Special Bulletin on BorgWarner (BWA), E*Trade (ETFC), General Motors (GM) and WellCare Health Plans (WCG) October 5, 2016
BorgWarner (BWA)
just began a run-up. There’s no serious upside resistance until it approaches 45. There’s a lot of room in there for traders and longer-term investors to make money. BWA is a somewhat undervalued growth & income stock. Buy BWA right now. Buy.
I mentioned in yesterday’s weekly update, investors should sell E*Trade (ETFC) as it approaches 31. ETFC is actively rising. The stock is approaching significant price resistance, with a ceiling at 31. Projected earnings growth is grinding to a halt in 2017 (December year-end). Yes, it’s “a good company,” but we’re here to make money. So your best chance to keep that chunk of capital growing is to move it into a more undervalued stock with better earnings growth and a better upside opportunity (such as Whirlpool (WHR), which is rated Strong Buy). Put in a sell limit order on ETFC at 30.50, good-til-cancelled.
General Motors (GM) continues to climb. In yesterday’s weekly update, I wrote: “GM rose past 32 in late September, and could easily rise to 35, where it will meet significant upside resistance. All traders and growth investors should be prepared to sell near 35, because the stock’s going to get stuck there. Caveat: The 4.8% dividend yield is safe, so keep GM if the dividend is your primary investment goal. Hold.”
It’s time to put in a sell limit order on GM now at around 35, good-til-cancelled. Don’t overthink this. GM is a widely-owned stock in hedge funds. All of those money managers are reading price charts. They all know the stock is going to get stuck at 35, and many of them will choose that moment to sell, and reinvest into stocks with more promising charts. The selling pressure will push the price back down toward 32. Put in a sell limit order on GM at 35, good-til-cancelled.
WellCare Health Plans (WCG) broke past 117 on the upside today, and is now officially reaching new all-time highs. This type of chart activity is a growth investor’s dream. In yesterday’s weekly update, I wrote, “Due to the stock’s valuation, as soon as the breakout takes place, I’m going to move WCG to a Hold, with the intention of (a) letting the run-up play out and (b) holding the stock until the resolution of the potential takeover situation.”
I’m moving WellCare to Hold today. WCG is a fully-valued aggressive growth stock. If I were a pure growth stock manager, I’d leave it as a Buy, because of the chart momentum. But value is important to my investment strategy. In that light, WCG is now a Hold, definitely not a Sell. I expect the stock to continue rising. Hold.