Today’s featured stocks include a bank and its CCAR results, a retailer and its prognosis in the wake of the Amazon-Whole Foods merger, and a new addition to the Growth & Income Portfolio.
Cabot Undervalued Stocks Advisor 717
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Oil Prices and Energy Stocks
The price per barrel of West Texas Intermediate light sweet crude oil is rebounding from an important support level that it touched in June. The price had risen from about $27.50 to $55 in the year following the depths of oil prices in February 2016. That’s a 100% price increase. No matter which stock, commodity or investment vehicle you’re following, a 100% price increase over a 12-month period is generally not sustainable. The price needs to pull back and rest, and that’s what we’ve seen oil do in recent months.
If you casually follow oil price, you could benefit from this June 30 article from OilPrice.com, “Oil Prices Gains Could Be Here To Stay.” The article describes goings-on in the industry with a surprising clarity and brevity. (Translation: you don’t have to be an energy wonk to decipher what’s taking place!) It’s a lot easier for me to give you the prognosis on a company than on a commodity such as oil. You’re going to have to form your own opinion on oil, and I’ll be here to help you pick the best companies in the energy sector.
As far as share prices of integrated oil companies are concerned, they receded recently, and they now appear ready to rise. I just want to reiterate that the fundamentals at my favorite companies—BP, CVX, XOM and TOT—look fantastic, all exhibiting strong earnings growth, undervalued prices and big dividends. If you are a patient person, willing to own stocks for between three months and two years, I think you’ll do very well with integrated oil companies.
Stocks of refining and marketing companies are not trading in synch with integrated oil company stocks. Instead, they’ve been outperforming the broader market, and show no overall sign of stopping. They have the same great fundamentals as the integrated oil companies. My favorites include PSX, TSO and VLO. Here’s my June 29 review of Phillips 66 (PSX) from Wall Street’s BEST Daily.
I’ve recently been guiding investors to sell stocks when those stocks retrace their highs from a of couple years ago. That’s because the stocks tend to get stuck there and establish multi-month sideways trading patterns. I have an obligation to deliver new investment ideas to subscribers, and I can often only do that by removing other stocks from the portfolios. But that doesn’t necessarily mean there’s anything wrong with the stocks that I remove! I will do my best to be very clear on a company’s future prospects and the stock’s valuation if I sell based on long-term trading patterns. If you decide to hold such a stock through its quiet period of sideways trading, you’re always welcome to check in with me later to ask if anything’s changed with the company’s prospects.
Lastly, if you have the stomach to follow politics, here’s a July 2 article from Bloomberg, “The Humbling of Rex Tillerson,” who is the Secretary of State and former CEO of ExxonMobil (XOM).
Brief Notes on Other Stocks
KeyCorp (KEY) announced its new capital plan, which enhances both the future dividend and the stock buybacks.
Send questions and comments to Crista@CabotWealth.com.
Portfolio Notes
Make sure to review the June 29 Special Bulletin in which I mentioned news, rating changes and/or price action on Bank of America (BAC), Bank of New York Mellon (BK), Citigroup (C) and KeyCorp (KEY).
Buy-Rated Stocks Most Likely To Rise More Than 5% Near-Term:
Commercial Metals Company (CMC)
Goldman Sachs (GS)
PulteGroup (PHM)
Quanta Services (PWR)
Tesoro (TSO)
Universal Electronics (UEIC)
Today’s Portfolio Changes:
Commercial Metals Company (CMC) joins the Growth & Income Portfolio as a Strong Buy.
Dollar Tree (DLTR) moves from Hold to Buy, and moves from the Growth Portfolio into the Buy Low Opportunities Portfolio.
Legg Mason (LM) moves from Hold to Strong Buy.
Last Week’s Portfolio Changes:
KLX (KLXI) joined the Growth Portfolio as a Strong Buy.
TiVo (TIVO) moved from Strong Buy to Hold.
Growth Portfolio
Growth Portfolio stocks have bullish charts, strong projected earnings growth, little or no dividends, low-to-moderate P/Es (price/earnings ratios) and low-to-moderate debt levels.
Featured Stock: Bank of America (BAC)
Bank of America (BAC – yield 1.9%) is an undervalued large-cap bank with strong earnings growth. In recent news, Warren Buffett plans to exercise Bank of America warrants that give his company, Berkshire Hathaway (BRK/A), the right to own 700 million shares of BAC at a cost of about 30% of the current share price. That will give him a whopping $12 billion profit! The transaction also increases confidence in the stock among the rest of the investment community.
The Federal Reserve reported results of its Comprehensive Capital and Analysis Review (CCAR) on June 28. Bank of America’s capital plan was approved, featuring a 60% increase in the dividend payout, which rises from $0.075 to $0.12 per quarter, and a new $12.9 billion share repurchase plan.
Analysts expect EPS to grow 13.5% and 22.1% in 2017 and 2018 (December year-end). The corresponding P/Es are 13.0 and 10.6. Bank of America will report second-quarter 2017 results on the morning of July 18. Investors may access the earnings webcast on the company’s website.
BAC has short-term upside price resistance at 25.5, which it could easily surpass this year, possibly even this summer. Strong Buy.
Updates on Growth Portfolio Stocks
American International Group (AIG – yield 2.0%) is a very undervalued diversified insurance company. Reuters reported, “Billionaire investor Carl Icahn is backing off his demand to break up insurance giant American International Group Inc, following the company’s sale of assets and hiring of a new chief executive officer, a person familiar with the matter said. Icahn wants to give new CEO Brian Duperreault a chance to improve the company’s return on equity.” Duperreault is planning to pare back the pace of buybacks in order to invest in acquisitions and business expansion. Last week, the stock briefly rose to its highest price since February, then came back down to the bottom of its trading range in conjunction with the aforementioned news report.
AIG just exhibited a shakeout trading pattern, which indicates that we’ll likely see the stock surpass 64 this week, on its way toward short-term price resistance at 67. Strong Buy.
Cavium (CAVM) is a very undervalued, aggressive growth semiconductor stock. Sometimes share prices suffer in a manner that’s completely unrelated to the company’s actual successes. In that light, CAVM has fallen along with weakness throughout the technology sector. Consensus earnings estimates, however, are the highest that they’ve been all year. Analysts are expecting EPS to grow 81.7% and 27.0% in 2017 and 2018. (My baseline stock selection criteria is a 15% EPS growth rate.) The P/Es are 22.3 and 17.6, way below the EPS growth rates, indicating that the stock is quite undervalued. CAVM could bounce at 60 several times before it’s ready to rise again. Buy.
Johnson Controls (JCI – yield 2.3%) is a multi-industry company with the following business mix: fire & security services, residential and commercial HVAC/R (heating, ventilation, air conditioning and refrigeration), automotive batteries and building equipment. The company is experiencing strong growth in China and India, and just set up a second corporate headquarters in China. Read more about JCI’s business prospects in this June 29 Forbes article, “A Closer Look at Johnson Controls’ Focus on China.” JCI is an undervalued growth stock. JCI is rising toward price resistance at 45.5, where it will still be quite undervalued. Strong Buy.
KLX Inc. (KLXI) is a manufacturer of aerospace fasteners, consumables and logistics. KLXI was featured in the June 27 weekly update. Wall Street’s earnings per share (EPS) estimates jumped last week. KLXI is now expected to grow earnings by 95.2% and 42.0% in fiscal 2018 and 2019 (January year-end)). The corresponding P/Es are 24.4 and 17.2, indicating that the stock is seriously undervalued. (The company is projecting much higher fiscal 2018 earnings growth than is reflected in the analysts’ estimates.)
KLX rose to a new high near 53 in early June, fell about 10%, and is now heading back toward 53. I expect to see additional new highs this year. Strong Buy.
Martin Marietta Materials (MLM – yield 0.7%) is an aggressive growth stock that’s quite undervalued based on 2018 numbers. Martin Marietta’s 2018 consensus earnings estimates exhibited a notable increase last week. EPS are now expected to grow 24.7% and 29.4% in 2017 and 2018, with corresponding P/Es of 26.9 and 20.8. There’s recent price weakness throughout Martin Marietta’s peer group. The stock could rise above short-term price resistance at 240 this year. Strong Buy.
PulteGroup (PHM – yield 1.5%) is a single-family U.S. homebuilder. PHM is a very undervalued growth stock. The price chart is bullish, with a breakout past 24.5 extremely likely this month. Buy PHM now. Strong Buy.
Quanta Services (PWR) is recovering from an exaggerated—and seemingly unwarranted—price correction in May. The corporate outlook remains fantastic, with aggressive earnings growth and a low P/E. PWR could rise as high as its February high around 38.5 this year. Buy PWR now. Strong Buy.
Vulcan Materials (VMC – yield 0.8%) is an aggressively growing supplier of construction aggregates, asphalt and concrete. Most stocks within Vulcan’s peer group suffered last week, but remained within their trading ranges. VMC could rise into the 130s this summer. Strong Buy.
XL Group (XL – yield 2.0%) is a very undervalued, aggressive growth insurer and reinsurer. Earnings per share are expected to grow 99.4% and 26.1% in 2017 and 2018 (December year-end), with corresponding P/Es of 13.8 and 10.9. XL shares have been repeatedly rising and resting since June 2016. I expect XL to remain on an overall uptrend this year. Strong Buy.
Growth & Income Portfolio
Growth & Income Portfolio stocks have bullish charts, good projected earnings growth, dividends of 1.5% and higher, low-to-moderate P/Es (price/earnings ratios), and low-to-moderate debt levels.
Featured Stock: Commercial Metals Company (CMC - yield 2.5%)
It’s quite common for stocks of various industry groups to rise and fall in unity in the stock market. When they fall, we hear phrases like “the baby got thrown out with the bathwater,” meaning that good stocks fell along with the bad ones. When they rise, we hear phrases like “a rising tide lifts all ships,” meaning that bad stocks rose along with the good ones.
We’re witnessing that phenomenon right now among technology stocks (getting shaky!), food retailers (which fell in June), oil refining and market stocks (rising) and steel stocks (rising). We currently own Schnitzer Steel (SCHN) in the Buy Low Opportunities Portfolio, and there’s plenty of room for another worthy steel stock to join us today as the market embraces that industry group. That company is Commercial Metals Company (CMC), a recycler and manufacturer of steel and metal products, including rebar and fence posts.
Commercial Metals operates on an August fiscal year. The company’s earnings growth was not previously strong enough to attract my attention, and is projected to finish 2017 with 3.3% EPS growth. However, fiscal 2018 is expected to deliver 59.1% EPS growth, reflecting improvements in revenue, costs and profit margins. Looking at a multi-year time period of past and future, it becomes clear that CMC has hit a turning point in its business in which debt levels are suddenly much lower, falling revenue is giving away to rising revenue, and profits are surging. Current product demand is enhanced by a growing volume of highway and construction projects.
The 2018 P/E is only 13.1, dramatically lower than the EPS growth rate. That’s going to cause the market to sit up and take notice. Let’s “notice” this stock before Cramer begins touting it, shall we?
Third-quarter results produced a huge earnings beat in late June. Non-GAAP EPS were $0.34 when analysts were expecting $0.24, or $97 million of net income vs. the $85 million estimate. Since there’s one more fiscal 2017 quarter to be reported in what was essentially a slow-growth year for CMC, it’s important to anticipate whether those results will please investors or scare them away. At this point in time, it appears that another upside quarterly surprise could easily happen, giving me motivation to buy CMC now, rather than waiting for fiscal 2017 to become history.
There’s an additional profit catalyst on the horizon for CMC. The strength of the euro vs. the U.S. dollar appears to be reaching higher levels, which enhances profits for U.S. companies that export to Europe. CMC does a lot of business in Poland. It’s therefore realistic to expect CMC’s profit forecasts to rise in the coming months.
The Section 232 Investigation in the Steel Industry
On May 25, I issued a Special Bulletin pertaining to the U.S. Department of Commerce’s Section 232 investigation into the national security implications of trade abuses associated with steel imports. The essential question for the Section 232 investigation is whether low prices on steel imports are harming the steel industry enough that the U.S. government needs to attempt to put a stop to the unfair trade practices.
The Commerce Department is contemplating new tariffs on imports (which could prompt retaliation by foreign producers), limits on imports of specific steel products (which could push consumer prices higher), tariffs on imports that exceed quotas (potentially affecting consumer prices), and/or tariffs that ensure minimum pricing (which maintains foreign competition without the undercutting of U.S. pricing that had led to job losses and bankruptcies). As with many government agendas, big plans tend to get seriously watered down after considering foreign relations and other economic considerations. Results tend to be rather ho-hum after months of alarming news headlines.
Steel stocks reacted well to the commencement of the Section 232 investigation. That’s because the companies finally have prospects for relief from trade abuses that chronically harmed the industry. Virtually any result—short of a decision to do nothing—will likely help steel companies’ balance sheets and abilities to avoid additional job losses. Investors may read more on the Section 232 topic in this June 28 article from Barron’s.
CMC is a small-cap stock that’s followed by 11 Wall Street analysts. Like many basic industry stocks, CMC had a big post-election run-up in late 2016, followed by a price correction in the first quarter of 2017. After settling into a three-month trading range, CMC is now ratcheting higher. In the coming months, I expect CMC to retrace its December 2016 high around 24, at which time it will still be significantly undervalued. Buy CMC now. Strong Buy.
Updates on Growth & Income Portfolio Stocks
BP plc (BP – yield 6.9%) is an undervalued, aggressive growth integrated oil company. The company plans to increase its natural gas production mix from 50% to 60% over the next eight years. Read more in this July 2 article from OilPrice.com, “Is BP Shifting its Focus to Natural Gas?.” Analysts are expecting EPS to grow 110% and 33.5% in 2017 and 2018, with corresponding P/Es of 19.7 and 14.7. Shares of integrated oil companies are trading near the bottoms of their recent price ranges, and looking ready to rise. I encourage growth investors and dividend investors to buy BP, with a maximum upside of about 44 during the next year. Strong Buy.
Blackstone Group LP (BX – variable large payouts) is an undervalued alternative asset manager. Jefferies analyst Gerald O’Hara commented last week, “we like BX for its opportunity to monetize pre-existing real estate exposure and recent addition of dedicated infrastructure.” BX appears capable of surpassing its recent trading range, between 32.5 and 34. I intend to sell when BX reaches long-term price resistance at 38. Buy.
ExxonMobil (XOM – yield 3.8%) is the largest U.S. integrated oil company. XOM is an undervalued aggressive growth stock. Earnings per share are expected to grow 54.0% and 22.7% in 2017 and 2018 (December year-end), with corresponding P/Es of 22.1 and 18.0. The long-term debt-to-capitalization ratio is extremely low at 14%. Shares of integrated oil companies are trading near the bottoms of their recent price ranges, and looking ready to rise. Continue to buy XOM in anticipation of a maximum run-up to 91 this year, as it eventually retraces highs from July and December 2016. Strong Buy.
GameStop (GME – yield 7.0%) is a retailer of games, collectibles and technology, with additional ventures in the entertainment field. The company is transitioning through a multi-year process of diversifying its product areas away from a dependence on physical game revenue. The stock is volatile, currently rebounding from a low near 20 where it repeatedly bounced during the last year. Hold.
Invesco (IVZ – yield 3.3%) is an attractive and undervalued growth & income stock in the asset management industry. Consensus earnings estimates have been inching upward during recent months. Wall Street now expects EPS to grow 12.6% and 11.2% in 2017 and 2018 (December year-end), with corresponding P/Es of 14.0 and 12.6. IVZ is rising toward upside price resistance at 38-39 where it last traded in March 2015. The stock will be fairly valued there. I will sell IVZ near 38, to avoid a prolonged sideways trading period. Hold.
TiVo (TIVO – yield 3.8%) is a digital entertainment company that provides technology licensing and related services, which enable people to access online and televised entertainment. TIVO is an extremely undervalued small-cap stock. TIVO recovered from its drop in May, and is now resting. I expect the stock to continue rising toward short-term price resistance at 21. Hold.
Buy Low Opportunities Portfolio
Buy Low Opportunities Portfolio stocks have neutral charts, strong projected earnings growth, low-to-moderate price/earnings ratios (P/Es) and low-to-moderate debt levels. (Dividends are not a portfolio requirement, but some of the stocks will have dividends.) Investors should be willing to wait patiently for these stocks to climb.
Sometimes a stock in the Buy Low Opportunities Portfolio produces good capital gains and the share price is no longer low, yet the stock remains an attractive investment. Those stocks will then be moved into the Growth Portfolio or the Growth & Income Portfolio.
Featured Stock: Dollar Tree (DLTR)
Share prices of food retailers were harmed in June when Amazon.com (AMZN) announced its pending purchase of Whole Foods Market (WFM). As is typical with this type of stock market event, the best stocks among food retailers were trashed alongside the most mediocre stocks in the industry.
Dollar Tree (DLTR) is a discount retail variety store that includes food among its product offerings. Dollar Tree closed on its purchase of Family Dollar stores in July 2015. The company plans to open 350 new Dollar Tree stores and 300 new Family Dollar stores this year, while closing 40 Family Dollar locations.
Dollar Tree also happens to offer 18.5% EPS growth this year. Compare that to Wal-Mart (WMT) and Dollar General (DG), each experiencing less than 1% profit growth this year; while Target (TGT) and Kroger (KR) are projected to see falling EPS this year. Sprouts Farmers Market (SFM) has recently been expected to continue growing profits, but none of these companies’ profit expectations compare favorably to Dollar Tree’s. That’s important because professional investment managers throughout the U.S. are reevaluating food retail stocks to make sure that they own the ones that are most likely to fare well in light of the Whole Foods buyout. Those decisions will naturally begin with the question, “Which of these companies has a successful plan to grow profits?” The answer will invariably be Dollar Tree.
Why bother changing portfolios?
As a result of the shake-up among food retail stock prices, I’m moving DLTR from the Growth Portfolio to the Buy Low Opportunities Portfolio because the current price chart is characteristic of a typical “buy low” stock. The earnings growth situation has also changed enough that DLTR will no longer belong in the Growth Portfolio in the near future. Whereas the company achieved aggressive earnings growth in fiscal 2017 and 2018 (January year-end), analysts expect earnings growth rates to moderate to about 11%-12% per year in fiscal 2019 and 2020. Those are certainly attractive earnings growth rates, but they don’t meet the 15% standard to which I hold new additions to the Growth Portfolio.
DLTR has fallen far enough that a rebound will provide big capital gains. Therefore, I’m also moving DLTR from Hold to Buy. I had moved DLTR from Buy to Hold in April 2017 as the stock rose past 82, on its way toward upside price resistance at 90. Now that the stock is trading in the upper 60s, it’s a bargain again.
Dollar Tree’s long-term debt-to-capitalization ratio is higher than I would prefer at 52%. But investors should also be aware that the company is aggressively paying down its post-merger debt. That number stood at 62% just a year ago. The drop in the debt ratio and the successful incorporation of the Family Dollar acquisition prompted Moody’s Investors Service to raise Dollar Tree’s credit rating in March 2017.
I’m not worried about the Amazon-Whole Foods situation harming Dollar Tree’s retail sales, certainly not within the timeframe that I intend to own the stock. I expect the DLTR share price to rebound into the 80s, and possibly much higher, depending on other factors such as inflation, stock market trends and a continued market rotation out of technology stocks.
The downturn in the share price has been exaggerated and irrational. The stock is hinting that it’s stopped falling, but it could easily rest for a while before rising again. Buy.
Updates on Buy Low Opportunities Portfolio Stocks
Archer Daniels Midland (ADM, yield 3.1%) is fairly valued, with double-digit earnings growth expected in 2017 and 2018. ADM traded steadily between 41 and 43 in May and June. The stock could realistically reach 47 again in the coming months. Hold.
Boise Cascade (BCC) is a wood products manufacturer and building materials distributor. This aggressive growth stock remains significantly undervalued. BCC could surpass upside price resistance at 31 quite soon. We could see BCC reach the upper 30s this year. Strong Buy.
Chipotle Mexican Grill (CMG) is an undervalued aggressive growth stock. Chipotle had a low-profit year in 2016 due to the effects of food-borne illnesses in 2015, earning $0.77 per share. Analysts now expect the company to earn $8.22 per share in 2017, then to see EPS rise 47% to $12.08 in 2018 (December year-end). The corresponding P/Es are 50.6 and 34.4. Wall Street analysts would naturally take into account this year’s approximate 5% increase in food and freight prices and increased labor costs when forecasting annual profits, so investors don’t need to second-guess the EPS projections when they hear news about food inflation. CMG might be establishing price support at 415, and will likely need to rest there before it gathers the strength to rise. Strong Buy.
Goldman Sachs Group (GS – yield 1.3%) Investors will recall that Goldman received negative press in May after it purchased $2.8 billion of Venezuelan bonds. Last week, Goldman apparently sold approximately 10% of those bonds to hedge funds. It would be fair to assume that the bonds were sold for a profit, and that additional bond sales could take place. As expected, Goldman’s capital plan was approved by the Federal Reserve in June. Unlike most banks, Goldman does not promptly announce its new dividend and share repurchase plans upon the Fed’s annual review. Changes in analysts’ earnings estimates for GS make the stock more undervalued now than in recent months. Earnings per share are expected to grow 14.2% and 11.3% in 2017 and 2018 (December year-end), with P/Es of 11.9 and 10.7. GS rose a tremendous amount in 2016, had a price correction in March, and has since traded sideways. The stock appears to be embarking on a run-up. GS could rise to its recent high above 250 this year. Buy GS now. Buy.
Legg Mason Inc. (LM – yield 2.9%) is a very undervalued asset management and financial services company with aggressive earnings growth. On June 19, I moved LM from Strong Buy to Hold at its recent price peak, simply because there was less room for capital gains as it travelled to long-term price resistance at 44. The subsequent pullback to 38 has created a 15% capital gain opportunity, so I’m now moving LM from Hold to Strong Buy. That recommendation is directed toward short-term traders, and also toward investors who prefer to own very undervalued growth stocks for multiple years. That’s because the stock will likely become stuck in a trading range with a high around 44 for quite a while. Strong Buy.
Mattel (MAT – yield 2.8%) is a global toy manufacturer with a new CEO who is redirecting the company’s product and marketing focus. The company is expected to earn $1.01 and $1.23 per share in 2017 and 2018 (December year-end), undervalued based on 2018 numbers. MAT fell in mid-June due to news of the recent dividend cut, and appears to be recovering. There’s no current stability in the price chart. The strong 2018 earnings growth outlook should help the stock recover in the coming months. Hold.
Schnitzer Steel Industries (SCHN – yield 3.0%) is one of the largest U.S. scrap metal recycling companies. Investors who follow my stock recommendations know that I almost always quote consensus earnings estimates, rather than just one analyst’s estimates. However, there are so few analysts on Wall Street covering SCHN, and their estimates have been so incredibly wrong (on the low side), that today I’m quoting the numbers from a heavy-hitter on Wall Street. This analyst has been projecting earnings growth that’s far above consensus. (I’m not at liberty to publicize the name of the firm, because I do not have legal permission to cite their private research in this publication. I don’t want them to close my account!)
The steel industry analyst at this prominent Wall Street investment bank has been increasing his earnings estimates to reflect this year’s surge in profits. Reflecting third quarter results (August year-end), he’s now expecting 2017 and 2018 earnings per share (EPS) of $1.29 and $1.54, representing aggressive year-over-year EPS growth of 169% and 19.4%.
Shares of steel companies rose last week, with SCHN leading the pack. Expect some profit-taking when SCHN reaches 27, where it traded in February. SCHN is a small-cap stock, in a volatile market sector, with relatively little analyst coverage. Buy.
Tesoro (TSO – yield 2.3%) is a very undervalued aggressive growth stock in the oil refining and marketing industry. The company will change its name and stock symbol on August 1 to Andeavor (ANDV). TSO rose from an April low of 75 to a high of 94 in June. I would normally expect the stock to rest for a few months after such a big run-up, but price charts of energy refining and marketing companies look extremely bullish right now. It would not be unusual to see TSO retrace its 2015 high over 110 this year. Strong Buy.
Total SA (TOT – yield varies, approx. 4.5%) is a French integrated oil and gas company, and a greatly undervalued aggressive growth stock. Earnings per share are expected to grow 24.9% and 18.0% in 2017 and 2018 (December year-end), with corresponding P/Es of 11.8 and 10.0. This is a great time to buy TOT, which is low within its trading range, and looking ready to rise. My plan is to keep TOT in the portfolio until it reaches three-year price resistance in the low 60s. Strong Buy.
Universal Electronics (UEIC) is a consumer electronics company. This growth stock is overvalued based on 2017 numbers, but undervalued based on 2018 numbers. UEIC has been trading in a narrow range for four weeks—a bullish chart pattern that signals a new run-up on the horizon. There’s some price resistance at 72, and again at 79. Buy UEIC now. Buy.
Vertex Pharmaceuticals (VRTX) is an undervalued, aggressive growth biotech company that corners the market in treatments for cystic fibrosis (CF). On June 30, Barron’s offered the opinion that Vertex would make an attractive acquisition target for Gilead Sciences (GILD), with an estimated takeover price in the range of 153–178. VRTX is on a general uptrend. I plan to sell VRTX when it approaches two-year price resistance near 140. Hold.
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