Weekly Portfolio Summary

So it's been since like April since I've done one of these summaries.  I'm not going to take a lot of time talking about what's been going on here this time, because of that fact and let you get caught up on where I stand since the second quarter analysis I've provided over the last number of weeks.  That said, I do want to call out that I have taken on a new position over the last few months.  I have gotten into the iShares MCI Eurozone ETF.  I am preparing for what may be a corrective period where we start to see the rest of the world grow more through recovery from the Great Recession.  The US has out performed global markets and is valued higher than much of the rest of world.  While it's not accurate to say that the rest of the world should be evenly valued, it is fair to say we've grown so much more than usual that the rest of the world is going to have to catch up some.  This means we may start seeing slower growth in the US, maybe the S&P 500 only goes up 5% over the course of a year instead of over 10% as we've seen the last few.  As such, I wanted to protect my portfolio for some of this shift risk assessment.  Finally, I have added some more capital to my overall portfolio.  I actually have more to add, but the market hasn't been creating positions I've wanted to jump into, so I'm in no rush to put things into play.  In fact, doing this keeps me properly cognizant of making room for new positions as well.  Hopefully I'll start doing some analysis around keeping or releasing holdings for new positions that pose more gain potential over the coming weeks and months.

Please read below for more on my position in the EZU and my other thoughts on my holdings.  Admittedly, I'm probably maxing out at the number of holdings I want to be putting so much focus into, so I really need to start putting some past lessons into play and make sure I'm selling as necessary too.
  

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:
iShares MCI Eurozone ETF (EZU, $41.93, +1.46%) - The US stock market has been providing strong success in the global markets after the impacts of the Great Recession.  Finally, we're seeing signs in the overall global economic recovery elsewhere.  Wanting to diversify myself a little more broadly than with just US based stocks, I looked to this ETF to help provide a European recovery focus in my portfolio without having to choose specific industries and risk choosing a bad sector with single stock selection.  This fund is also has little to no UK exposure, which protects us from Brexit impacts while also being unhedged for currency changes, as there is an expectation that the Euro has been too weak in comparison to the dollar.  I need to admittedly call out that I have made this pick through the guidance of others and will react relatively accordingly to that guidance.  I have only half of my position now and would like to get more if the price comes below my cost basis - which just hasn't been happening.  Since this is an index fund, I won't place an earnings or price target.  Only note that my goal is to capitalize from growth outside the US, while trends seem to tell me that large gains may be harder to come by in upcoming years for the S&P 500.  The EZU is 7.9% of my portfolio.

Twos:

Citigroup (C, $68.58, +64.18%) - The long awaited turn around continues to progress.  The company recently announced at its first shareholder meeting in years that they're shifting from a perspective of cost control and cleaning up their portfolio to that of growth.  They've gained support from the government, as shown by their doubling of the dividend and plans for $19B in share buybacks to put their excess capital to work.  They outlined similar capital returns for 2018 and 2019, though they do still require the approval of the government.  Add on top of that the fact that the global economy seems to be growing again and you have an international bank that may have an edge on its competitors.  With prices at my 2017 price target, I think it's fair to recognize the fact that this stock isn't immune to going down, however, it has support under it with the company's buyback program.  I'm guessing you won't see the stock drop below $64, even in a correction.  In the charts, we continue to see a full set of charts that have bullish trend lines as the stock has been able to stay above its 50 DMA.  That said, the ascent has been steep and the stock has been spending the last few weeks resting and pulling back slightly.  It seems this rest has completed and we're starting to see some strength again, however, this is more likely to be a small spurt more than the next leg longer.  Overall the indicators show there just hasn't been enough rest yet.  I'm targeting a 2017 TBV of $69 and have estimated a 2018 TBV of $74.  It's important to watch for a time that the company may begin being priced on earnings instead of TBV, at which point I would expect to see another significant jump in the stock.  My price target is now $74 and I'm downgrading the stock to a 2 in light of the proximity to that price.  Citigroup is 15.51% of my portfolio.

Cedar Fair (FUN, $66.80, +18.21%) - As a growth-yield play, I'm focused on the experiential theme that theme parks like this bring.  People want pictures of them doing things, not just owning things.  They are ready to part with money in exchange for memories, and a theme park is a great play on that.  All in all, the company has been able to deliver just that, however, last quarter's results were a bit disappointing (you can see my analysis here).  Revenues were less than desired and the company is now in question whether it can achieve it's $500M EBITDA target a year early.  The primary cause has been weather related, which seems to fit in with overall themes, given that competitor Six Flags had similar results.  Despite this, attendance and customer spend are on the rise and they continue to open new features in parks - opening 3 parks up for their Holiday Festival in December.  The stock under performed the market by over a percentage point, all despite a large gain on Thursday due to an upgrade by KeyBanc.  All the gains and then some were given up on Friday with no news.  In the charts, we see a stock seeking to find direction.  It pulled back significantly, but has since started to climb again.  Seeing a bit of a flag pattern forming in the short term charts, which just means when the formation completes we're likely to see a breakout in one direction or the other.  The long term charts show a revision to the mean of the 200 DMA, where the history shows anything below that point is worth buying as the stock will rally within a few months to keep the long term trend climbing.  It's worth noting that despite being the strongest time of year for these parks, the stock has formed a habit of selling off around this time.  It can start to recover higher anywhere between October and March, so you'll need to be patient.  At this point, I could see it pull back as low as $62.  As per my analysis, I've adjusted my earnings estimates down to $3.07 for 2017 and $3.48 for 2018.  This sets my 2018 price target at $68.40. Cedar Fair is 14.60% of my portfolio.

Home Depot (HD, $150.78, +142.70%) - Looking at experience from a different lens, I continue to believe people are looking to build/fix/improve their households as they spend more time congregating there.  Previous quarter results were strong, but the stock got hit anyway - even after competitor Lowe's missed its expectations.  People seem to be scared of Amazon as a potential competitor, while HD already has a strong internet position and is already capable of delivering products on site within 4 hours to 2 days.  It wasn't until Hurricane Harvey hit Houston, Texas that the stock started to rebound a little.  The company continues to execute well and have increased their targets for this year as part of last quarter's results (you can review here).  This Thursday, they will be presenting at the Goldman Sachs Retailing conference where we might hear a little more about their internet presence after the grilling on the last call.  The charts are showing a stock that has been setting up for a new breakout.  While the stock has certainly been in decline since they've reported, there are a few notable patterns forming.  First, you have the "W" pattern forming in the daily and weekly charts.  Once it breaks through the 50 DMA, you're likely to see the stock rise more often than not.  The second thing I'm noticing is the flag pattern forming over the last 6 weeks.  Lower highs are being met with higher lows as the stock continues to consolidate around the $150 mark.  It's also worth noting that the stock has stayed firmly above its 200 DMA despite all this action, providing a strong floor.  The conference timing is interesting as it could be just what's needed to break things out.  I estimate 2017 earnings of $7.25.  As discussed after the quarterly results, I've gotten a little more cautious with the stock's multiple and lowered it to 20, while keeping in mind 22 is still possible in the short term.  My 2018 earnings estimates are at $8.10, leaving a price target of $162.  HD is 11.36% of my portfolio.

Honeywell (HON, $137.63, +225.13%) - 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.  Despite the transition with the CEO, we've seen the company successfully continue to manage expectations and deliver to their word.  In fact they've started practicing a little under promise, over deliver as the company saw more organic growth than forecasted this last quarter (see my analysis here).  If we're seeing true global economic expansion, chances are industrials like this one are only going to grow faster.  Also, Boeing just reported spectacular results, meaning that Honeywell's aerospace division should be getting stronger, as a supplier to the cockpit and on-board Wi-Fi components.  Honeywell will present on Thursday at the Gabelli Aircraft Supplier Conference.  I don't expect anything to change stock price action from this, though.  The charts are telling a tougher story at this time.  In the short term, the stock has been relatively flat at this price for the last 6 weeks.  It's hovering around the 50 DMA and I'm not seeing a lot of signs that it has strength to go higher yet.  If the stock breaks down, we're likely to see the stock pull down towards $130 as the price will revert towards the upward trend of the 200 DMA.  In the long term, we're in a rather healthy stock yet.  Just be ready to pull back if we get a market wide sell off.  I have a 2018 earnings target of $7.80.  This leaves my 2018 price target at $140 with my 18 multiple.  HON is 15.56% of my portfolio.

Ionis Pharmaceuticals (IONS, $54.19, +7.17%) -  I chose this as my speculative stock to try to make significant gains in my portfolio.  After reporting strong earnings results, the stock took a beating for "missing estimates" which were raised aggressively after hearing the Biogen Idec sales results for Spinraza.  They significantly increased profits and only had a nine cent loss while increasing pro-forma income targets for the year from break-even to a profit of $55M.  On top of that, despite extremely strong phase 3 results, Glaxo-Smith Kline (GSK) returned the partnered drug Nusinersen to Ionis.  Ionis can't be more thrilled, based on call results, but the market didn't see this positively, given competition and the fact that this drug did have the platelet count issue in the past.  The company has a lot of opportunities in front of it with their pipeline and a drug that's been mostly paid for to be returned for a larger portion of profits, should it be approved by the FDA helps brighten the company's future prospects.  The stock is performing decently on a long term and short term trend.  The stock has been staying above its 200 day moving average despite the volatility and seems poised to head towards the $60 area by the end of the year.  I'm not really expecting big jumps in the stock until we reach FDA approvals which are likely to be early next year for both Nusinersen and Volanasorsen.  It's breakthrough at the end of the week above the $52 mark helps the stock jump above the 50 day moving average and helps strengthen the floor of the stock for now.  I'm estimating a 2017 earnings target of a $0.18 loss and expect to see them in the green in 2018 with earnings of around $0.10.  My price target for 2018 is at $68, given no drug approvals or denials at this time.  I feel like this stock is a buy if it drops back into the mid-forties, but I expect the ascent from here to be slow.  Ionis is 14.29% of my portfolio.

On Semiconductor (ON, $17.25, +89.65%) - On Semi continues its leadership in power saving for various technical devices.  The acquisition of Fairchild Semiconductor, which completed late in 2016, was meant to help expand their reach, capabilities and market share.  With the increased synergies that are now coming to fruition, they should be able to increase their value and it just so happens to coincide with a time when semiconductors and memory modules are hot, with continued reports of strong demand, and continued sales in end products.  The push for automation in vehicles and industrial uses has a runway to keep things moving forward and these spaces align with On's corporate strategy.  The high amount of debt the company has puts their balance sheet in some jeopardy, however, the cash flow is strong and focus is on quickly cleaning up that part of the balance sheet (see my second quarter analysis here for more).  The company presents at the Citi Global Technology Conference on Thursday, but I don't expect anything from this event to generate price action in the stock.  The charts indicate quite a large amount of risk here after last weeks strong performance.  The charts are actually a little scary.  Last week the stock surged about a buck on a $16 basis.  While this is the breakout from another "W" pattern in our charts, there's something about it that still seems frightening - particularly on limited news.  All charts are showing a stock that hasn't yet reached, but is starting to push up to overbought territory.  While the business and news cycle is strong, I'm struggling to identify for how long as we are clearly starting to see multiple expansion happening.  This surge could be a short-term top while I do see potential for the stock getting to $18 over the coming months before getting realistic.  I estimate 2018 earnings to be $1.30 with other notes you can find in my quarterly analysis.  I still believe the right multiple for the stock is 13 times earnings due to the volatile nature of the stock.  As such, that puts a 201 price target $17, which we've just surpassed.  I have the stock at a 2 for its long-term prospects.  That said, after last week's move, I am a little more cautious on the short-term, despite just now entering into what is typically a strong season for tech.  ON is 5.85% of my portfolio.

Pepsico (PEP, $115.84, +60.23%) - 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.  The company continues to outperform its peers (though calling Coke a peer is getting much more difficult) and posted nearly 4% organic growth against strong comps from 2015.  Their portfolio is balanced, which should provide cushion to popular trends like "soda taxes" being placed by cities and focus on healthy eating alternatives.  The stock has underperformed the  S&P 500, however, it has also vastly outperformed the consumer staples index.  When the overall market is this strong, it's hard to expect a safety stock like this to perform so well.  I expect the stock to provide protection in the next pullback, however, it's important to note that it has its own risks as rates start rising.  The multiple is likely to tighten eventually and when it does, the stock is likely to suffer from multiple contraction, though that impact may be much less than many other CPG companies, given the organic growth and balanced offerings they have in their portfolio.  From a technical perspective, the stock has been trading in a narrow $2 range since May.  We're currently on the lower side of that range, but we now see the 50 DMA starting to roll over as well and it seems to be starting to act as a ceiling.  My take is if this stock breaks below $115, we're likely going to push down to the 200 DMA around the $112 mark before we might find support.  Given current economic reports, it becomes less likely that the Fed raises rates more this year, so the yield will be supportive.  We haven't seen a year with losses since the heart of the Great Recession in 2008.  Suffice it to say I wouldn't be surprised with a down year in 2018.  I estimate 2018 earnings of $5.49.  I have a multiple of 22 at this point, leaving my 2018 price target at $120, however, it multiples contract, be aware that the downside risk is more in the area of $104, depending on how much the 10 year treasury yield increases.  PEP is 8.73% 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.