The market rallied nicely on Friday on the heels of a modest jobs report, with the Dow up 73 points and the Nasdaq advancing 23 points. The market is still in a trading range, but all of our market timing indicators remain positive, so we expect higher prices ahead.
That said, individual stocks remain hit or miss based on earnings reports and industry rotation. This morning’s bulletin is in regards to Five Below (FIVE), which has been unable to pull out of its tailspin following a good-but-not-great quarterly report last week. Because of that, we’re selling the stock today and booking our small profit.
This move leaves the Model Portfolio with three open slots and a cash position north of 30%, which is too high given the market’s bullish stance. Thus, we’ll add one stock today and look to put the rest of our cash to work when the market and growth stocks resume their uptrends.
Our new addition is GrubHub (GRUB), the leading online and mobile platform for takeout orders. The stock is a bit extended here, but after a powerful earnings gap in late July, the stock has acted very well, and we think its growth potential is huge.
We’ll now have eight stocks in the Portfolio and a cash position near 21%. Stocks rated BUY include Abiomed, Alibaba, Amazon, GrubHub, ProShares Ultra S&P 500 Fund and Veeva Systems. Stocks rated Hold are Facebook and Ulta Beauty.