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Yesterday’s huge move took
the S&P 500 above 1,105 to close right at 1,115. TradeMaster Daily Stock Alerts’
Jason Cimpl told his readers he’s bullish going into next week. And yesterday’s
close at 1,115 will keep him from selling his latest round of upside trades.
That’s good news for TradeMaster
readers, because one stock they bought on Friday made a 50% move in
just two days. Jason’s bullish stance suggests there are more gains ahead for
this little beauty.
Jason is looking for a move
above the next resistance of 1,120 sometime in the next few days.
We’ve discussed
earnings warnings over the last few days. As you know, I believe the potential
for companies to start lowering their earnings forecasts is weighing on the
stock market.
Well, this morning, FedEx
(NYSE:FDX) reported solid earnings for its last quarter. But
the company also said full year earnings would be in the $4.40 to $5 a share
range. Analysts had expected earnings of $5.05 a share for the year.
Sure sounds like an earnings
warning. Except that this is the first time FedEx has offered full year
guidance since before the recession. And the company also indicated that the
lower-than-expected guidance is a result of higher costs, rather than lower
revenues.
So, it’s not a disaster.
FedEx, and shipping
companies in general, are important gauges of global economic growth. Higher
levels of business activity result directly in higher volumes of packages
shipped. The fact that FedEx is forecasting solid revenues is a good sign for
global economic growth.
And the fact that FedEx is
even offering full year guidance is a good sign that the economy has stabilized
enough to give the company confidence in its forecasts.
Cell-phone
maker Nokia (NYSE:NOK) also warned, but that’s hardly significant. Apple
(Nasdaq:AAPL) and Research in Motion (Nasdaq:RIMM) have relegated the one-time market leader in phones to second-tier
player status.
Nokia’s warning may actually
be good news. Apple is up on the news, which supports the Nasdaq. And we can
assume that demand for high-priced smart phones remains strong.
Oil prices
have been very strong, at $76 a barrel with ease yesterday. I expect to see $80
sometime soon. I hope Daily Profit
readers adopted my energy policy (buy oil stocks now).
It’s also time to be bullish
on solar stocks. The sector has been knocked down by reports what governments
are going to reduce subsidies for solar instillations because of debt issues.
But valuations are extremely
low for the sector. My two favorites are Trina Solar (NYSE:TSL) and Canadian
Solar (Nasdaq:CSIQ).
Canadian Solar is an
interesting case. The stock was crushed when the company announced earnings
would be delayed due to an SEC
investigation into revenue recognition. It looks as though past earnings may be
re-stated. But going forward, the company should be fine once the investigation
ends. In fact, I think stock could move 30%-40% once the investigation clouds
clear.
Reader
mail time!
Shaun B. writes
Pro advisory subscribers from England and greatly enjoy your commentary
as well as your worldwide coverage, I have a couple of quick questions on etfs
that I’m wondering if you could answer for me. I am curious after your comments
about the oil etf XOP what is your take on other oil ETF’s as generally they
seem to me to give poor returns even when the sector is booming? Also on this
note given your bullish comments on natural gas what are your thoughts on the
natural gas ETF?
First of all: DO NOT BUY THE
UNITED STATES NATURAL GAS FUN (NYSE:UNG)
FOR ANYTHING EXCEPT A SHORT-TERM TRADE! This ETF has serious design flaws and
will only lose money over time. The problem is the fund buys forward month
natural gas futures and then sells them as they approach expiration. So they
are consistently paying more for the asset than they can sell it for.
Now, ETFs in general have
lower betas than individual stocks. And they are supposed to. Because ETFs give
you broad sector exposure, they limit your risk to stock specific problems. So
you give up some upside for stability.
I don’t have a problem with
investing in ETFs. Just understand that ETFs won’t move as much as individual
stocks. And that goes for both upside moves and downside moves.
In a few weeks I’ll be
releasing a new ETF investment research report as part of my Global
Commodity Investing service. ETFs are a great way to play commodities
and commodity-related investments. Keep an eye for updates as we get closer to
the release date.
George L.
asks:
Ian–I see your evaluation of Oil & Gas
Exploration and Production ETF (XOP) below. My question is do you think there
is any reason for similar optimism for PXJ, another EFT is the Oil
Exploration area? The stock price over the last two years has never been
close to the original purchase price my broker paid. What is your advice on
this stock? Am enjoying your newsletters. Thanks.
The PXJ is the PowerShares
Dynamic Oil & Gas Services ETF. As the name implies, this ETF hold oil
services stocks like Baker-Hughes (NYSE:BHI) and Halliburton (NYSE:HAL). It is
not a pure play on oil prices.
Due to lower demand for oil,
oil companies have trimmed back their spending. That directly affects oil
services stocks and the PXJ. Not only that, but this ETF holds offshore
services companies like Transocean (NYSE:RIG). Transocean stock has been cut in half since its Deepwater Horizon rig
blew up and sank in the Gulf
of Mexico.
I would think that next two
years should be better than the last two years for PXJ.
Sidney Y. wants
to know about REITs:
Hey Ian,
My REITs have continued to advance nicely. I bought MFA in the mid
$6s, received a 13% (APY) dividend and it’s mid $7s now. Also, I bought ANH right after
the dividend in the low $6s and it’s @ $7 with a dividend of 16% next month.
I’m looking @ ANGC with a 20% dividend in 2
weeks. What do you think about REITs?
Thanks for all your hard work.
Hi Sid, thanks for writing.
Always good to hear from you. I’m sure you know I’ve recommended Maguire
Properties (NYSE:MPG) a couple times in Daily
Profit and readers have made some good money.
It’s not a popular position,
but I like commercial real estate and REITs. After some of the banks, like
Citigroup (NYSE:CITI) and Bank of America (NYSE:BAC), commercial real estate and REITs are the last of the bombed out
sectors from the financial crisis of 2009.
There’s risk with these
stocks, that’s for sure. But there’s also the potential for some big moves
higher. Also, I wouldn’t buy these stocks for the dividends. If they keep
paying, great, but don’t depend on the dividend.
Thanks for all your comments
and keep ‘em coming to [email protected]