Last week saw the second consecutive positive week for global stock markets. The Dow Jones Industrial Average was up 1.70%, while the S&P 500 rose 1.30%. The NASDAQ rose only 0.50%, but penetrated its 50-day moving average, thereby confirming a new uptrend. The MSCI Emerging Markets Index (MCSI) also rose 2.79%
The big news was, of course, the elections in Greece, which reaffirmed the country’s commitment to austerity — at least in the short term. The market clearly anticipated this result, with your position in National Bank of Greece (NBG) soaring 50.41%. As I have noted, you should treat this position like an option without an expiration date. This is your “lottery ticket” on profiting hugely if Greece makes it.
Monster Beverages Corp (MNST) also continued its relentless run and is now up 34.08% since I first recommended it. Other gainers in your portfolio included Bank of Ireland (IRE), up 4.20%, and last week’s pick Pharmacyclics (PCYC), up 4.41%. This week, I am also recommending the $43 August call options on PCYC (PCYC120818C00043000) in pursuit of potentially bigger gains in the weeks ahead.
Both Liquidity Services, Inc. (LQDT) and 3D Systems Corp. (DDD) were down sharply. However, these two picks are both at technical resistance points that make them good candidates for adding to your Bull Market Alert portfolio.
With the Nasdaq breaking out above its 50-day moving average on Friday, this week’s Bull Market Alert pick is a pure momentum play, Mellanox Technologies, Ltd. (MLNX). An Israeli-based fabless semiconductor company, Mellanox, is riding the wave of “cloud” computing focusing on communication and data transmission infrastructure equipment that connects servers and storage systems, thereby ensuring the smooth communication of data and information.
Mellanox’s signature product, the InfiniBand, is a better-performing version of Ethernet, offering both better performance and lower cost than its rival. Oracle (ORCL) — which acquired 10.2% Mellanox in 2010 — is a big customer, as is Hewlett Packard (HP). Just last week, Intel (INTC) announced that it will use Mellanox’s InfiniBand adapter chips, providing a big boost to Mellanox’s revenues in the future.
With its InfiniBand system adopted by more and more vendors, Mellanox’s revenues and earnings are shooting through the roof. The company’s earnings per share (EPS) grew by 113% in Q1and analysts expect it to grow another 170% in the current quarter. That means that despite its strong recent run, there is plenty of upside left in this stock.
So buy Mellanox Technologies (MLNX) today and set your stop at $52.50. After last week’s run, I’m going to hold off on recommending expensive options this week.
Portfolio Update
Bank of Ireland (IRE) rose 4.20% last week. IRE managed to crack the 50-day moving average and moved back to a BUY. The wave of positivity from the recent Greek election results may keep IRE moving upwards over the weeks to come. IRE is now a BUY.
National Bank of Greece SA (NBG) launched a whopping 50.41% over the past five trading days. NBG took off like a gunshot last week on positive anticipation over the Greek elections. The Sunday win at the polls for the conservative, pro-bailout party greatly eases investor concerns that Greece will exit the euro — a move that would de-stabilize the region and global markets. It is realistic to expect more winning weeks for your position in NBG over the months ahead. Still trading below its 50-day moving average, NBG is a HOLD.
Monster Beverage Corp. (MNST) added 3.34%. Monster made another 52-week high (not including the 4/30/12 spike) to continue its unbroken run above the 20-day moving average. Analyst firm Stifel Nicolaus also maintained its “Buy” rating on Monster last week and upped its price target to $83 — 5.5% above Friday’s closing price. MNST is a BUY.
Novo Nordisk A/S (NVO) rose 2.20% last week. A recent report predicted the growth rate for diabetes onset to continue increasing at a startling pace. This bad news is good news for NVO. A Jefferies analyst recently predicted “sustainable high single-digit growth” in diabetes drug markets well into the future, with the market hitting $54 billion a year by 2020. NVO is a HOLD.
3D Systems Corp. (DDD) gave back 5.07%. After falling from a recent 52-week high back to its 50-day moving average, DDD is once again presenting a terrific buy point. As noted in prior updates, each of the past two times DDD has met its 50-day moving average, the stock has run up to a 52-week high. This is a safe bet once again. DDD is a BUY.
Liquidity Services, Inc. (LQDT) had a tough week, dropping 11.58%, and ending the week straddling its 50-day moving average. This resistance point has held all the way back to February. Analyst firm Benchmark came out Thursday and maintained its “Buy” rating on the stock, as well as its $73 price target. This is 30% above Friday’s closing price. LQDT is a HOLD.
Pharmacyclics Inc. (PCYC) added 4.41% for its first week in your portfolio. PCYC reported on its clinical trials Saturday for its drug “ibrutinib.” Results were very positive — enough to push PCYC to a Phase 3 study, and likely to an even higher stock price in the weeks to come. PCYC is a BUY.
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