Today’s updates cover companies beginning with the letter I, several of which gave investors
very nice returns. I’ve included the advisor’s current advice on the pick, whenever available, and
given you the return from the date of recommendation through the end of 2013.
International Business Machines Corp. (IBM) was recommended by Peter Hughes, CFA of Steven Check’s The Blue Chip Investor. The shares are down by 1.32%.
Illumina Inc. (ILMN) was picked by Nate’s Notes. Editor Nate Pile updated the company in
Issue 747, July 24, saying, “Thanks to great execution on the part of Illumina, Inc.’s management
team, the company has continued to run circles around its competition in the high-throughput
genomic sequencing industry, and, as a result, the company’s stock has also continued to
outperform many of its peers by a fairly wide margin since we made the stock our Top Stock
Pick at the beginning of the year. Despite being up nearly 50% so far this year (and thus due
for a ‘cooling off period’ at some point), we continue to believe that the stock is still a great
long-term buy at current prices and recently raised our buy limits accordingly. ILMN is now
considered a strong buy under $68 and a buy under $76.” The shares of Illumina have been one
of the best performers of our 2013 Top Picks, up 111.09%.
Intel Corp. (INTC) was chosen by Sy Harding of Street Smart Report, and has risen 27.45%.
Harding reported, “The stock sold off sharply (declining 33% from its April high to a low in
late November) in reaction to the company lowering guidance for the second half of 2012 on
slowing global economies. We believe the sell-off was overdone, the stock is very oversold,
and will rebound nicely in 2013. Intel is the dominant force in the computer processor arena.
Smaller rival AMD very occasionally emerges as a potential threat only to see Intel leapfrog
ahead again. The company was faulted for being slow to recognize the demand for smaller chips
used in smartphones and tablets, an area currently dominated by ARM. But Intel is moving
more aggressively into that area also with its ‘Atom’ chips, and acquired Infineon’s wireless
connectivity chip business in 2011 to support that undertaking. Intel has a strong balance sheet
and cash flow, and maintains an immense budget for R&D and to sustain its industry-leading
manufacturing technologies. Shares are selling at less than 10 times estimated 2013 earnings, and yield 4.2%. Our upside target is $27. We suggest a ‘mental’ protective stop at $17.20.”
InVivo Therapeutics (NVIV) was chosen by BI Research Analyst Tom Bishop, and updated in
our August 28 Digest Daily Alerts. Bishop instructed shareholders, “Sell InVivo Therapeutics.
The new CEO has already taken a look at the timeline for the biopolymer scaffold device and
in a press release this morning unfortunately pushed it way out beyond what the prior CEO was
indicating—way beyond. Now I don’t know what to believe, if the prior CEO could be so far
off on this one. I myself may not sell all my shares (after you get a chance) because I believe in
the technology, but if class actions emerge, the stock may be hit some more. Those who got in
initially at $2 and later at $1.75 and sold some at $3.80 or better (and hopefully/possibly some at
$6) will still do pretty well. As you can imagine this has been a very hard decision.” The shares
had declined 16.59% as of the Daily Alert.
iShares MSCI EAFE Index ETF (EFA) was recommended by Marvin Appel, Systems and
Forecasts, and is up 20.89%. Appel wrote, “Write covered calls expiring on January 18, 2014
at the strike price with the most time value. EFA still has a lot of upside potential to recover in
absolute price and in its price relative to the S&P 500 before it revisits its level $62 where it
traded in June 2011.”
iShares MSCI Emerging Markets Index (EEM) was chosen by Donald L. Sazdanoff of The
Sovereign Advisor, and is down 3.59%.
iShares MSCI Europe Financial Sector Index Fund (EUFN), picked by Paul Goodwin of
Cabot China & Emerging Markets Report, was replaced in Issue 747, July 24, with Qihoo
360 Technology Co. Ltd. (QIHU). At the time, EUFN had risen 6.89%. Goodwin noted,
Accordingly, I’m changing my pick for the remainder of 2013 to Qihoo 360 Technology Co.
Ltd., a young Chinese company that’s making waves by turning the mobile search industry in
China on its head. Qihoo 360’s main product has always been protection software for mobile
devices that keeps phones and pads safe from spam, malware and viruses. The company used
its popular free website to provide a distribution channel, advertise its products and reap a little
revenue from outside advertisers. But in August 2012, the company began offering its own Web
earch engine, competing head-to-head with giants Baidu and Google. When the next market-
share numbers came out, Qihoo’s browser had nabbed almost 10% of the mobile search market!
Emerging market stocks haven’t been much in favor thus far this year, but Qihoo 360 has the
potential to lead the pack in the second half of 2013.” The shares of QIHU are up 42.23%.
iShares MSCI Mexico Investable Market Index (EWW) was chosen by three advisors—
Mary Anne & Pamela Aden of The Aden Forecast, Nicholas Vardy of Bull Market Alert
(via TheStockAdvisors.com), and Jim Powell, Global Changes & Opportunities Report, (via
TheStockAdvisors.com). Powell updated his recommendation in our Issue 747, July 24 update
and noted the name change to iShares MSCI Mexico Capped ETF (EWW). The price of
EWW has declined by 3.56%.
Iteris, Inc. (ITI) was picked by Contra the Heard Investment Letter. Editor Benj Gallander
wrote in his update in our Issue 747, July 24, “Revenues increased 4% to $15.9 million. Debt
was completely eliminated. Cash trended upward to almost $20 million and that was after a
share buyback of a further 664,000 shares. Insiders are motivated for success not only because
of their salaries, but because they own almost 28% of the stock. A major metric going forward
is the backlog, which increased 9% to $38.6 million. While ITI’s technology is an important
component of roadways that continue to become more and more congested, if the driverless car
vision that some foresee does come to pass, this enterprise’s expertise will move even further to
the front lines. The initial sell target is $3.49, far below where the company used to trade. The
industry remains ripe for consolidation and Iteris could prove a target.” The shares have risen
28.05%.
Errata:
In our January 7 Top Picks Daily Alert, we neglected to report that Asia Pacific Wire & Cable
Corp., Ltd. (APWC) picked by William Velmer of S.A Advisory, was sold and replaced by
Command Center, Inc. (CCNI) in our Issue 747, July 2. Velmer wrote, “CCNI provides
flexible, on-demand employment and staffing solutions to businesses nationwide through a
network of more than 58 brand stores. CCNI has shown robust revenue and earnings growth
during the past couple of years. For 2011 and 2012, respectively, revenue equaled $82 million
and $98 million and income/share was $0.015 and $0.025 (61.3 million and 63.3 million diluted
shares). The public staffing companies—Kelly Services (KELYA), Manpower (MAN), Robert
Half International (RHI), Trueblue (TBI), On Assignment (ASGN) and Korn/Ferry International
(KFY)—sport an average P/E of 24. CCNI currently sports a trailing 7.5 actual P/E. We believe
that, because of dramatic managerial and other corporate overhead reductions, much lower debt
expense and the elimination of low margin business, CCNI will earn at least $0.08/share for
2013. We believe that CCNI, besides being fundamentally extremely cheap and undervalued,
is also an attractive takeover candidate with huge premium potential. CCNI is fundamentally
super cheap with upside potential of 200% to 400% and almost zero downside risk. We have
new management, lean and mean operations, takeover potential and it’s trading near its 52-week
low. We rate CCNI with a very strong BUY at current levels. If we are right, you may not need a
job!” CCNI had risen to $0.45 at the end of 2013, for a return of 66.67%.