Highlights:
Blackstone Group (BX) reported second quarter results this morning.
XL Group (XL) moves from Strong Buy to Buy.
Vertex Pharmaceuticals (VRTX) rose 21% yesterday.
Blackstone Group LP (BX – variable large payouts) reported second-quarter economic net income (ENI) of $0.59 per share this morning, when the market was expecting $0.62. ENI is an effective metric for measuring unrealized investment gains among alternative asset managers. Assets under management (AUM) grew 4% during the quarter to $371.1 billion. Blackstone reported strong gains in investment income and real estate, and weak performance among its energy holdings due to lower commodity prices.
The next quarterly distribution will be $0.54 per share, at an annualized yield of 6.2%. The distribution is payable on August 7, with an ex-dividend date of August 1. Investors may access the earnings press release and conference call webcast on Blackstone’s website.
The share price is down a modest amount today. BX left its recent trading range last week, and is heading toward long-term price resistance at 38, at which time I will be removing the stock from the portfolio. Dividend investors and buy-and-hold growth investors should feel comfortable keeping BX longer-term. Hold.
XL Group (XL) has had quite a run-up this year. I’m planning to hold the stock longer-term, because it’s extremely undervalued, but I’m changing my recommendation from Strong Buy to Buy because it will probably need to rest soon. Buy.
Vertex Pharmaceuticals (VRTX) rose 21% to 159.69 yesterday, following Tuesday’s good news of successful drug trials, giving the stock an approximate 117% year-to-date gain. There will likely be no change in earnings estimates based on the drug trials because the company isn’t expected to begin marketing a new drug until the year 2020. As of yesterday’s market close, earnings per share (EPS) are expected to grow 95.3% and 92.2% in 2017 and 2018 (December year-end), with corresponding price/earnings ratios (P/Es) of 96.2 and 50.1. It would be fair to say that VRTX is fully valued on 2017 earnings expectations, but quite undervalued based on 2018 numbers.
The price chart completely changed this week, with the stock blowing past upside price resistance and reaching new highs. It would not be remotely unusual for the stock to pull back toward 135 and rest there, followed by another run toward 170. If you don’t want to see VRTX fall toward 135, you might consider selling right now. I’m going to keep the Hold recommendation on VRTX for the time being. If it drops down to 140, I’ll probably recommend new purchases. Hold.
Ameriprise Financial (AMP) broke out of a trading range this week, and has no upside price resistance. Buy AMP today. Buy.
Dollar Tree (DLTR) just completed a double-bottom chart pattern; a harbinger of immediate upside price action. Buy DLTR today in anticipation of a 2017 rebound into the low 80s. Buy.
KLX (KLXI) appears ready to shoot up past 53 and begin a new run-up. Buy KLX today. Strong Buy.