Today’s news: Morgan Stanley (MS) reported a huge first quarter earnings beat; Southwest Airlines (LUV) had an air disaster; many of our portfolio stocks are rising.
Dear Sarah,
Morgan Stanley (MS) reported record first quarter profits of $1.45 per share this morning, when analysts were expecting $1.25. The company achieved record revenues, and exceeded its return on equity (ROE) target. The company repurchased $1.25 billion of stock during the quarter. Morgan Stanley is an investment bank and wealth management company. You may access the quarterly results webcast and press release here. (Disclosure: I worked for Morgan Stanley for 13 years.)
Morgan Stanley is an undervalued large-cap growth stock. Consensus earnings estimates will be rising in the coming weeks, as Wall Street analysts update their numbers and write new research reports, which will invariably generate additional buying activity in the stock. There’s 9% upside as the stock retraces its March high of 59, and I expect additional capital gains thereafter. Nobody has missed their chance to buy MS and profit from the company’s successes. Strong Buy.
Southwest Airlines (LUV) had an in-flight problem yesterday when an engine blew out on an airplane, causing the death of a passenger. What the heck is going on with the share price, which is up today? I have no answers. I’m only here to report that the stock did not react negatively, the stock is undervalued and low in its trading range, and today is probably a good day to buy LUV. Strong Buy.
Baker Hughes, a GE Company (BHGE) is racing toward short-term price resistance at 37. If you were in the stock for a quick trade, you’ll want to sell when it passes 36. (Remember, “pigs get fat and hogs get slaughtered.”) Everybody else should hold BHGE, and consider buying more shares on the next pullback. Strong Buy.
Chipotle Mexican Grill (CMG) blew past upside price resistance at 345 this morning. There is no particular news, other than SunTrust Robinson raising their price target from 340 to 380 today. The stock is fully valued based on my investment strategy, but from a broader perspective, we’re likely to see additional capital gains. That’s because over 80% of the stock is held by institutions–financial professionals who are pleased with the new CEO appointment, and willing to wait for results to emerge under his leadership. If those institutions are not selling, then there won’t be much downside pressure on the stock price. If you own CMG, I recommend that you hold your shares, and consider using a stop-loss order to protect your downside. Hold.
Commercial Metals (CMC) is experiencing a giddy run-up this week. Wait for a brief pullback, then buy the stock. Strong Buy.
Supernus Pharmaceuticals (SUPN) is rapidly approaching 50, where it last traded in September. Traders might consider selling quite soon, but everybody else should hold SUPN for additional capital gains, because it’s still a very undervalued aggressive growth stock. If the stock rises to 50, then pulls back to 46, buy more. Such a pullback is quite normal, and that’s when I’ll move the stock back to a Strong Buy recommendation. Buy.