various reports regarding consumer behavior come out.  The company also has a share buyback program in place that could help provide some support on pullbacks.  However, it is a more international company and is now at risk of impact due to "currency headwinds."  The stock I picked up for trade was meant to be held until around March at the latest.  The action recently and new risks facing the company has increased my unease, but not enough to sell out yet.  The price Target is at $11.  While we want to see continued growth advancements, the stock tends to sell off over the spring/summer and then can be revisited early fall.  While this shouldn't be an absolute dictator on your holding, it's something to pay attention to.  On Semiconductor is 9.7% of my portfolio.

Pepsico (PEP, 98.53) -  After last week's board announcement, the stock slowly inched a little higher over the week.  With CEO Indra Nooyi able to focus more on clean execution, I believe the company can be well positioned to take its next step forward.  With oil prices as low as they are, we could see accelerated margin growth due to lower input costs - both for corn and oil.  This is a company that's usually hedged out 6 months in front of themselves, though, so if that is the truth, it's still only a second half 2015 story.  Most technical factors are looking positive, as the overall trend with the price staying at or above the 100 day average.  Being yet another international stock in my portfolio, currency conversion now poses as the new risk, as does impact from the Russian Rebel insurgencies.  The company still gets over half of its earnings from the US, though, which shields it a little.  While I'm struggling to find reason to increase my price target yet, I also feel like this stock is actually worth buying if it gets to $96.50 and really worth buying if it gets anywhere near $90.  I was worried that the stock was ahead of itself, and it was, but it doesn't appear to have rolled over.  I'm looking forward to their earnings report in February as it'll help me realign growth expectations as well as have an understanding of how much buyback impact we might see as well.  Yields are at 2.7% for now and given the drop in the 10-year, the stock has some more breathing room for now.  Just keep rates on the radar so you can react in a timely manner.  PEP is 9.5% of my portfolio and my price target is $102 for 2015 on an estimated $5.10 of earnings.