Today’s news: Sell Molina Healthcare (MOH); Schlumberger (SLB) moves from Strong Buy to Buy; TiVo (TIVO) rose 7.6% yesterday; price action on many portfolio stocks (below)
Molina Healthcare (MOH) joined the Growth Portfolio on April 3 at 79.10, and is rising rapidly toward short-term price resistance at about 92. (It had briefly peaked at 94 this year.) There’s a big announcement coming on May 22 in which the state of Washington will be awarding contracts. MOH will surely rise or fall on that news, and the news will determine the direction of the stock for the coming weeks. Since we’re up 10% thus far on the stock, I’m selling today, and taking the profit that stands behind Door #1. I choose not to select the surprise that’s standing behind Door #2 on May 22. Please make a decision as to whether you want to sell before May 22, or choose Door #2. Keep in mind that the scheduled announcement could theoretically come early. Sell.
Schlumberger (SLB – yield 2.7%) – As SLB advances toward short-term price resistance at 79, I’m moving the stock from Strong Buy to Buy, anticipating that the stock will bounce around in the upper 70’s for a while. SLB is still an undervalued aggressive growth stock that I expect to eventually rise past 79 toward longer-term price resistance at 84, where the stock last traded in January 2017. Buy.
TiVo (TIVO – yield 4.9%) rose 7.6% yesterday—a big one-day move. Influences on the share price include news that Soros Fund Management holds TIVO in their portfolio as of March 31, news of a new multi-year licensing agreement, and the company’s ongoing strategic review process, which I’ve written about in several publications this month. The stock has traded between 13 and 15.5 all year, and could surpass 15.5 in the coming weeks. Expect volatility and buy on dips. Strong Buy.
Baker Hughes, a GE co. (BHGE – yield 1.9%) – The stock has run from 28 to 36 since early April, and now it’s threatening to rise above 37, in which case it’ll head toward its most recent peak at 46 from December 2016. That would represent a 64% move in a very short time period. If that happens, I will sell, because it normally takes many months of pullbacks and churning in place for a stock to make further gains after retracing former highs from years ago. Buy.
Commercial Metals (CMC – yield 2.0%) is rapidly approaching its March high at 26. The stock could easily have a pullback soon, before eventually surpassing 26. CMC is an extremely undervalued aggressive growth stock, and I plan to keep it in the portfolio longer-term. Buy on pullbacks. Strong Buy.
PBF Energy (PBF – yield 2.7%) and Delek U.S. Holdings (DK – yield 1.9%) are energy refining and marketing companies. They are each undervalued aggressive growth stocks in the energy refining & marketing industry that are reaching new highs. DK is up 62.4% plus dividends from my February 6 purchase price of 32.41. (To receive the next dividend, you must own the stock on the close of biz on May 18. If you sell on May 21 or thereafter, you will receive that dividend.) The share price on PBF is 44.24, up 41.1% from my March 6 purchase price of 31.355. (We just passed the ex-dividend date on May 14.)
These stocks will not rise forever. Price corrections are perfectly normal, no matter how undervalued the stock and no matter how fast the earnings growth rate. Make a decision on whether you want to sell soon for a quick and large profit, or whether you want to hold DK and PBF for a much longer time period. A pullback could knock 15% off the share prices in a heartbeat. If that idea horrifies you, use stop-loss orders and/or sell half your shares today. I am monitoring the price action, and might sell soon. Longer-term prospects remain outstanding. Hold.