I have five buy ideas today, including these portfolio changes: Ameriprise Financial (AMP) joins the Growth & Income Portfolio, and Goldman Sachs (GS) moves from Buy to Hold.
Ameriprise Financial (AMP – yield 2.5%) joins the Growth & Income Portfolio today.
Ameriprise is a financial services company, offering insurance products (life, home and auto insurance and annuities), asset management (investment advice and investment products) and wealth management services (brokerage and banking services) to retail and institutional clients. You can read more about Ameriprise in my March 17 article that was featured in Wall Street’s BEST Daily on the Cabot website.
I’m giving Ameriprise a Buy rating because it has attractive valuation and earnings growth, but the 2018 EPS growth rate is a little lower than I need it to be for a Strong Buy rating. (That’s not a negative … think of the stock as “investment grade.”)
Here are updated numbers since my last stock review:
The most recent dividend increase took place in May, with a current yield of 2.5%. Earnings per share (EPS) are expected to grow 28.3% and 10.9% in 2017 and 2018 (December year-end), with corresponding P/Es of 12.3 and 11.1. Throw in the hefty 2.5% dividend yield, and you have an undervalued growth & income stock. The company will report second quarter results on the afternoon of July 25.
I’ve been following AMP all year, waiting for today’s share price breakout. Today is the day to buy AMP!
There is no upside price resistance. That means there are no investors who used to own AMP at a higher price, who have been waiting for the stock to rebound so that they could sell and break even. There’s therefore no selling pressure on the horizon. Buying such a stock on the breakout is the most bullish time to buy a stock, because there’s no ceiling on the price.
Granted, AMP is not Amazon.com (AMZN), and it’s not going to act like AMZN. That’s okay. We’re in this for capital gains (enhanced by dividends), and it doesn’t matter whether those gains come from a boring stock or an exciting stock. Profit is profit. AMP could rise into the 160’s and still not be overvalued. Buy AMP today. Buy.
Caveat on AMP: I recommend that nobody invest more than 25% of their portfolio in the financial sector. In my experience, when an investor makes a big bet in one industry or sector, Murphy’s Law kicks in and they end up regretting that decision. That’s not a warning aimed at rookie investors … that’s a warning for all investors, including myself. Stay diversified.
Blackstone Group (BX) appears ready to leave its recent trading range and head toward long-term price resistance at 38. When BX reaches 38, I expect it to get stuck there, and I will sell it. (I will move BX from Buy to Hold at 35, because there will be less than 10% upside at that point.)
However, the stock’s profile as an attractive, undervalued growth & income stock will remain strong. If you are a longer-term investor or a yield investor, hold onto BX, and consider buying more shares right now. Traders should also buy BX today. Buy.
Goldman Sachs (GS) has begun its rebound back to a maximum of about 252. This is your last chance to buy GS for a short-term trade with close to 10% capital gain potential. I’m moving the stock from Buy to Hold now, anticipating selling around 250. Hold.
Quanta Services (PWR) is actively rising toward short-term price resistance at about 38.5. The stock could conceivably surpass that price in 2017. Strong Buy.
Universal Electronics (UEIC) appears to have begun climbing back toward 78, where it traded last summer. Since there’s a decent pullback in the share price today, I wanted to reiterate this capital gain opportunity to risk-tolerant growth investors and traders. Buy.