The week started ugly but ended in typical bull market fashion. This week ends on Thursday, as Friday is Good Friday, and marks the end of a fantastic quarter for stocks. I expect that we could see some follow-thru from the late-week buying and am still targeting 1590 as an interim peak. This is really a one-day move from here (1557). Maybe we see some of the overbought food stocks, like HRL, give it up the following week.
The number of stocks on my watchlist above the 10dma is a relaxed 53. While the overall market has gone to a "black 1", it remains contained from a price-momentum perspective. SPY is just .52, while IWM is .60, DIA is .71 and QQQ is .02. Looking at the SPDR ETFs, XLP is the only one above 1 at 1.2 (Consumer Staples). Healthcare (XLV) is close at .98. These numbers tell me that there is a very strong focus on quality right now. Low beta names are attracting the most interest.
Looking at the watchlist ( Download Watchlist032213 ), the number of black 1s is now 23, with some coming off and some coming on. We have just three stocks that offer 35% or more, with CE joining AKAM and CTCT and INT and ATX dropping off. 10% winners included: FLO, ENV and WSM. I didn't quite get FLO (and still don't fully) but now that they won their bid from Hostess for the breads, the analysts jacked their estimates by 15% or so. I have raised my target, which was based on 18PE (and now 20PE) from 27 to 34. I wish I hadn't been scared out of ENV by their filing - I really thought we would get a chance to buy it back on the cheap. WSM, of course, moved higher on a solid report and Cramer's public hard-on that I think has to be based on the fact tha they have a young female CEO who caught his interest. CAH was the closest to -10%, falling 9.6% on the contract loss.
Looking at oversold names on the watchlist, LQDT (-1.83), CATO (-1.72), VOLC (-1.45) and UNFI (-1.36) are the only ones below -1. ANV (-2.31) and ULTA (-1.83) stand out on the "prospects". On ULTA, I know that I was "Treasure" and it did bounce after going a little lower than I had expected. I do want to caution that this one could take time - I would sell at 79.50 from a short-term perspective. Further out, I think it can rally if I understand correctly the cadence of their expenses in 2013 that led to the terrible Q1 guidance. I also want to point to the very overbought names on the watchlist, all > 1.5: FLO (3.43), ENV (2.35), HRL (2.12), WAG (1.84), BDX (1.8), JNJ (1.69), CFN (1.64) and AVP (1.52).
Turning to the stocks in the models ( Download Positionwatch032213 ), I changed a few targets. I adjusted TECD lower slightly. I cut CATO. I reduced LQDT - PE from 20 to 18. I increased RAVN slightly to 20 PE (I think I will just sell this remaining piece). I increased WSM too with a higher multiple (now using 19PE). I raised OMI slightly (now 19PE). Finally, I raised my target on WAG (13.5 PE to 15, which is also 10X EV/EBITDA) to 59. This is a stretch to me, but it dicates that I will be looking to sell the remaining stock at 48-49.
This is a very quiet week with respect to earnings - nothing on the entire watchlist! We do have FINL on Thursday. JOSB on Wednesday could be interesting - this is the company that had a horrible Friday afternoon pre-announcement in January.
Service Update
I continue to want to move this over to Marketfy, but they aren't ready. My intention is to offer a companion product that you will be able to get as part of a $99 bundle. I will need to figure out exactly how it will work. For April, I will continue to post here. I will charge $25 for those of you who both subscribe to the Marketfy product and who wish to continue. I will send out an email this week. Please note that the way it was set up, Marketfy will want you to pay for the service beginning 3/27. I will see if they can extend it to 4/1. If you know that you don't intend to renew at marketfy or that you don't want to subscribe to the $25 My Own Analyst, please let me know. I will send out an email this week too.
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