Weekly Portfolio Summary

Another week past us and it was a rougher one.  June, statistically speaking, is hard on portfolios, as it typically is a month where stocks don't perform well.  It seems this year is starting off with indications it'll be no different.  My portfolio, in particular, took a hard hit as stocks took a serious beating as people prepared for a better than expected jobs number.  On Friday, we got that better than expected number of 280K created.  Wages were also rising, leaving more and more belief that we'll see interest rate hikes this year.  The consensus appears to be during the September meeting.  As people work to price this in and figure out where to put their money, the stock market is likely to continue with its churning.  I can't say I'm ideally positioned for a higher rate market, however, I don't feel I am necessarily caught with poor stocks either.  This will be assessments I need to continue to focus on to determine if I need to make changes.

There's not a lot to look forward to in the week ahead for my portfolio.  Isis Pharma and Home Depot will be presenting at some conferences this week, but these are likely to be non-events.  I suspect the market will be driven by macro indicators and news for the next few weeks, while any M&A news would be the likely catalysts to put a charge into certain stocks and/or sectors.  Volume is usually low this time of year, to the best thing I can do is find time to continue to analyze my portfolio and see if there are stocks I may be wise to swap in.

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:
Cedar Fair (FUN, 57.28) - The key short-term factor will be interest rates.  If they're going up, stocks like this one (MLP) will get hit regardless of how well it's doing.  It does have hefty yield support, though, unlike a lot of companies out there.  Over the long term, this is a stock that gives lots of money back to shareholders via dividends and buybacks and has growth.  In the long term, this stock appears capable of going higher.  I estimate the company to make $2.94 in earnings this year and have a 2015 price target of $64.50.  Cedar Fair is 9% of my portfolio.

Twos:
Citigroup (C, 56.24) - This is another stock that is bound by interest rates in the short term.  In this case, if rates are rising, the stock is likely to go higher.  Given interest rates are so low and the estimated direction is up, the interest rates and increased margin rates the banks can make money on is my long term thesis as well.  The company is now able to start delivering more cash back to investors in the form of buybacks and dividends as well.  This should help provide a continued floor on the stock.  I didn't see enough in the quarterly announcement to raise my tangible book value and price target of $59, and I see $50 has been holding as a strong floor for the stock.  Citi is 12.6% of my portfolio.

Home Depot (HD, 110.37) - The company delivered great results while the competition missed expectations.  Despite this, the stock has fallen since those earnings announcements.  The short term factor appears to be related to a combination of gasoline prices and interest rates, such that if either go higher, this stock tends to get beat up.  The long term thesis is that despite the run this stock has had, we're far from the end of the cycle.  Household formations are increasing, people are likely to go after homes before rates start getting too high,  and there are an awful lot of millenials looking to get out of Mom and Dad's basement and form their own household.  So far the stock has held above the $110 technical floor that was in place.  I am expecting earnings of $5.30 and a multiple of 24.5.  My calendar 2015 price target is still lofty at $130. HD is 13.9% of my portfolio.

Honeywell (HON, 103.74) - This is a stock that seems to show the overall market sentiment towards the US Dollar and Treasury yields  If the dollar is down and yields are down, this stock rises and visa versa.  The quarterly report was strong and now the dollar is still weaker than when they reported, which should help revenues in the second quarter. The stock was range bound between $100 and $105.  It cracked $105 for a little while, but has not been able to maintain it.  That lower end of the range is managing to be a very reliable floor to buy off of, not withstanding any significant market news outside of the dredge we've been hearing all year so far.  Guidance now sits at $6.00 - 6.15. My estimate on their 2015 stays at $6.12 with a multiple of 18 due to how consistently this company delivers. This resulted in my 2015 target of $110. HON is 19.6% of my portfolio.

Isis Pharmaceuticals (ISIS, 66.15) - This is a speculative stock.  It will swing wildly.  Biotech stocks seem to be easily falling in and out of favor and this stock moves as a part of that.  After a big run, we saw a pullback.  Then when the deal with Bayer on the anti-coagulant partnership was approved, we saw the stock jump.  With nearly 40 therapies in the pipeline, this platform continues to show strong promise for the company as it goes forward.  It's a long-term speculation play and it should be traded around to be most efficient in profiting from it.  I'm still struggling to valuate the price target for a company growing fast, but with no earnings.  I wouldn't be surprised that the 52 week high for 2015 has already been set, but anything is possible in this space.  From a technical perspective, the stock price has surged past both the 20 and 50 day moving averages.  It currently appears that both the 50 and 100 day moving averages are holding for now, but we haven't built a very strong base.  If it they don't continue to hold, the 200 DMA has been reliable.. Long term trends show room to continue running while medium term trends appear as though the stock is getting some rest.  This has long-term potential, I just need to find the right short-term opportunities to buy more stock.  Isis Pharmaceuticals is 4.2% of my portfolio.

On Semiconductor (ONNN, 12.93) - This is another stock swinging wildly with based on macro moves.  You'd think this would rise off of a rising interest rate as growth would likely be accelerating, but everyone seems to fear that the economy is slowing down.  As such, the stock is down hard after a solid surge up.  The company is making a real move in the auto and industrial spaces with their imaging sensors solutions in particular and I believe with the push to more automated machines coming on strong, the company has reason to feel upbeat.  Company buybacks are proving to help put a floor into the stock, which I currently estimate to be around $12.  I still estimate $0.86 earnings and raised the multiple to 15 (it might actually be the earnings side that should be increased, but here's how I'm working it for now).  This provides a price target of around $13.  There's long-term potential in the stock, however, tech moves erratically.  It's completely possible to walk away early only to come back for more a few months later after an over done pullback.  On Semiconductor is 12.2% of my portfolio.

Pepsico (PEP, 93.05) - Another stock in my portfolio that is controlled by the vicissitudes of interest rates, and more so the US dollar.  As rates rise, so will the dollar and everyone will start selling on the negative impact this has on earnings with so much coming from overseas.  The dividend has been raised for the 53rd year, which helps keep the stock attractive against bond yields.  Based on the news from the last earnings call, I adjusted my guidance and targets to be more cautious.  The earnings estimate was lowered to $4.44 and I provide a 22 multiple for a price target of $98.  Estimates may be adjusted depending upon the movements of the US dollar and the results we get for second quarter results, where the Dollar has been lower than it was in the first quarter for much of the duration.  The stock has fallen through it's technical floor of 94, which is also below the 200 day average.  This puts some concern into me as I'm not seeing much evidence of support, though it is showing a few signs that this move down is overdone.  If this really is overdone, it needs to change direction quick, as the 50 day average is about to cross the 200 day average in negative fashion.  PEP is 11.7% of my portfolio.