Cabot Undervalued Stocks Advisor Weekly Update

BLACKSTONE GROUP (BX) ANNOUNCES CORPORATE CONVERSION
Apollo Global Management (APO) Shares Surge Alongside Blackstone Group

I began telling investors about the possibility of Blackstone converting to a corporation in early May 2018 when KKR & Co. (KKR) made such a decision on the heels of a similar decision coming from Ares Management (ARES). At that time, I also mentioned that Apollo Global Management (APO) could come to an identical decision. I told you about these potential outcomes at least half a dozen times during the last twelve months.

The effects of the corporate conversion include these outcomes:
1. Blackstone will gradually pay a higher income tax rate.
2. Blackstone’s post-conversion quarterly reports will stop reporting economic net income (ENI) and begin reporting earnings per share (EPS). The EPS numbers are expected to be slightly lower than ENI.
3. Shareholders will eventually cease having to deal with K-1 reporting on their income tax returns.
4. Blackstone estimates that up to 60% of institutional investors (e.g. mutual funds and pension funds) and most stock market indexes have investment policy statements and prospectuses that prohibit them from investing in limited partnership shares. Once Blackstone completes its corporate conversion, those same financial entities will be free to consider buying shares of Blackstone, thus potentially pushing the share price upward. Blackstone is one of the largest and most successful investment companies in the world and could therefore be reasonably perceived as a desirable investment to the aforementioned institutional investors.

If you look back at the share prices of ARES and KKR during 2018, you can see that they whipsawed all over the place throughout the year. You might then assume that the act of converting from an LP to a C-corp does not resonate well with investors. I just want you to keep in mind that we had three stock market corrections in 2018—THREE!—in February, October and December. Therefore, despite any potentially bullish results from a corporate conversion over the medium- and long-terms, literally any company’s stock is still subject to short-term stock market volatility.

Your job, right now, is to decide whether you want to keep BX and/or APO during these short-term run-ups, and then sell (essentially, do you want to be a trader?); or are you a longer-term investor who loves either the big dividend income offered by alternative asset manager stocks or the capital gain potential that could accompany this corporate conversion. (Scroll down to the Growth & Income Portfolio to read my current recommendations on APO and BX.)

The Company is Not the Stock

A couple days ago, I heard from an investor who was confused about why his “great long-term investment” aggressive growth stock’s price is currently falling. This is perhaps one of the most basic lessons from Stock Investing 101. Mike Cintolo, Chief Analyst of Cabot Top Ten Trader and Cabot Growth Investor explained it again on April 19 in his article, Two Important Lessons Disney Stock Has Taught Us.
The company is not the stock, which is a hard concept for most investors to really grasp. Obviously, in a loose way, a stock (or market) will follow the fundamentals; if sales and earnings are headed up over time, the stock is likely to as well. But it’s far from a one-to-one relationship, and many investors are surprised to see how long a stock can be disconnected from the performance of the underlying company.

When you hear people say that “the stock market is volatile,” they’re not only referring to other people’s stocks, penny stocks, or companies with poor products or bad finances. They’re also talking about the stocks of excellent companies that you might own, such as Walt Disney (DIS), Apple (AAPL), Schlumberger (SLB) and Delta Air Lines (DAL).

Right now we’re witnessing this falling stock/successful company phenomenon within the apparel industry, and with our portfolio stocks: Designer Brands (DBI) and Guess? (GES). I recommend patience and portfolio diversification.

There are many stock strategies that can work well, as long as the investor has a clear idea of what they’re doing, has an ability to turn off their emotions (i.e. greed and fear), and has an ability to self-correct. By self-correct, I mean that there will be unexpected results that crop up over your investing lifetime. Your job is to learn from those events or mistakes and adjust your portfolio strategy so that there’s less chance the same bomb will land in your lap again in the future.

My investment strategy might be way too sedate or risky for you, in which case I’m happy to refer you to my co-workers at Cabot Wealth Network who specialize in other investment styles: income, growth, trading, small-cap, equity & index options, marijuana and emerging markets. If you’re not sure which style you prefer, or you know in advance that you like multiple investment styles or multiple investment sources (outside of Cabot Wealth Network), then Nancy Zambell’s publications—Wall Street’s Best Investments and Wall Street’s Best Dividend Stocks—could also provide you with the variety you’re craving.

Send questions and comments to Crista@CabotWealth.com.

PORTFOLIO NOTES
Be sure to review the Special Bulletins from April 18 and 22 in which I mentioned news, rating changes and/or price action on Alexion Pharmaceuticals (ALXN), Apollo Global Management (APO), Blackstone Group (BX), CF Industries Holdings (CF), Schlumberger (SLB), Sleep Number (SNBR), Supernus Pharmaceuticals (SUPN) and Synchrony Financial (SYF).

QUARTERLY EARNINGS RELEASE CALENDAR
This week (date unknown): Royal Caribbean Cruises (RCL) – 1Q
April 23 am: CIT Group (CIT) – 1Q
April 24 am: Knight-Swift Transportation (KNX) – 1Q
April 25 am: Alexion Pharmaceuticals (ALXN) and Southwest Airlines (LUV) – 1Q
April 26 am: Total S.A. (TOT) – 1Q
April 30 am: Baker Hughes (BHGE) – 1Q
April 30 pm: Apple (AAPL) – 2Q
May 2 am: Apollo Global Management (APO), Dow Inc. (DOW) and DowDuPont (DWDP) – 1Q
May 2 pm: Universal Electronics (UEIC) – 1Q
May 6 pm: Mosaic Company (MOS) – 1Q
May 7 pm: Voya Financial (VOYA) – 1Q
May 8 am: Marathon Petroleum (MPC) – 1Q
May 9 pm: TiVo (TIVO) – 1Q

EARNINGS SEASON SCORECARD
Big earnings beat: Comerica (CMA), Delta Air Lines (DAL) and Synchrony Financial (SYF)
Earnings within 5% of consensus estimate: Schlumberger (SLB)
Big earnings miss: Blackstone Group (BX)

TODAY’S PORTFOLIO CHANGES
Comerica (CMA) moves from Strong Buy to Hold.
Designer Brands (DBI) moves from Strong Buy to Hold.
Guess? (GES) moves from Strong Buy to Hold.

LAST WEEK’S PORTFOLIO CHANGES
Abercrombie & Fitch (ANF) moved from Hold to Buy.
Alexion Pharmaceuticals (ALXN) moved from Strong Buy to Hold.
Blackstone Group (BX) moved from Buy to Strong Buy.
CF Industries Holdings (CF) moved from Buy to Strong Buy.
Dow Inc. (DOW) moved from Buy to Strong Buy.
D.R. Horton (DHI) moved from Hold to Retired
Mosaic Company (MOS) moved from Buy to Hold.
Supernus Pharmaceuticals (SUPN) moved from Strong Buy to Hold.
WestRock Company (WRK) moved from Hold to Sell.

UPDATES ON GROWTH PORTFOLIO STOCKS

CF Industries Holdings (CF – yield 2.6%) is one of the world’s largest producers of nitrogen products, serving customers on six continents. The company operates nine nitrogen production facilities in Canada, the U.K. and the U.S. The company’s profitability is affected by both currencies and natural gas prices (lower prices being optimal). Natural gas is recently trading at its lowest year-to-date price of $2.49 mmbtu (millions of British thermal units).

CF is a cyclical mid-cap aggressive growth stock. The company is expected to grow EPS by 81% and 30% in 2019 and 2020, with corresponding P/Es of 20.1 and 15.4. The stock just began emerging from a five-month trading range. The run-up could take CF to 49, 53 or 55, depending on price action among its industry peers and within the broader market. Strong Buy.

CIT Group (CIT – yield 2.8%) operates both a bank holding company and a financial holding company that provide financing, leasing and advisory services to small and middle market businesses, consumer markets, and the real estate and railroad industries. CIT Group is expected to report first quarter EPS of $1.08, within a range of $0.96-$1.20, and revenue of $462.5 million, within a range of $446-$479 million, on the morning of April 23.

CIT is an undervalued growth stock with an attractive dividend yield. On April 17, the company officially declared a 40% increase to the second quarter dividend to $0.35 per share. The price chart indicates that CIT could promptly rise above its recent trading range (46-51) and head to 55, where it peaked repeatedly in 2018. Buy.

Knight-Swift Transportation Holdings (KNX – yield 0.7%) is the largest full truckload carrier in North America and an industry leader with an exemplary management team. Knight-Swift is expected to report first quarter EPS of $0.52, within a range of $0.50-$0.54, and revenue of $1.3 billion, within a range of $1.2-$.4 billion, on the morning of April 24.

KNX is overvalued now that earnings growth has slowed. The stock rose on heavy volume last week, and appears to be breaking out of a trading range. This week’s first quarter earnings report could affect both the earnings outlook and the share price, so be ready for anything. If the news is negative, I will sell the stock. There’s upside price resistance at about 38. Hold.

Marathon Petroleum (MPC – yield 3.5%) is a leading integrated downstream energy company and the nation’s largest energy refiner, with 16 refineries, majority interests in two midstream companies, 10,000 miles of oil pipelines and product sales in 11,700 retail stores. Marathon will host its annual shareholder meeting on April 24. There are many moving parts expected in Marathon’s first quarter earnings report (due on May 8), including cost synergies related to the October 2018 Andeavor acquisition, a large share repurchase, and synergies and potential changes in the business plans of Andeavor Logistics LP (ANDX) and MPLX LP (MPLX).

Consensus earnings estimates reflect a 2019 EPS falling 6.8%, followed by a 56% jump in 2020 EPS. The 2020 P/E is 6.7. MPC has been trading with a ceiling at about 66 since November, and does not yet appear ready to rise. Strong Buy.

Sanmina Corp. (SANM) designs and manufactures optical, electronic and mechanical products for original equipment manufacturers (OEMs) in a broad variety of industries. Earnings per share are expected to grow 41.2% and 11.9% in 2019 and 2020 (September year end). The 2019 P/E is quite low at 10.3. SANM is a small-cap growth stock. SANM is trading near price resistance at 33. We could see a near-term breakout that carries SANM to 35. This stock is appropriate for risk-tolerant aggressive growth investors. Strong Buy.

Southwest Airlines (LUV – yield 1.2%) is the largest U.S. domestic air carrier, transporting over 120 million customers annually to over 100 locations in the U.S., Central America and the Caribbean. Southwest is currently grounding its Boeing Max 737 jets through August, which will affect capacity numbers. Southwest Airlines was featured in the April issue of Cabot Undervalued Stocks Advisor.

Southwest is expected to report first quarter EPS of $0.61, within a range of $0.56-$0.65, and revenue of $5.1 billion on the morning of April 25. Wall Street expects full-year EPS to grow 9.4% and 14.0% in 2019 and 2020. The company typically announces an annual dividend increase in the range of 25%-33% in mid-May. The stock is trading quietly around 52-53 as we approach the earnings report. Hold.

Supernus Pharmaceuticals (SUPN) focuses on the development and commercialization of products for the treatment of central nervous system diseases and psychiatric disorders, including epilepsy and migraine. Supernus has five pipeline products, in various phases of clinical trials, which aim to treat ADHD, impulsive aggression, bipolar disorder, depression and severe epilepsy. Three of those pipeline drugs are expected to launch in 2020, 2021 and 2023. Investors can replay last week’s Investor Day presentation.

SUPN is an undervalued small-cap growth stock. Analysts expect EPS to increase 14.6% and 31.1% in 2019 and 2020. The corresponding P/Es are 15.3 and 11.7. SUPN fell back toward 35 last week as national political discussions surrounding socialized medicine scared investors. If a nominated presidential candidate promotes “Medicare for All,” investors can likely expect a black cloud to linger over the entire healthcare sector until the general election, if not longer. Hold.

Voya Financial (VOYA – yield 0.1%) is a retirement, investment and insurance company serving approximately 14.7 million individual and institutional customers in the United States. Voya is expected to report first quarter EPS of $1.12, within a range of $0.96-$1.23, and revenue of $279.0 million, within a range of $270-290 million, on the afternoon of May 7. Voya’s earnings are equity-sensitive. The S&P 500 index rose 13% in the first quarter. The company could easily deliver an upside earnings surprise during any quarter that was accompanied by strong stock market performance.

VOYA is an undervalued aggressive growth stock. Analysts expect full-year EPS to grow 36.4% and 14.9% in 2019 and 2020, and the current P/E is 9.9. Voya is prioritizing share repurchases, and planning a large dividend increase this year that has not yet been finalized.

I’m cautious because the stock just retraced its 2018 high of 54-55, which normally signals that the run-up will come to a halt. Don’t sell your shares. I think that any near-term pullback is likely to be extremely brief, and a great buying opportunity. Hold.

UPDATES ON GROWTH & INCOME PORTFOLIO STOCKS

Apollo Global Management, LLC (APO – yield 5.8%*) is an alternative asset manager with assets under management (AUM) totaling $280 billion, dispersed among credit, private equity and real estate investments. Apollo will report first quarter results on the morning of May 2.

APO is an undervalued mid-cap growth & income stock. The stock will most likely trade between 30-35 in the near future. Strong Buy.
*The payout varies each quarter with the total of the last four announced payouts equaling $1.83 and yielding 5.8%.

Blackstone Group LP (BX – yield 5.6%*) is the world’s largest and most diversified alternative asset manager with $512 billion in client assets. The company deploys capital into private equity, lower-rated credit instruments, public debt and equity, real assets, secondary funds and real estate, all on a global basis.

Blackstone announced that they will convert from a limited partnership to a corporation. (See additional comments above in today’s introduction, and in the Special Bulletin from April 18.) Blackstone reported $0.44 economic net income (ENI) for the first quarter last week, when the market expected $0.52. The company repurchased 1.5 million shares of stock during the quarter. Investors may review the earnings press release and the webcast.

The next dividend of $0.37 per share will be paid to shareholders of record as of the close of business on April 29. At some point, and in conjunction with the corporate conversion, shareholders will likely begin receiving regular quarterly dividends, as opposed to the varying quarterly distributions that they have thus far received. That future payout will almost certainly give investors a lower yield than they previously received under the limited partnership structure.

BX is a growth & income stock. Last week, the stock surged back to its September 2018 high above 38. BX has additional upside, especially after July 1 when the official corporate conversion takes place. Strong Buy.
*The payout varies each quarter with the total of the last four announced payouts equaling $2.17 and yielding 5.6%.

Comerica (CMA – yield 3.4%) is a financial services company engaged in domestic and international business banking & lending, wealth management and consumer services. Comerica reported first quarter adjusted, diluted EPS of $2.08, above all analysts’ estimates. Net charge-offs were low, indicating strength among consumers’ abilities to repay their debt obligations. Full year earnings estimates reflect 14.0% growth, but the 2020 EPS estimate now reflects very slow growth. I’m moving CMA from Strong Buy to Hold, and I will continue to monitor the 2020 numbers. Hold.

Commercial Metals Company (CMC – yield 2.7%) is a recycler and manufacturer of steel and metal products, including rebar and fence posts. CMC is an undervalued aggressive growth stock with an attractive dividend yield. Analysts expect EPS to increase 24.8% and 24.7% in fiscal 2019 and 2020 (August year end). The 2019 P/E is low at 9.5. CMC pulled back a bit after an early April breakout—a very normal occurrence, and a good opportunity to buy CMC before the run-up gains more steam. Buy CMC now. Strong Buy.

Delta Air Lines (DAL – yield 2.4%) is a U.S. and international passenger and cargo airline that serves nearly 200 million people every year, flying to more than 300 destinations in over 50 countries. DAL is an undervalued growth & income stock. Delta is expected to achieve 18.1% EPS growth in 2019, and the P/E is 8.6. I’m keeping an eye on the 2020 EPS estimate, which currently reflects 7.9% growth. That number has gradually improved since early March.

The stock is resting from a big recent run-up. There’s price resistance at the December high of 60. Buy on dips and give the stock some time to catch its breath before it advances again. Strong Buy.

Dow Inc. (DOW – yield 4.8%) is the materials science division of DowDuPont (DWDP) that began trading as a separate company on April 2, 2019. Each DowDuPont stockholder received one share of Dow Inc. common stock for every three shares of DowDuPont common stock held. Dow Inc. was featured in the April issue of Cabot Undervalued Stocks Advisor. Information detailing the cost basis adjustment calculation for the spinoff of Dow Inc. from DowDuPont appeared in the April 16 update of Cabot Undervalued Stocks Advisor.

Dow is expected to report first quarter EPS of $0.91, within a range of $0.80-$1.14, and revenue of $10.7 billion, within a range of $10.4-$11.0, on the morning of May 2. The actual numbers could vary significantly from the consensus estimates, but the market probably won’t mind too much, as investment professionals are used to adapting to spinoff and IPO companies’ unfamiliar financial styles and management personalities.

Analysts expect Dow to report EPS of $4.91 and $5.81 in 2019 and 2020. These numbers could continue to change quite a bit during the first several quarterly reporting periods as Wall Street becomes more familiar with Dow’s operations and management team. I’m very pleased with the profit projections, the dividend yield and the current P/E, which is 11.8. Strong Buy.

DowDuPont (DWDP) – The materials science division of DowDuPont is now called Dow Inc. (DOW), and began trading on April 2, 2019. The remaining two companies, DuPont and Corteva, will separate by June 1. The final DWDP dividend will be paid on May 28. I removed the references to “yield” herein because it’s no longer a relevant number for DWDP until the final spinoff takes place and the new dividend payouts for Corteva and DuPont are announced. DowDuPont was featured in the April issue of Cabot Undervalued Stocks Advisor. Information detailing the cost basis adjustment calculation for the spinoff of Dow Inc. from DowDuPont appeared in the April 16 update of Cabot Undervalued Stocks Advisor.

DowDuPont is expected to report first quarter results on the morning of May 2. The company stated last week that it expects lower profits from Corteva and higher profits from DuPont than management had previously indicated.

Investors who own DWDP will own two companies in June: Corteva and DuPont. The price chart, adjusted for the recent DOW spinoff, indicates that DWDP could break past six-month price resistance at 40 in the coming days. Buy DWDP now. Buy.

Guess?, Inc. (GES – yield 5.3%) is a global apparel manufacturer, selling its products through wholesale, retail, ecommerce and licensing agreements. The company is growing revenues aggressively in Asia and significantly expanding in both Asia and Europe. GES is an undervalued, aggressive growth, small-cap stock with a big dividend yield. Wall Street expects EPS to increase 22.4% and 18.3% in fiscal 2020 and 2021 (January year end). The 2020 P/E is 14.0.

The share price has been suffering recently, along with a variety of its industry peers. I’m moving GES from Strong Buy to a Hold recommendation. When the share price stabilizes and appears ready to advance, I’ll move it back to a Buy recommendation.
Hold.

Royal Caribbean Cruises (RCL – yield 2.3%) is a cruise vacation company that delivers travelers to desirable and exotic destinations on all seven continents. The company operates a total of 59 ships, with 17 on order, under the brand names Royal Caribbean International, Celebrity Cruises, Azamara Club Cruises and Silversea Cruises.

Royal Caribbean is an undervalued, large-cap growth & income stock. Royal Caribbean is expected to report first quarter EPS of $1.11, within a range of $1.09-$1.14, later this week. RCL began a new run-up last week toward its September 2018 high of 132, then pulled back a bit. Buy RCL now. Strong Buy.

Schlumberger NV (SLB – yield 4.4%) is the world’s largest oilfield service company. New standards of financial accounting for leases went into effect on January 1. Investors may read more about IFRS 16 on the Deloitte website. Wall Street expects full-year EPS to fall 1% in 2019 and to rise 41% in 2020. The market is forward-looking, and I’m therefore not concerned about this year’s lack of earnings growth because the company is on the verge of outsized profitability next year. SLB began a new run-up in recent days, which could carry the stock to 50-52 before it rests again. Most types of investors could benefit from buying SLB right now. Buy.

Total S.A. (TOT – yield 5.3%) is a French multinational integrated energy company operating in over 130 countries. Total is expected to report first quarter EPS of $0.96, within a range of $0.78-$1.17, on the morning of April 26. Full-year earnings estimates have been rising since mid-February, when the price of Brent crude oil broke out of a trading range. (The oil price continues a slow climb.) Total is expected to see full-year EPS grow 8.1% and 17.4% in 2019 and 2020, and the 2019 P/E is 10.4. TOT is trading between 55-59. The next run-up will likely take TOT to about 64, where it peaked in October, prior to the fourth quarter 2018 stock market corrections. Buy.

UPDATES ON BUY LOW OPPORTUNITIES PORTFOLIO STOCKS

Abercrombie & Fitch (ANF – yield 2.8%) is a leading global specialty retailer of apparel and accessories for men, women and kids, operating under the Abercrombie & Fitch, abercrombie kids, Hollister and Gilly Hicks brands. ANF is a small-cap stock. Analysts expect EPS to grow 26.1% and 6.9% in fiscal 2020 and 2021 (January year end). ANF appears capable of promptly rising to price resistance at its 2018 high near 29. There’s long-term resistance at 37. I’m not thrilled with the 2021 EPS growth rate, which could certainly improve in the coming months. However, the price chart looks extremely compelling, so I’m taking this one week by week. Buy.

Alexion Pharmaceuticals (ALXN) is a biopharmaceutical company that researches and manufactures treatments for severe and rare health disorders. ALXN is an undervalued large-cap growth stock. Alexion is expected to report first quarter EPS of $2.19, within a range of $1.96-$2.28, on the morning of April 25. Wall Street expects full-year 2019 EPS to increase 17.6% and the P/E is 13.5.

ALXN fell last week as national political discussions surrounding socialized medicine scared investors. If a nominated presidential candidate promotes “Medicare for All,” investors can likely expect a black cloud to linger over the entire healthcare sector until the general election, if not longer. Hold.

Apple Inc. (AAPL – yield 1.4%) is a manufacturer and provider of many popular technology devices and services, including the iPhone, iPad, Mac, App Store, Apple Care, iCloud and more. Five new services will roll out in the coming months: Apple News+, Apple TV+, Apple TV Channels, Apple Arcade and Apple Card. There are over 1.4 billion active Apple devices globally, which provide a strong and growing revenue base for Apple Services. Apple is expected to report second quarter EPS of $2.36, within a range of $2.12-$2.49, and revenue of $57.4 billion, within a range of $54.5-$59 billion, on the afternoon of April 30. Also, watch for an announcement of an annual dividend increase in conjunction with the earnings report.

Click here to read my April 18 article about Apple and Qualcomm’s (QCOM) agreement to cease litigation and instead work together. Qualcomm will now be the supplier of Apple’s iPhone 5G modem chips, and Intel (INTC) will exit the modem chip business. AAPL continues to rise, with price resistance at 230, where AAPL last traded in October. Buy AAPL now and buy more on pullbacks. Strong Buy.

Baker Hughes, a GE Co. (BHGE – yield 2.8%) offers products, services and digital solutions to the international oil and gas community. New standards of financial accounting for leases went into effect on January 1. Investors may read more about IFRS 16 on the Deloitte website.

Baker Hughes is expected to report first quarter EPS of $0.13, within a range of $0.12-$0.17, and revenue of $5.6 billion, within a range of $5.5-$5.9 billion, on the morning of April 30. The number of U.S. rigs drilling for crude oil and natural gas fell by ten last week to a total of 1,012, down one vs. a year ago. BHGE is an undervalued aggressive growth stock. The recent price chart appears weak. Buy.

Designer Brands Inc. (DBI – yield 4.7% – formerly DSW Inc.) is a footwear, accessories and apparel retailer that operates Designer Shoe Warehouses and a variety of other brands of retail stores, totaling nearly 1,000 locations in 44 U.S. states and Canada, and ecommerce. DBI is an undervalued growth stock with a hefty dividend yield. The share price has been suffering recently, along with a variety of its industry peers. I’m moving DBI from Strong Buy to a Hold recommendation. When the share price stabilizes and appears ready to advance, I’ll move it back to a Buy recommendation. Hold.

The Mosaic Company (MOS – yield 0.4%) – Hold.*

Synchrony Financial (SYF – yield 2.5%) is a consumer finance company with 77.1 million average active customer accounts. Synchrony partners with retailers to offer private label credit cards, and also offers consumer banking services and loans.
SYF is an undervalued, mid-cap growth & income stock.

Wall Street expects full-year 2019 EPS growth of 13.4%, and the P/E is low at 7.9. The EPS number does not include the potential for up to $4 billion of extra share repurchases, above and beyond normal repurchase plans, being funded by the sale of the Walmart loan portfolio. The price chart indicates that SYF just began a new run-up that could stretch to 39, where SYF last traded in January 2018. Buy SYF now. Strong Buy.

TiVo (TIVO – yield 8.0%) – Hold.* (last review March 19)

Universal Electronics (UEIC) is a manufacturer and world leader of wireless and voice remote control products, software and audio-video accessories for the smart home; with over 400 patents and a strong pipeline of new products in the areas of safety and security, climate control and lighting. The company will report first quarter results on the afternoon of May 2. UEIC is an undervalued micro-cap growth stock with very little analyst coverage, appropriate for risk-tolerant investors and traders. The stock is in a general uptrend, rising toward medium-term price resistance at 44-45, at which price traders should exit. Strong Buy.

* In order to focus attention on newsworthy changes in our portfolio stocks, I’m eliminating descriptions of Hold-rated stocks during weeks when there are no significant news announcements or changes in consensus earnings estimates. As a reminder, Hold does not mean Sell. Hold means that I am not recommending additional purchases of the stock today, either due to price chart action, earnings outlook, or stock valuation. I expect Hold-rated stocks to perform well in the coming months.