The stock market had its worst week of the year, and was down for the second week in a row. The Dow Jones Industrial Average lost 1.1%, while the S&P 500 fell 1.3%. The NASDAQ ended the week down 1.5%. Yet that didn’t stop your holding in Monster Beverage Corp. (MNST) from powering ahead. With the June $60 call options up 124.14%, sell your remaining options to lock in your ninth triple-digit percentage gain of the year.
Given the change in market sentiment, this week’s Bull Market Alert recommendation, real estate investment trust (REIT) Digital Realty Trust (DLR), is a more defensive bet that I expect to do well even if the market continues its current correction.
DLR focuses on strategically located real estate that is critical to the day-to-day operations of technology industry tenants and corporate enterprise datacenter users. The organization’s clients include information technology departments of Fortune 1,000 companies, as well as financial services companies. Facebook is DLR’s third-biggest client. The growth of cloud computing continued the expansion of data center requirements and a diverse geographic and tenant footprint bodes well for Digital Realty’s future.
As a Stanford University graduate, I’ve always had a weak spot for Silicon Valley. After all, its home to much of the technology that has genuinely changed the world — whether it’s through the personal computer, the web browser, or Google. In 1984, I was one of the first people in the world to use a Mac, when Apple populated all the Stanford libraries with the Mac’s boxy first edition.
Technology investing is all about hitting a home run — or striking out. Yet if there is a conservative way to play the surging tech boom in the United States in Silicon Valley and elsewhere, Digital Realty Trust (DLR) is it. When it first went public in 2004, Digital Realty Trust was a small company with only 24 properties, 10 of them in California. Today, DLR’s revenue is 10 times what it was in 2004, and its one of the top 15 U.S. REITs with 102 properties in the United States, Europe, Australia and Singapore. Seven years ago, 42% of its properties were in California. Today, it’s down to about 25%. In the fourth quarter of 2011 alone, Digital Realty bought four properties in Ireland, San Francisco, Atlanta and Northern Virginia.
From a short-term trading perspective, DLR is oversold and due for a bounce. It has also outperformed the broader U.S. market over the past three months. Also, remember that the company has to pay out 90% of its REIT taxable income to its stockholders. DLR yields 4% and has increased its earnings 10 times over the past seven years. (By the way, if you are looking for recommendations yielding 6% to 16%, check out my new trading service Dividend PRO.)
So, buy Digital Realty Trust (DLR) at market today and place your stop at $68.50. If you want to play the options, I recommend the July $75.00 calls (DLR120721C00075000).
Portfolio Update
Bank of Ireland (IRE) jumped 5.42% over the previous week. IRE’s stock chart took a slight U-turn upwards last week on no apparent positive news. However, several technical indicators on IRE’s chart hit the low point in the stock’s trading ranges last week — and did so in near unison. This “aligning of the technical stars” may have been enough to start a fire under IRE’s stock chart. IRE is a HOLD.
National Bank of Greece SA (NBG) popped 9.50% last week. NBG jumped last Tuesday on news that National Bank of Greece may be selling off Finansbank — the Turkish arm of NBG. NBG is a HOLD.
Intuitive Surgical, Inc. (ISRG) was flat, rising just 0.24%. ISRG started dipping from its 52-week high a little over a week ago. However, analyst firm Dougherty & Company initiated coverage on ISRG last Tuesday and set a price target of $650. This is 15% above the current stock price, and good enough news to send ISRG higher every day last week — right back to its 52-week high. ISRG will report earnings on Tuesday April 17 and is a BUY.
Altisource Portfolio Solutions (ASPS) lost 5.63% over the past five trading days. ASPS currently holds the #1 spot on both the NYSE and NASDAQ for “mortgage investment stock with the best price/earnings to growth (PEG) ratio.” A PEG ratio of 1.00 generally signifies a “fairly priced” stock, with lower figures indicating undervaluation. ASPS’ low 0.42 PEG ratio gives it some excellent bullish pressure, making it a great value stock in your portfolio. ASPS will report earnings on April 26 and is a HOLD.
Monster Beverage Corp. (MNST) added 1.39%. MNST remains a great buy, even as the market wavers, as sales of its products are growing at a higher rate than many of its competitor’s like-branded wares. And, keep in mind, Monster is just beginning its break into the international drink markets. MNST is a BUY.
Dick’s Sporting Goods (DKS) gained 0.82% over the previous week. DKS has been trapped between its 52-week high of $50, and $47 lower support level. However, DKS managed to rise from support last week, back its 52-week high, even as markets logged one of the worst weeks of 2012. DKS is a BUY.
Novo Nordisk A/S (NVO) came in flat for the week. Novo Nordisk did receive a bit of good news as the U.S. Food and Drug Administration (FDA) gave NVO approval to update its Victoza product label and include specific labeling highlighting Victoza’s “superior blood sugar control abilities.” This gives NVO’s product a distinct advantage over its competing product. NVO will report earnings on April 27 and is a BUY.
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