Weekly Portfolio Summary

Another week of business is in the books.  Now that summer is unofficially over, people are getting back to work and volume should be on the rise in the markets yet again.  Markets were down slightly on the week and my portfolio was essentially flat.  

In terms of macro events, the issues with North Korea calmed down while Trump's announcement to end the DACA and put a few hundred thousand kids at risk of deportation took to the front page along with the President's surprising dealing with democratic leaders to extend the debt ceiling for 3 months coupled with an aid package for the impact of Hurricane Harvey in Houston.  

At this time, macro news like the ones mentioned and the likes of Hurricane Imra hitting Florida now impact the overall markets until early October when we start getting third quarter reports from companies.  So in short, there won't be a lot going on for now and that does leave room for the market to pull back some.
  

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, $42.42, +2.65%) - This week, comments from the ECB and news around the US debt ceiling pushed the Euro higher and it resulted in the EZU surging a bit itself.  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 8.0% of my portfolio.

Cedar Fair (FUN, $63.32, +12.05%) - 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.  This week weather provided pressure on the stock as a second hurricane bears down toward the US.  With Irma, the path is most likely to come up the length of Florida and then up the east coast, likely impacting at least 2 parks with more bad weather.  The bad weather theme has had its impacts, as revenues and attendance through Labor Day was announced yesterday, with revenues down less than 1% from a  year ago.  CEO Matt Ouimet said they were pleased with results, however 2017 EBITDA is now expected in the $480M - $490M range.  Goals of reaching $500M or more in EBITDA has been moved back to the original 2018 timeline.  The stock sold off on Thursday due to that announcement and the stock price is back around where it was after its quarterly announcement, which is about in line with my expectations.  This stock will sit in travel and leisure indexes and ETFs, though, so be prepared for more potential selloffs depending on the damage left behind from Hurricane Irma.  The stock has shifted from seeking direction to now trying to find a bottom as it's hit a new lower low in the short term trends.  I feel the stock is starting to become oversold and there are indicators saying the same.  My guess is that the stock will start to bottom around the $60 - $62 range.  And as it bottoms, I don't expect a quick shot up for recovery as we're now closing out the busy season and there isn't a lot of new news coming to get excited for.  I reiterate earnings estimates at $3.07 for 2017 and $3.48 for 2018.  This sets my 2018 price target at $68.40 with a multiple of 19.5. I've also upgraded the stock to a one, as the stock's price starts to get into the area where I expect that we'll see the stock bottom out at.  Cedar Fair is 13.9% of my portfolio.

Twos:

Citigroup (C, $66.17, +58.41%) - 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.  The stock underperformed the market this week, with prices pulling back a bit on lower interest rates and word out of the ECB that is likely to keep pressure on those rates in the short term.  Meanwhile our own Fed is less likely to raise rates anytime soon.  I'm guessing you won't see the stock drop below $64, even in a correction, though, as the company is likely to enploy stock buybacks when the price is well below the TBV like that.  The stock has now broken through the 50 DMA, but it's continuing to hold the $64 mark so far.  I believe we'll hold the $62 - $64 area, but there is a fair amount of pressure on the sector due to the likely lack of a Fed hike.  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 15.0% of my portfolio.

Home Depot (HD, $159.66, +157.00%) - 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.  While already having a strong internet presence as "One Home Depot" to compete against Amazon, should they get in the space, HD has now teamed up with Google to use their Google Home assistant to allow you to order with the sound of your voice.  I find this move to be akin to what Wal-Mart has done to build a competitive presence against the massive internet retailer.  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 other piece of the story is the hurricanes making landfall in the US.  Harvey has already devastated the Texas and Louisiana and now Irma is bearing down on Florida.  The devastation from these hurricanes are record breaking and it will mean a lot of sales in Home Depot's future as the rebuild will take place over the upcoming years.  As such, the stock has been surging from where it was last week, performing significantly better than the overall market.  The stock has broken through the patterns I spoke about last week, not only breaking out, but surging to new 52-week highs by the end of the week.  That said, the price moved fast and I don't have the confidence that it will continue to surge like it did last week.  I'm expecting the price to flatten out at this point as the overall market sets its direction into the end of the year and we wait to see the damage left behind by Hurricane Irma.  Overall market indicators show the same signs of over buying though upward trends are still trying to develop themselves.  I estimate 2017 earnings of $7.25.  I maintain a multiple of 20, while keeping in mind 22 is still possible in the short term.  My 2018 earnings estimates are at $8.10, though this could increase when you start taking all of the damage from the 2 hurricanes into consideration.  This leaves a price target of $162 (room up to 178 with the higher multiple).  HD is 12.1% of my portfolio.

Honeywell (HON, $137.57, +224.98%) - 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 down market for the week, the stock was up slightly, giving a chance that the stock has stopped pulling back under current broader circumstances.  If we're seeing true global economic expansion, chances are industrials like this one are only going to grow faster.  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 technicals continue to be troubling to read, however, the stock has managed to, once again, bounce off of the 50 DMA.  There's still not a lot to indicate that there's a lot of change in direction, though.  This is still more of a meandering stock and I'd be ok with that until we reach the third quarter results.  In the long term, we're in a rather healthy stock yet.  I have a 2018 earnings target of $7.80.  This leaves my 2018 price target at $140 with my 18 multiple.  HON is 15.6% of my portfolio.

Ionis Pharmaceuticals (IONS, $56.16, +11.07%) -  I chose this as my speculative stock to try to make significant gains in my portfolio.  The stock seems to be continuing its pop, most likely delivered via a short squeeze as there's been essentially no new news.  Their subsidiary, Akcea, has submitted Volanesorsen to the FDA for approval, but a date hasn't been set yet to my knowledge.  The pipeline provides a number of shots on goal as we await new phase 1 and 2 results to be getting shared in upcoming weeks.  The stock was down in line with the market this week, indicating there was nothing in particular moving the stock last week.  Ionis will present on Wednesday at the Morgan Stanley Healthcare Conference.  It's possible we'll hear about progress being made with Nusinersen, now that they received the rights back from GSK.  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.  Despite my expectations, the stock has moved quickly over the last week.  Chart indicators are showing signs of the stock being overbought, so we'll need to be careful with that, given the volatility we typically see.  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 14.9% of my portfolio.

On Semiconductor (ON, $16.60, +82.51%) - 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 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, which pulled back slightly more than the market last week.  As expected, the stock pulled back this week and it seems to be in a better position to settle down and reestablish itself again.  At this point, there is no specific direction in the charts and we're entering a strong business cycle for the company.  It's a wait and see type of situation, though I expect the overall upwards trends to hold on a medium to long term view.  I maintain 2018 earnings of $1.30 and I still believe the right multiple for the stock is 13 times earnings due to the volatile nature of the stock.  As such, that gives us a  price target of $17, but recognize we can see some multiple expansion before we're at significant risk.  I have the stock at a 2 for its long-term prospects.  ON is 5.6% of my portfolio.

Pepsico (PEP, $115.04, +59.12%) - 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.  It also underperformed the market this week when it received a downgrade from Credit Suisse on concerns that they losses in beverage sales won't be recoverable through the snacks division as we move forward.  I don't see the same level of concerns as the portfolio continues to bring various products to market to meet consumer demand/needs.  When the overall market is this strong, it's hard to expect a safety stock like this to perform so well.  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.  We've watched the stock now fall below the 50 DMA.  As I said last week, 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.  The technical trends show this to be the general trend as all things seem to continue to point downwards slowly at this point.  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 and this year the stock is up over 11% year-to-date.  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 8.7% 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.