Weekly Portfolio Summary

The last week was rather uneventful for my portfolio while it managed to gain 0.6% compared to the S&P 500's 0.7%.  Right now, the markets seem to be paying attention to earnings, which is a wonderful things.  However, the punditry is focused on a much more unpredictable leadership, making it a little harder to pay attention to what is really moving the market.

The week ahead, however, is going to be crazy.  And since stocks appear to be paying attention to earnings announcements, there's potential for significant impacts to my portfolio based on what is said.  I'll do my best to keep up, but this is just when things get tough to manage for a home gamer.  

We kick the week off with earnings Monday morning, when On Semi shares their fourth quarter and 2016 results.  I've been on sell watch for this company due to its cyclical nature and the fact that the company is much higher than my price target now.  That said, there's potential for more earnings than I believe from their acquisition of Fairchild Semi and the semiconductors, as a whole, have been surging on great earnings results.  There has been consolidation in the industry, inventories appear to be down, and the Internet of Things appears to be creating the next longer term cycle.  Forecasts here will likely be key as we start to step into the company's slower quarters.  Analysts are looking for earnings of $0.23, revenues of $1.22B and feedback that demand is strong and existing inventories are weak.

Next up will be Wednesday where I take on a double header.  First up will be Pepsico who will announce and hold their call before the bell.  After a retreat in stock price while interest prices rose, Pepsico has surged ahead 6% over the last four weeks.  More interesting, and in a way frightening, is the fast that even though competitor Coca Cola reported a very weak quarter, Pepsi's stock continued to go up.  I certainly believe that their diversification into snacks is going to be a significant reason why they aren't impacted as much, but I am a little concerned that the stock's price is getting to a level where the company needs to blow out the quarter and provide strong guidance.  This isn't a stock I'd buy going into the announcements at these levels.  I expect rate increases to hit the stock again and we may see better prices after they announce.  Analysts are looking for sales of $19.53B and earnings of $1.16.  Core organic growth will be what to pay attention to - both in past and future performance.

Finally, Cedar Fair announces fourth quarter and fiscal 2016 results while hosting their conference call later in the morning.  The company had a strong 2016, though the summer months did get a little hot, which caused a slowdown in visitation for a small period of time.  Analysts will be looking for hotel results and continued strength and earnings as the company continues to expand both their Halloween and Christmas events - taking advantage of the holidays, despite their not being good times for ride experiences.  Analysts are expecting earnings of $.02 for the quarter and revenues of 182.64M.  Each quarter is rather choppy and unpredictable compared to a year as a whole.  What should prove interesting is any guidance the company provides.  They've had a EBITDA goal of $500M and it is expected that management will hit that in 2017, despite the 2018 goal.  It'll be interesting to hear if/when they expect to hit that.   

I also want to note that due to the large number of conference calls I have in the week, I likely won't have a portfolio summary prepared for next week.  This will help allow the time I have for research to be put forth on the calls instead.
  
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 a combination of 12-18 month outlook on stock direction and market driven need for capital preservation or appreciation.  The ratings may not necessarily directly results in moves I make due to financial positioning and cost basis.


Ones:
Ionis Pharmaceuticals (IONS, $45.42, -12.73%) -  I chose this as my speculative stock to try to make significant gains in my portfolio.  Unfortunately, the biotechs have fallen out of favor due to a couple high-profile pricing concerns and political banter about getting costs under control.  While the group, as a whole, still isn't out of the woods, Ionis is currently faring to be in a much better position.  The company received approval of its Spinraza drug just before Christmas and Volanasorsen phase 3 data will be released during this quarter (likely shortly before they announce fourth quarter results, as this has been a pattern recently).  In addition, they've inked some partnership deals with Novartis and announced that their results for 2016 will significantly out perform their guidance.  Like Citigroup, the stock has moved a large amount in a short period of time and has since pulled back as investors both take profits and get a little more cautious.  The next big news event appears to be earnings, which is not yet scheduled.  Ionis will be at the Leerink Partners Healthcare Conference on Thursday, so beware new announcements Tuesday or Wednesday.  Technical analysis shows relative strength for the stock in the multi-year and weekly charts, but the MACD for both needs to be watched as it's about to have a bearish crossover, however all indicators I see send it bouncing rather than crossing over.  The daily chart is a bit more negative.  RSI has been on a downward trend since mid-November, and the MACD has been bearish since about Christmas time with no signs of improvement yet.  The RSI has been working towards a trend break, but isn't there yet.  The MACD also had a bullish breakthrough during the week, despite the fact the price fell on the week.  The most interesting piece is despite the short-term down trends, the OBV stays stubbornly flat/strong.  This is usually a contrarian indicator that I believe is beginning to show reason to get into the stock.  As has been way to typical of me, I've been cautious in buying the stock - thinking I might get it lower, just to have some news event happen and send it higher.  I need to get more aggressive and willing to put up with a little more risk in a spec stock like this.  My ideal price is between $40 and $43, but I'm not sure I can get that any more.  I'll watch carefully and react accordingly.  I'm estimating a 2017 earnings target of a $0.50 loss for next year, primarily due to ramp-up costs early on.  My price target for 2017 is about $58.  Ionis is 10.53% of my portfolio.

Twos:
Citigroup (C, $57.63, +37.96%) - I've held this bank for a long time as a play off a turnaround which might be starting to happen.  Economic reports, which have been consistently strong enough to believe the Fed both can and will raise rates, which allows banks to make more money.  Focus now turns to orders to review and potentially repeal the Dodd-Frank bill, which would reduce costs and efforts around regulation.  Anticipation of this is one of the reasons the stock price ran since the election.  The stock remains a value, given its price is below the TBV, but that won't stop it from having pullbacks as it has been catching its breath lately.  The descent has subsided for now, but I'm not convinced it's done yet.  After their last report, there is some concern around their NIM estimates, though they appear exceptionally conservative - predicting no more rate hikes this year.  I'm also a little concerned in an oversupply of stock, which hopefully can be remedied by a combination of permission to buy back more stock and larger dividend payments.  Citi's charts have improved, but we're not out of the woods.  The long-term MACD experienced a bearish crossover and the RSI is trying to recover to a point where it is back in line with its long-term upward trend.  OBV continues to be strong and we saw the stock rise some during the week to back up the potential of laden strength.  The weekly charts are very much in line with the long-term, however, we're seeing some changes in the daily charts.  The MACD has had a bullish crossover.  The RSI and OBV appear to be working towards breaking 3 month trend lines.  The money flow index has also really taken off - indicating we're seeing an increase in money flowing into the stock despite any dramatic movement.  The 50 DMA appears to be a level of upwards resistance, for now, but we won't test that until about $58.50.  I still am very confident in Citi's long-term upward trajectory despite the bearish pattern we see right now.  I would recommend buying shares if it pulls back below $56.   I'm targeting a 2017 TBV of $68 and am keeping my multiple at 1x TBV due to their latest report and overall market sentiment.  Citigroup is 16.04% of my portfolio.

Cedar Fair (FUN, $63.11, +13.07%) - To try to play the strengthening US consumer while also protecting my portfolio with yield, I chose Cedar Fair on the theory that people are looking more for fun experiences to put their money as they feel more comfortable with an improving economy and lower gas prices.  2016 resulted in record sales and there isn't anything, at this point, that has management believing the trend is changing.  They continue to expand their Christmas celebrations and also look to expand or improve on hotel experiences as much of their attendance comes from a wider radius.  This year, the company feels confident that they will continue to see growing EBITDA as they target to make $500M in EBITDA a year faster than originally targeted.  When looking into the technicals, I see signs of a pullback coming in the multi-year view.  The MACD is about to have a bearish crossover and it seems the RSI has gone and dipped below it's multi-year down trend.  OBV is maintaining strength, though, so I'm not expecting major shifts.  There are similar indications in the weekly charts with the MACD about to cross under while the RSI is flat and OBV is strong.  The price has dipped below the 50 DMA as well.  Finally, the MACD is bearish in the daily charts, as is the RSI.  The OBV is still flat.  I'd say that my downside risk is still in the $57 - $60 range ($60 is the 200 DMA whereas $57 provides 6% yield) and odds are you're going to want to buy in more if prices reach this range.  I estimate 2017 earnings of $3.57 and with a multiple of 18, the 2017 price target is $64.25.  I'll have to wait until earnings are released before I can make any adjustment to these targets.  Just another reason why I feel the upside is limited for now.  Cedar Fair is 16.10% of my portfolio.

Home Depot (HD, $139.85, +125.11%) - I chose this stock as a play on the housing and retail industries, expecting positive results from people taking advantage of an improving economy and home prices to invest in home building and improvements.  While Home Depot's results have backed my expectations, the stock hasn't performed in suit over the last year.  The fact that retail is currently weak is certainly a factor to the stock's under performance, but I believe the concept of people wanting to spend more time at home has them investing more in the home.  The stock was choppy to start the year, but recently it has started to breaking out on some positive news from home builders and the fact that a mostly local company, like Home Depot, is virtually safe from the protectionist and anti-trade commentary we've been hearing from the new President.  The company is executing on its plan, taking share, and expect same store sales comps of 5%, which is pretty incredible for a company that isn't opening more stores.  I have a feeling the fourth quarter earnings call and 2017 guidance will be key, but they're quite a while away yet.  In the mean time, the charts are showing a change in sentiment.  We see strong supporting strength in the multi-year charts via a bullish MACD and a RSI that has changed trends for the positive.  Be careful of some indicators reaching into overbought territories already, though.  Meanwhile, the weekly charts have a very bullish MACD, RSI, and OBV.  Things are rougher in the daily charts as the MACD is chopping back and forth over its crossover line and the RSI and OBV stay fairly flat.  Overall, trends are starting to look more positive as we see price patterns now filling out an inverse head and shoulders, the 50 DMA crossed above the 200 DMA, and the MACD has become increasingly bullish in longer term views.  There still seems to be near-term risk as I'm a little concerned over the run the stock has had as we approach the next quarterly results, however, the stock is basically priced about the same as they were when they announced last quarter too.  We've now broken through the $139 barrier I was watching and I anticipate the stock to run more, but if it retreats, we are likely to fall into some more downward pressure.  I estimate 2016 earnings of $6.34 and 2017 earnings of $7.10.  I estimate a multiple of 22, giving a 2017 price target of $156.  I think this is a great company and operator, and you may want to consider picking up stock now or on any pull backs.  HD is 12.97% of my portfolio.

Honeywell (HON, $121.85, +187.85%) - I continue to believe that this company is best of breed in the industrial conglomerate sector.  It does a great job of spreading itself across short, medium, and long-term cycles, has a significant play into the aerospace cycle (commercial airplanes being a primary focus), and they have a management team with a track record of excellent execution.  The aerospace division continues to be an area of concern lately with private jets, helicopters, and defense spending lagging expectations, but I believe this is a short-term event and management confirms this belief by stating improvements are expected to resonate come the second half of the year.  Over the next month we will watch the company transition to a new leader as Dave Cote steps down.  While there was concerns, originally, I believe the market is starting to get comfortable with Darius Adamczyk as shown through the recent increase in stock price.  Taking a look at the charts, the stock has suddenly shown a breakout to the upside, as the stock has reached all time highs and is bursting upwards.  All technical indicators from multi-year to daily appear to be positive, however, I have noted in all of these charts that some of the indicators are starting to stretch into overbought territory as well.  It's important not to get complacent at this time or be caught in a pullback if things get too hot.  It's still early in the move, though, I believe, as it seems to be fueled by overall sentiment regarding how the overall economy is doing and how the market is shifting towards more cyclical names.  I anticipate 2017 earnings of $7.10 - anticipating that the company is currently being particularly cautious.  I also think industrials are going to be able to fetch a stronger multiple if the economies of the world really do start firing on growth.  Thus, I have set the multiple to 18, resulting in a 2017 price target of $128.  HON is 16.95% of my portfolio.

Pepsico (PEP, $106.10, +46.75%) - The epitome of a safety stock, this consumer packaged goods (CPG) company is in my portfolio not just for the safety it can provide when the stock market takes a dive, but also because the company has been performing extremely well on its promises.  It's currently one of the best CPG companies in terms of organic growth after third quarter results.  After dropping down to around $100 while interest rates rose, the stock has since recovered quite well, though I don't fully understand why.  Rates have fallen some over this time period, but not in ratio to how the stock fell when the rates rose.  CPG fourth quarter reporting has been mixed and competitor Coca Cola put up less than desirable results and guidance.  Despite this, the stock continues to rise.  I find myself feeling more cautious when I've watched the stock rise 6% on no news going into the earnings results.  Don't be surprised if the stock pulls back even if results are in line.  Shifting to the charts, things continue to get more positive.  The MACD has bounced and stayed bullish on the daily charts while the weekly and multi-year have both completed bullish crossovers.  The RSI has started rebounding and is about to push through longer-term down trends that it has been following.  So far, it's accomplished this in the daily charts.  The price is above the 200 DMA and the 50DMA is working its way towards a positive crossover.  This is the point where the stock may break out and try to push towards it's 52-week high, but that will be dependent of the earnings results we get this week.  That said, this is a great stock to help diversify your portfolio and build over time into the weakness.  I estimate 2017 earnings of $5.16.  I have my multiple set to 19 because I anticipate multiple contraction in this space as rates go up, which gives a 2017 price target of $98.  Any selling done will be purely to lock in gains acquired.  PEP is 9.84% of my portfolio.


Threes:
On Semiconductor (ON, $14.14, +66.88%) - On Semi was a stock I chose long ago as a play into the tech industry.  It's a leader in power saving for various technical devices.  It completed the acquisition of Fairchild Semiconductor during the third quarter, which is meant to help expand their reach, capabilities and market share.  With the increased synergies, they should be able to increase their value.  The tech sector - semiconductors in particular - have been exploding with results from consolidation in the industry as well as some great reports from early reporting companies.  The high amount of debt the company has puts their balance sheet in some jeopardy, so this isn't exactly a best in breed stock, though.  This hasn't been an impact on the stock surging higher as we continue to hit all time highs.  In full disclosure, my downgrade of the stock has been premature.  I am not in a camp that this price surge will continue yet, though, so I can't upgrade it again.  Instead, I'm riding this rush looking for the right time to sell.  The earnings call Monday morning could be what makes or breaks the stock at this point.  Multi-year charts are very bullish with trends strongly positive in all indicators.  There are a few that are overbought at this time, but RSI isn't one of them and the MACD seems to be getting stronger.  The weekly charts are very similar, however, the strength stagnates in the dailies some.  Here, the MACD is flat and choppy, as is the RSI.  My biggest concern is how steep this run up is in the long-term charts and the historical patterns it relates to.  It's hard not to feel like we're reaching a peak in stock price, so what is said in the call will have to be very convincing.  At this time, the stock is well over my 2017 price estimate, though my estimate may actually be too cautious, given the overall environment.  I will maintain my ranking of a 3 for now because I don't have enough information to adjust my price targets except for what the analysts think.  My 2017 earnings estimate is $1.05.  I feel a fair multiple for the stock is a 13, putting the price target around $13.50 for 2017.  I see that consensus for 2017 it at $1.15, so there might be something about the Fairchild deal I'm missing.  If that's the case, that can move the upside target to $15, which is why I'm not rushing to sell the stock (along with what technical analysis tells me about my timing).  I also want to be cautious of the cyclical patterns that typically happen in this stock as we typically see the stock drop come spring time.  ON is 9.84% of my portfolio.

Nothing on this site should be taken as advice, research, or an invitation to buy or sell any securities.  All views expressed are solely of my own and I am not a professional money manager.  Please consult with your financial adviser before taking any action in your own portfolio.