Today we have a momentum recommendation from Stock Trader’s Almanac and updates on two buy-rated stocks from Cabot Stock of the Month: Melco Crown Entertainment (MPEL) and Tesla Motors (TSLA).
DSW Inc. (DSW)
from Stock Trader’s Almanac
[There is a seasonal trend of] historical consumer strength running from approximately the end of September to the beginning of June in the following year. ... Based upon the Morgan Stanley Consumer Index, the sector has produced gains averaging 10.8% over the last 15 years during this timeframe. ... The time is right to consider adding individual consumer-orientated stocks to the Stock Portfolios.
Our first candidate is DSW Inc (DSW). It recently hit a new 52-week when it raised guidance and announced that it was planning to split its shares two-for-one. DSW is a footwear and accessory retailer in the U.S. with a broad and diverse product lineup selling online and at traditional brick and mortar stores. DSW is reasonably valued with a trailing P/E in the low 20s and has an attractive Price/Sales ratio of 1.55. Revenues are rising, it has no debt and plenty of cash. DSW could be purchased on pullbacks below $78.75 (current pre-split price).
Jeffrey A. Hirsch, Stock Trader’s Almanac, www.stocktradersalmanac.com, 800-762-2974, August 20, 2013