The turmoil in stock prices continued last week. The Standard & Poor’s 500 index declined only 0.4%, but consumer discretionary, energy and technology stocks suffered larger losses. Money flowed into several value sectors, including industrial, financial and materials stocks. Is the bull market in growth stocks over? Probably not, but I believe the best and safest place for your money is in value stocks during the remainder of 2017. Buying stocks with low price-to-book-value ratios, low price-to-earnings ratios, and solid, growing dividend yields makes sense to me.
In this Weekly Update, I summarize the latest news for four companies. Prices appearing after each stock symbol are the closing prices on Thursday, July 6, 2017.
Also, in this Update, I present two indexes which companies featured in the Cabot Value Model or in the Cabot Enterprising Model during the most recent four months so you can quickly find my recent write-ups for stocks appearing in the models.
My schedule for the next four weeks will be:
- Thursday, July 13, Cabot Value Model issue 276V
- Friday, July 14, Weekly Update
- Thursday, July 20, Cabot Enterprising Model issue 276E
- Friday, July 21, Weekly Update
- Tuesday, July 25, Wall Street’s Best Daily
- Friday, July 28, Weekly Update
- Thursday, August 3, Cabot Value Model issue 277V
- Friday, August 4, Weekly Update
Company Reports
Alphabet (GOOG 906.69), parent company of Google, was hit with a record $2.7 billion fine by European Union antitrust regulators for giving preference in online search results to Google’s comparison-shopping service over other services. Google will likely appeal the ruling which could take years to resolve. Buy at 951.71 or below.
Celgene (CELG 131.95) entered into a deal to collaborate with BeiGene Ltd. (BGNE) of Beijing, China. The collaboration is two-fold.
1. With worldwide rights to BeiGene’s PD-1 inhibitor, Celgene will accelerate its immuno-oncology strategy in solid tumors. The agreement maximizes potential for PD-1-based immuno-oncology and for Celgene’s novel pipeline assets and global oncology expertise.
2. BeiGene will acquire Celgene’s commercial operations in China and exclusive license to Celgene’s China cancer commercial portfolio, including abraxane, revlimid and vidaza. BeiGene will receive $263 million in upfront license fees and $150 million equity investment. The deal is scheduled to close before the end of September 2017 and could become notably successful for both companies. Buy at 119.48 or below.
General Motors (GM 34.87) lowered its estimate of total industry sales, but GM’s stock price didn’t budge. Some of the weakness will come from corporation and rental car fleets. GM has been reducing sales to rental car fleets during the past year, which is looking like a very smart move. Morgan Stanley recently set a one-year price target of 40 for GM, with a sum of the parts value of 50. My two-year Min Sell Price for GM is 42.08. Hold.
SPDR Gold Trust ETF (GLD 116.47) could receive a boost from a falling U.S. dollar and persistent political fears, according to a recent Barron’s article. The dollar is being pressured by the probability that several major central banks around the world are on the verge of rolling back stimulus efforts or raising interest rates. Higher rates abroad will make the dollar less attractive and gold more appealing to investors. In addition, if President Trump fails to win approval of his policies, investors might shift from stocks to gold. Interest in gold could increase noticeably during the second half of 2017, making gold or the SPDR Gold Trust ETF an important hedge in your portfolio. Hold.
Index of Latest Summaries – Recommendations featured in recent issues.
