Can the Price of Oil Continue Climbing?
Over the course of 20 months, between June 2014 and February 2016, the price of West Texas intermediate crude oil fell 75% from about 107 to 27. In the ensuing 27 months, the price has thus far rebounded to 71. If this were a share price on Apple (AAPL) or Walt Disney (DIS), you would have no difficulty believing that the drop in the share price was ridiculous and that the rebound is long overdue. Yet oil prices seem to stymie people’s abilities to accurately assess energy industry information.
Just as there are factual influences on a company’s operations and share price, there are also factual influences on the price of oil. Current influences include constraints on OPEC production, Venezuela’s economic collapse and falling oil production, potential U.S. sanctions on Iran, an unusually large price spread between Brent and West Texas crude pricing, and more. But I’m no energy industry guru, and I’d rather point you to OilPrice.com as an excellent source of global energy news.
There’s one thing that common stocks and the price of oil—and virtually all other investments—have in common: their price charts. The study of price charts is called technical analysis. A student of technical analysis can look at the various components of price charts and give you a decent estimate of what the price will do in the near future, without knowing whether they’re looking at the price of gold, the price of commercial real estate in Memphis, or the price of the S&P 500 index.
In studying price charts, it becomes clear that investments tend to rise or fall to the limits imposed by former trading ranges. In the case of West Texas intermediate crude oil, you can see that the price spiked down to about 80 in 2011 and again in 2012. When you’re looking at today’s rising price, the bottom of the former trading range will theoretically become the top of the current trading range (a.k.a. price resistance). Therefore, the most we can reasonably expect the price of West Texas intermediate crude oil to climb to in the near future will be about 80. At that point, it will almost assuredly come back down. I cannot predict how far the price might fall, but I can predict that I will be ready to buy undervalued growth stocks within the sector, as they fluctuate alongside the price of oil. I just don’t want to buy most energy stocks today after their share prices have had significant run-ups.
On my part, I see rising earnings estimates throughout the sector, most notably among refining and marketing companies. We have two such companies in the Cabot Undervalued Stocks Advisor portfolios: Delek U.S. Holdings (DK) and PBF Energy (PBF). They’ve gone up so rapidly in recent months that I start twitching when I look at the price charts. I want to sell and get it over with, so that I don’t have to wonder if there’s a big price correction looming. That’s emotional, and emotions don’t hold a constructive place in investment decisions. So I’m going to both enjoy our outsized capital gains and face the horror of the type of price corrections that are virtually inevitable with rapidly-advancing stocks. Fortunately, these companies’ rapidly rising earnings estimates are likely to minimize the size of the future price corrections and speed up the share price recoveries. Whereas I’ve been recommending energy stocks since late 2016, there are still many investment professionals who are just getting on board with the sector’s improving fundamentals and rosy outlook. Their buying activity will likely support energy stock prices for the next several years.
I’m not going to raise DK and PBF from Hold to Buy until they have pullbacks. However, if you have not participated in the upturn in energy stocks, you can look to our three oilfield service companies: Baker Hughes, a GE Co. (BHGE), KLX Inc. (KLXI) and Schlumberger (SLB). I’m far more confident in their short-term price trajectories, and of course, their fundamentals are fantastic.
Send questions and comments to Crista@CabotWealth.com.
PORTFOLIO NOTES
Be sure to review the Special Bulletin from May 17 in which I mentioned news, rating changes and/or price action on Baker Hughes, a GE Co. (BHGE), Commercial Metals (CMC), Molina Healthcare (MOH), PBF Energy (PBF), Schlumberger (SLB) and TiVo (TIVO).
Buy-Rated Stocks Most Likely* To Rise More Than 5% Near-Term:
Blackstone Group (BX)
Knight-Swift Transportation (KNX)
Martin Marietta Materials (MLM)
Skechers USA (SKX)
TiVo (TIVO)
*I can review price charts and make an educated determination about what’s likely to occur, but I will sometimes be wrong. I cannot control the stock market; I can only guide you through it.
Today’s Portfolio Changes:
Comerica (CMA) moves from Buy to Hold.
Interpublic Group (IPG) moves from Strong Buy to Hold.
KLX Inc. (KLXI) moves from Strong Buy to Hold.
Martin Marietta Materials (MLM) moves from Strong Buy to Buy.
Morgan Stanley (MS) moves from Hold to Sell.
Last Week’s Portfolio Changes:
Molina Healthcare (MOH) was sold from the Growth Portfolio.
Schlumberger (SLB) moved from Strong Buy to Buy.
Updates on Growth Portfolio Stocks
Alphabet Cl. A (GOOGL) is the world’s largest internet company. Revenue is derived from Google’s online ads, with the balance coming from the sale of apps, digital content, services, licensing and hardware. YouTube announced new versions of YouTube Music and YouTube Premium (formerly YouTube Red), each designed to increase revenue and capture market share through subscription services by emphasizing local authenticity. Alphabet’s EPS is expected to grow 37.6% and 7.2% in 2018 and 2019. GOOGL is ratcheting toward the top of its steady trading range near 1,190, where I plan to sell because the stock is quite overvalued based on 2019 earnings projections. Traders who buy below 1,080 could make 10% profit within that trading range. Hold.
Apple (AAPL – yield 1.6%) manufactures a wide range of popular communication and music devices. AAPL is an undervalued growth stock, expected to see EPS increase 24.8% and 15.6% in fiscal 2018 and 2019. The corresponding P/Es are 16.2 and 14.0. AAPL rose to a new all-time high this month. Buy AAPL now and buy more on pullbacks. Strong Buy.
Bank of America (BAC – yield 1.6%) is an undervalued growth stock. BAC is slowly traveling toward its recent high near 33, where I will likely sell in favor of a small bank or property & casualty insurance company. Hold.
CIT Group (CIT – yield 1.2%) 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. Analysts expect EPS to grow 27.0% and 25.6% in 2018 and 2019. The corresponding P/Es are quite low at 14.0 and 11.2. CIT is approaching its March all-time high near 56, and could easily continue rising from there. Strong Buy.
Delek U.S. Holdings (DK – yield 1.9%) is an energy refining and marketing company, and a very undervalued, aggressive growth small-cap stock. (The share price is rising rapidly, and DK is on the verge of qualifying as a “mid-cap stock”.) Yesterday, Raymond James raised its price target on DK from 57 to 65. Morgan Stanley “expects refining margins to expand by 30 percent through 2020,” citing a shortage of refineries during that time period. The investment firm upgraded the entire industry last week. In addition, Delek’s margins are benefiting from a much-higher-than-usual price spread between Brent and WTI crude oil, leading to rising consensus earnings estimates. Wall Street now expects full-year EPS to grow 192% and 24.5% in 2018 and 2019, and P/Es are in the mid-teens.
At 53, DK is up 63% plus dividends from my February 6 purchase price of 32.41. (The ex-dividend date was May 18.) The recent run-up has been unusual, largely fueled by consistently upward-revised earnings estimates and an investor focus on energy stocks due to rising oil prices. Odds are super-strong that we’re going to get a pullback, but also strong that DK will subsequently continue rising. So basically, hold DK for further gains (unless you need to raise cash in your portfolio) and buy more on pullbacks. Longer-term prospects remain outstanding. DK could appeal to investors who have a focus on value, growth or dividend income. Hold.
D.R. Horton (DHI – yield 1.2%) is America’s largest homebuilder, based in Ft. Worth, TX and operating in 26 states. The company also provides mortgage, insurance and title services. D.R. Horton was featured in the May issue of Cabot Undervalued Stocks Advisor. After achieving 16.9% earnings growth in 2017 (September year-end), D.R. Horton is expected to see EPS grow 33.6% and 19.7% in 2018 and 2019. Price/earnings ratios (P/E) remain low at 11.3 and 9.4 for fiscal 2018 and 2019. There’s 26% upside when DHI rebounds toward 53, where it peaked in January. I anticipate additional capital gains later this year. Buy DHI now. Strong Buy.
KLX Inc. (KLXI) reported first-quarter 2018 results yesterday that exceeded all analysts’ revenue and profit expectations. Non-GAAP EPS was $1.12 vs. the consensus $1.06 and revenue was $499.1 million vs. the consensus $472.2 million.
Please refer to the Special Bulletins from May 2 and 7 in which I described the KLX decisions to allow Boeing (BA) to acquire its Aerospace Solutions Group (ASG), and to spin off its Energy Services Group (ESG) to shareholders. At a current price of $74 per KLXI share, minus the value of the Boeing-ASG transaction at $63, the market is valuing the ESG business at $11 per share.
Here’s the update on KLX’s Energy Services Group (ESG) business from the earnings report: “The Company increased its 2018 ESG guidance for revenues, adjusted operating earnings and adjusted EBITDA.
• 2018 revenues are expected to increase by approximately 55 percent to approximately $500 million
• Adjusted operating earnings are expected to increase approximately $84 million to approximately $65 million
• Adjusted EBITDA is expected to increase approximately 300 percent to approximately $110 million, or 22 percent of revenues
• The Company expects continued strong organic growth in revenues and earnings in 2019”
If you own KLXI and wait for the two M&A transactions to take place, you will have $63 cash per share returned to you, and you will own shares of the new KLX Energy Services (KLXE). The Boeing cash transaction is expected to be completed by September 1, and the KLXE spin-off could happen at any point between now and the completion of the Boeing transaction. (You are free to sell KLXI on any business day prior to the spin-off and prior to the completion of both transactions. You could, for example, receive the spin-off shares in July, at which time your remaining shares of KLXI will trade near $63 until the Boeing transaction is completed. You could sell your remaining KLXI shares on the open market, or just wait for the Boeing transaction to be completed, at which time the cash should show up in your brokerage account.)
New information: Please note that if you own KLXI in a taxable account, the KLXE spin-off will be a taxable transaction. The income tax reporting will either be slightly complicated for you, or slightly expensive if you’re paying an accountant an hourly rate to research the situation. An alternate strategy that avoids complicated tax reporting would be to sell KLXI before the KLXE spin-off, and consider buying KLXE immediately after the spin-off.
I moved KLXI from Hold to Strong Buy on May 2 when the price was below 71. Now that the price is up 5% from that date, I’m going to move the stock back to Hold. I think KLXI can probably rise to near 80 in the coming weeks, reflecting a more fair value of the KLXE spin-off. Please visit the KLX website and view the webcast and slide presentation to learn more about KLX’s rapidly-growing ESG business. Hold.
Knight-Swift Transportation Holdings (KNX – yield 0.6%) is a truckload carrier formed from the September 2017 merger between Knight Transportation and Swift Transportation Company. Yesterday, Stifel raised KNX from Hold to Buy. KNX is an undervalued mid-cap aggressive growth stock. Analysts expect full-year EPS growth of 68.1% and 18.1% in 2018 and 2019. The corresponding P/Es are 17.5 and 16.9. Transportation stocks have been depressed in recent months, with KNX being more depressed than most. A quick study of 23 transportation stocks reveals that KNX has a P/E that’s lower than 90% of its competitors. That makes KNX one of the most undervalued stocks within an undervalued industry. The stock has begun its recovery from a big price correction in March and April, and appears quite able to rise in the coming weeks. There’s 20% upside as KNX eventually rebounds to its 2018 high at 50. Strong Buy.
Martin Marietta Materials (MLM – yield 0.8%) is a supplier of crushed stone, sand, gravel, cement, concrete and asphalt. Earnings estimates jumped again last week, subsequent to the first quarter earnings release. Analysts now expect full-year EPS growth of 27.6% and 22.8% in 2018 and 2019. The corresponding P/Es are 23.9 and 19.5. I’m moving MLM from Strong Buy to Buy. There’s about 10% upside as the stock travels back to its January peak at 240. At that time, I’ll assess EPS, PE and price action in the broader market before determining whether to continue to hold MLM. Buy.
PulteGroup (PHM – yield 1.2%) is a U.S. homebuilder and a very undervalued aggressive growth stock. Consensus earnings estimates, which rose last week, reflect 60.7% and 12.4% EPS growth in 2018 and 2019. The corresponding P/Es are 9.0 and 8.0. Keep in mind that analysts’ earnings estimates reflect all known influences to company operations, including changes in interest rates, income tax rates, wages and other economic data. Despite constant headlines about rising interest rates, the average analyst on Wall Street still expects PulteGroup to see profits rise 60.7% in 2018!
PHM is ratcheting upward after a big 2018 price correction experienced by most of its homebuilding peers. (After their huge 2017 run-ups, the extended pullback was not surprising.). Buy PHM now for a rebound to its January high of 35, and additional capital gains thereafter. Strong Buy.
Quanta Services (PWR) provides specialized infrastructure and network services to the electric power, oil and natural gas industries. PWR is an undervalued mid-cap growth stock. Wall Street expects EPS to grow 40.1% and 14.9% in 2018 and 2019. The corresponding P/Es are 13.3 and 11.6. The stock rose rapidly this month, and could pull back briefly. I expect PWR to rise to its January high of 40, with additional capital gains thereafter. Strong Buy.
Southwest Airlines (LUV – yield 1.0%) 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. Last week, Southwest raised its quarterly dividend by 28%, from 12.5 cents to 16.0 cents per share. The company also increased its repurchase program by $2 billion, in addition to the $350 million remaining in last year’s repurchase authorization. Southwest normally increases its dividend annually by approximately 25%-33% per year.
LUV is an undervalued stock that’s experiencing aggressive earnings growth. However, earnings growth projections are declining as the price of oil rises, because fuel costs eat into profits. Analysts now expect EPS to grow 27.4% and 17.3% in 2018 and 2019. The corresponding P/Es are 11.7 and 10.0. The share price fell recently, bottomed, and now appears ready to rise, although I’m not estimating that the rebound will happen rapidly. Patient investors who buy LUV now will be getting quite a bargain. Strong Buy.
Supernus Pharmaceuticals (SUPN) focuses on the development and commercialization of products for the treatment of central nervous system diseases and psychiatric disorders, including epilepsy, migraine and ADHD. SUPN is an undervalued, small-cap stock. Analysts expect full-year EPS to grow 50% and 37% in 2018 and 2019, with corresponding P/Es of 29.7 and 21.9. Investor’s Business Daily gives SUPN a composite rating of 98, making it their #1-ranked stock among the leading biomedical and biotech companies After reaching a new all-time high in May, SUPN could easily have a brief pullback before continuing its upward trajectory. Don’t be rattled if the stock falls 10%-15%, and consider buying more on pullbacks. I have every intention of keeping the stock for future capital appreciation. Buy.
Updates on Growth & Income Portfolio Stocks
BB&T Corp. (BBT – yield 2.7%) is a 145-year-old financial holding company with $222 billion in assets and 2,100 financial centers that serves businesses and individuals. BB&T is in a multi-year cycle of increasing its net interest margin (NIM) as the company earns higher income from investments and its growing loan portfolio, while keeping costs down via an increase in non-interest bearing deposits and extending maturities on lower-yielding CDs. Analysts expect full-year EPS to grow 43.7% and 8.2 % in 2018 and 2019, with corresponding P/Es of 13.7 and 12.7. The ex-dividend date was May 10. BBT appears capable of beginning a new run-up soon, after which I will sell in favor of a financial stock with stronger 2019 prospects. Hold.
Blackstone Group LP (BX—yield 7.8%*) is the world’s largest and most diversified alternative asset manager with $450 billion in client assets. The company raises tens of billions of dollars from investors and deploys the capital into private equity, lower-rated credit instruments, hedge funds and real estate. Financial news exploded last week upon Blackstone’s sale of its remaining holdings in Hilton Worldwide Holdings (HLT), ultimately more than tripling its 2007 investment in the company. Read more in this comprehensive article from Skift. (HLT does not meet my investment criteria due to its high debt ratio, which is common among real-estate-oriented companies.) Blackstone immediately agreed to purchase LaSalle Hotel Properties (LHO) in a deal valued at $4.8 billion.
Analysts expect Blackstone’s economic net income (ENI) to grow 2.8% and 11.8% in 2018 and 2019. I expect BX to return to its January high near 36. BX could appeal to dividend investors, growth & income investors, and traders who would be happy with a potential 13% capital gain this year. Buy BX now. Strong Buy.
*The payout varies each quarter, with the total of the last four announced payouts, plus the $0.30 special 2018 distribution, yielding 7.8%.
Comerica (CMA – yield 1.4%) is a financial services company engaged in domestic and international business banking & lending, wealth management and consumer services. The company is in a strong position to capitalize on rising interest rates that contribute to increases in net interest margin (NIM) through its variable rate loan portfolio (90% variable rate vs. 10% fixed rate loans). Comerica is expected to increase EPS by 41.0% and 11.5% in 2018 and 2019. The corresponding P/Es are 14.7 and 13.1. The ex-dividend date is June 14. I’m moving CMA from Buy to Hold. The share price advanced to the top of its two-month trading range last week. We could see CMA launch past 102 to new all-time highs fairly soon. I will likely sell CMA after that run-up, due to fair valuation. Hold.
Commercial Metals Company (CMC – yield 2.0%) is a recycler and manufacturer of steel and metal products, including rebar and fence posts. U.S. industrywide pricing is expected to remain strong due to robust economic activity, lower steel supply, and lower import volumes due to tariffs. In a separate topic from Section 232 tariffs that have been highlighted in the news, new duties imposed by the Department of Commerce on Vietnamese steel products as a result of trade cheating do not affect/enhance Commercial Metals revenue. Commercial Metals was featured in the May issue of Cabot Undervalued Stocks Advisor.
Wall Street analysts expect EPS to grow 98.6% and 63.8% in 2018 and 2019 (August year-end), with corresponding P/Es of 17.1 and 10.4. CMC is rapidly approaching its March high at 26. The stock could easily have a pullback soon, before eventually surpassing 26. CMC is an extremely undervalued aggressive growth stock, and I plan to keep it in the portfolio longer term. Buy on pullbacks. Strong Buy.
GameStop (GME – yield 11.9%) is a retailer of games, collectibles and technology; with additional ventures in the entertainment field. GameStop CEO Michael Mauler stepped down “for personal reasons” this month. Daniel DeMatteo, the company’s executive chairman, was named interim CEO. No further insight about the executive change was available. Last week, Bloomberg reported on various large hedge funds buying and selling GME shares. In addition, CNBC reported that hedge fund Tiger Management sent a letter to GameStop’s board urging it to “launch a strategic review and revive shareholder confidence in the sustainability of the GameStop business model.” The company is going through a multi-year shift in product emphasis, to which the stock has reacted poorly. The next ex-dividend date will likely be in early June. Sell Half.
The Interpublic Group of Companies (IPG – yield 3.5%) is a large conglomerate of advertising, marketing, communication and public relations companies serving all global markets. Its clients include Alphabet (GOOGL), Microsoft (MSFT) and Coca-Cola (KO). Wall Street expects full-year 2018 EPS to grow 22.7%, and the P/E is 13.7. Analysts expect 2019 EPS growth of 8.1%, which is certainly acceptable, but not apparently exciting enough to help the stock break past its former all-time high of 25 from July 2017. I’m moving IPG from Strong Buy to Hold, and will likely sell soon. The next ex-dividend date will likely be in early June. Hold.
Morgan Stanley (MS – yield 1.9%) is a major U.S. investment bank and wealth manager. I’m selling MS today because of moderate 2019 earnings growth expectations and a lack of momentum in the share price. The second quarter dividend was paid on May 15. Sell.
PBF Energy Inc. (PBF – yield 2.6%) is one of the largest U.S.-based petroleum refining and marketing companies, serving the U.S., Canada and other international locales. Morgan Stanley “expects refining margins to expand by 30 percent through 2020,” citing a shortage of refineries during that time period. The investment firm upgraded the entire industry last week. During the first quarter, value-oriented hedge fund Third Point LLC bought 1.3 million shares of PBF. Earnings estimates rose again last week. Wall Street now expects aggressive full-year EPS growth rates of 179% and 31.8% in 2018 and 2019. The corresponding P/Es are very low at 14.2 and 10.7.
PBF continues to reach new all-time highs. At a share price of 46, PBF is up 46% from my March 6 purchase price of 31.355. (We just passed the ex-dividend date on May 14.) PBF will not rise forever, although it’s not yet showing signs of weakness. Price corrections are perfectly normal, no matter how undervalued the stock and no matter how fast the earnings growth rate. Make a decision on whether you want to sell soon for a quick and large profit, or whether you want to hold PBF for a longer time period. A pullback could knock 15% off the share price in a heartbeat. If that idea horrifies you, use stop-loss orders and/or sell half your shares today. Longer-term prospects remain outstanding. Hold.
Schlumberger (SLB – yield 2.7%) is the world’s largest oilfield service company. The number of U.S. rigs drilling for crude oil and natural gas rose by one last week to a total of 1,046, up 145 vs. a year ago. Analysts are expecting full-year EPS to grow 36.7% and 47.3% in 2018 and 2019, with corresponding P/Es of 36.2 and 24.6. SLB is advancing toward short-term price resistance at 79. Once there, I anticipate that the stock will bounce around in the upper 70’s for a while. SLB is still an undervalued aggressive growth stock that I expect to eventually rise past 79 toward longer-term price resistance at 84, where the stock last traded in January 2017. Buy.
WestRock Company (WRK – yield 2.8%) is a global packaging and container company. WestRock will be meeting with analysts at the KeyBanc Capital Markets’ Industrials & Basic Materials Conference on May 31. The company’s acquisition of Kapstone Paper and Packaging is expected to close in the early fall. Analysts expect full-year EPS to increase 53.8% and 16.1% in 2018 and 2019. The corresponding P/Es are low in comparison at 15.4 and 13.3. The share price suffered in late May and has begun its rebound. There’s 14% upside as the stock gradually retraces its January high at 70. Strong Buy.
Updates on Buy Low Opportunities Portfolio Stocks
Alexion Pharmaceuticals (ALXN) is a biopharmaceutical company that researches and manufactures treatments of severe and rare health disorders. Alexion is expected to achieve 19.6% and 21.8% EPS growth in 2018 and 2019. The corresponding P/Es are 17.3 and 14.2. ALXN is experiencing a small pullback amid an advance toward its January high of 128. Buy ALXN now. Strong Buy.
Baker Hughes, a GE co. (BHGE – yield 2.0%) offers products, services and digital solutions to the international oil and gas community. The number of U.S. rigs drilling for crude oil and natural gas rose by one last week to a total of 1,046, up 145 vs. a year ago. Baker Hughes is in talks to own a minority stake with Abu Dhabi National Oil Co. (Adnoc), which operates the largest drilling enterprise in the Middle East.
Wall Street expects full-year EPS to grow 83.7% and 100% in 2018 and 2019. The corresponding P/Es are 45.4 and 22.7. The stock ran from 28 to 36 since early April, and now it’s threatening to rise above 37, in which case it’ll head toward its most recent peak at 46 from December 2016. That would represent a 64% move in a very short time period. If that happens, I will sell, because it normally takes many months of pullbacks and churning in place for a stock to make further gains after retracing former highs from years ago. Buy.
Skechers USA Inc. (SKX) is an apparel company that designs and manufactures affordable footwear for people of all ages. The company is based in California, and sells its products in over 160 countries and territories in Asia, Europe, the Middle East and the Americas, through wholesale, retail and e-commerce venues. SKX is an undervalued mid-cap growth stock, with minimal debt on the balance sheet. Earnings per share are expected to grow aggressively at 18.5% per year in 2018 and 2019. Corresponding P/Es are 14.4 and 12.2. SKX fell a crazy amount after the earnings release and found price support at 28. I encourage investors to hold SKX, and consider buying more shares while the price is depressed. Strong Buy.
TiVo (TIVO – yield 5.1%) is an entertainment technology company that joined the Buy Low Opportunities Portfolio in early March specifically because it’s a takeover target. In recent news, TiVo added Alexa voice control to its DVRs. In addition, Business Wire reported that “TiVo entered into a multi-year (IP) license agreement covering the consumer electronics brands of the Fnac Darty Group, the European retailer of entertainment and leisure products, consumer electronics and household appliances.” The ex-dividend date is June 5.
The company is interested in being acquired or going private because the shares are so undervalued. TiVo intends to complete the process of its strategic review by the time of the second quarter earnings release. TiVo was featured in the May issue of Cabot Undervalued Stocks Advisor. I anticipate there being very little to report until the company announces some sort of finalized M&A activity by August at the latest. The stock has traded between 13 and 15.5 all year, and could surpass 15.5 in the coming weeks. Expect volatility and buy on dips. Strong Buy.
Universal Electronics (UEIC) is a manufacturer and cutting-edge world leader of wireless remote control products, software and audio-video accessories for the smart home; with a strong pipeline of new products. After completing its prior repurchase authorization in the first quarter of 2018, Universal Electronics authorized a new repurchase of 100,000 shares on May 3. The company’s CEO and CFO will present at the 19th annual B. Riley FBR Investor Conference on May 24, 2018. Investors may access a webcast of the presentation at www.uei.com.
UEIC is an undervalued micro-cap aggressive growth stock, with minimal debt on the balance sheet. The stock is volatile, and very cheap right now, after plummeting on disappointing news of lower second-quarter shipments. The stock is not yet ready to recover, and will likely trade liberally between 28 and 40 for a while. Patient investors could dollar-cost-average into the stock as they await its next upturn. Traders will likely profit in the short-term. Strong Buy.
