Today’s news: Sell Ameriprise Financial (AMP), Vertex Pharmaceuticals (VRTX) moves from Buy to Strong Buy, XL Group (XL) moves from Hold to Buy, Apple (AAPL) rising.
Apple (AAPL – yield 1.5%) is breaking out of a trading range, reaching new highs again today. This October 27 news story is contributing to the bullishness: Apple says iPhone X pre-orders are ‘off the charts’. Buy AAPL now, and buy more on pullbacks. I expect the stock to perform well until at least June 2018. Strong Buy.
Ameriprise Financial (AMP) moves from Hold to Sell today. AMP joined the Growth & Income Portfolio in July as a Buy, rather than a Strong Buy. The price chart was extremely bullish, but I had slight reservations about the projected 2018 earnings growth rate. Despite the fantastic third-quarter results, and the ensuing increases in analysts’ earnings estimates, the 2018 earnings growth rate remains in the single digits, and the stock is fairly valued. In addition, I’ve been watching the share price rise for seven weeks without resting. It’s up 20% plus dividends in 3.5 months. I have no rational reason to expect additional near-term upside, so I’m ready to sell.
Sometimes I encourage longer-term investors to hold stocks after I remove them from these portfolios. In the case of AMP, I think everybody should sell in favor of more undervalued, lower-risk opportunities, or use a tight stop-loss. Sell.
Vertex Pharmaceuticals (VRTX) moves from Buy to Strong Buy on higher 2017 earnings growth expectations, lower recent valuation, and opportunistic share price. The shares traded quietly sideways in the three months since the huge jump in July, then the price chart exhibited a shakeout pattern last week, which is usually a bullish harbinger of a near-term run-up. Buy VRTX now. Strong Buy.
XL Group (XL – yield 2.1%) – Two good things: the market continues to embrace XL and its earnings prospects after a brief period of worry over catastrophe losses, and the stock is down a couple of dollars from when I had moved it from Buy to Hold 10 days ago. There’s room now for short-term profit as the stock eventually rises toward its recent July high near 47. I’m also leaning toward holding XL into 2018. I’m moving the stock from Hold to Buy. Buy XL today. Buy.