Since the S&P 500 is reaching new highs and some of our stocks are making significant moves this week, I thought I’d review those with you today. Four of our portfolio stocks are due to report earnings later this week—Vertex (VRTX), Whirlpool (WHR), Royal Caribbean (RCL) and Federated Investors (FII)—so I’ll likely issue another Special Bulletin before the weekend.
Highlights: Toll Brothers (TOL) moves from Buy to Hold.
Adobe Systems (ADBE) broke out of its trading range this week to new highs, closing last night at 113.72. It could rise another $14 (about 12%) before being considered fairly-valued. Strong Buy.
Amazon.com (AMZN) continues rising toward upside resistance at 840. This aggressive growth stock is overvalued. It’s probably a great long-term hold for a buy-and-hold investor, but that’s not my investment focus. I will sell near 840. Hold.
Boise Cascade (BCC) surged 5% yesterday, on no particular news other than strong earnings reported by D.R. Horton. Based on 2017 numbers, BCC is a very undervalued aggressive growth stock. When BCC breaks past 25—perhaps this week?—there will be additional price resistance at 26.75. Buy.
D.R. Horton (DHI) reported fourth-quarter EPS of $0.55 yesterday, when the market was expecting $0.47, and vs. $0.42 a year ago. A Tuesday economic report showing an 18-year low in the supply of houses on the market joined with news of D.R. Horton’s exciting surge in profit to catapult the share price up 6.6% yesterday.
The company also reported a higher average selling price vs. a year ago, a 16.7% increase in home sales vs. a year ago, a 14.6% increase in future orders, expectations of slightly higher gross margins in 2017, and reconfirmed its 2017 revenue forecast (September year-end).
DHI is a moderately undervalued growth & income stock. It’s likely that analysts will now rework their earnings estimates to reflect stronger earnings growth in fiscal 2017. The stock has some upside resistance at 34—about 10% higher than the current share price—where it recently peaked in July 2016. Buy.
Legg Mason (LM) is advancing this week. Traders should be alert to upside price resistance at 34.50. Everybody else should hold LM for more capital gains later this year. Strong Buy.
Mattel (MAT) is rising again, with upside resistance at 33.50, which it could surpass later this year. MAT is a very undervalued aggressive growth stock with a huge dividend.
Buy.
Quanta Services (PWR) is rising again. PWR is a very undervalued aggressive growth stock and definitely a “Trump stock.”Strong Buy.
Tesoro (TSO) appears ready for its rebound. Buy TSO now.Buy.
Toll Brothers (TOL) rose 4.8% yesterday on the back of good housing news, and D.R. Horton’s (DHI) strong first quarter. I’m moving TOL from Buy to Hold in light of slowing EPS growth in 2018 (October year-end). There’s a good chance that favorable industry sentiment, combined with Toll Brothers’ attractive 2017 earnings growth prospects, could propel the stock past 33 in the near-term. Hold.Vulcan Materials (VMC) is fast-approaching short-term upside resistance at 135. At that point, only the most short-term traders should sell. Everybody else should hold this undervalued aggressive growth stock for additional capital gains in 2017. Strong Buy.