Last week was a solid one for global stock markets. The Dow Jones Industrial Average was up 1.65% and the S&P 500 broke out to the upside by rising 2.23%. The MCSI Emerging Markets Index had its strongest week in recent memory, rising 3.52%.
The two big biggest gainers in your Bull Market Alert portfolio were your “option-style” bets on two European banks, Bank of Ireland (IRE) and National Bank of Greece SA (NBG), which soared 11.58% and 16.47%, respectively. The European Central Bank’s (ECB) commitment to buy sovereign bonds just might be enough to kick-start a genuine — and sustainable — bull market in these severely oversold European banks.
Your leveraged bet on the biotechnology sector through the ProShares Ultra Nasdaq Biotechnology (BIB) also rocketed 7.68%. Last week’s bet on Michael Kors (KORS) ended the week 3.86% higher — and with solid, 12.84% gains in your options. With the exception of your long-time bets on highly volatile European banks, all of your Bull Market Alert positions are profitable.
This week’s Bull Market Alert recommendation is Coffeyville, Kan.-based CVR Partners, LP (UAN), which owns, operates and grows a pure nitrogen fertilizer business. As a limited partnership, CVR’s focus is on paying sizable shareholder dividends — which is why it is also a recommendation in my high income-oriented trading service, Dividend Pro.
But here is why I see the potential for substantial upside in CVR’s stock price, as well.
The summer’s poor weather conditions for U.S. agriculture are terrific news for a fertilizer company like CVR. Excessive rains in the spring meant corn production collapsed. And lower-than-expected corn production means higher demand for fertilizer to make up for lost output.
Meanwhile, too much rain in the spring was followed by too little rain in the summer. The summer drought meant that many nutrients, nitrogen in particular, had to be reapplied this fall to make the soil fit for the next round of spring plantations. That’s yet another boon for nitrogen demand.
In fact, CVR Partners has already booked orders for almost all the ammonia it will produce for the next two quarters. No wonder its revenue grew at 68% year-over-year and its operating income has soared 500%. All of that bodes well for CVR’s share price in the months ahead.
If you like a bit of income in your portfolio, you’ll be happy to learn that CVR currently yields 9%. CVR generally pays its distributions on or about the 15th day of February, May, August and November to holders of record on or about the first day of each month.
So buy CVR Partners, LP (UAN) at market today, and place your stop at $22.50. For potentially bigger gains, buy the $30 February 2013 call options (UAN130216C00030000).
NOTE: I want to extend a special welcome to Robert Hsu’s Asia Edge subscribers who are joining Bull Market Alert for the first time this week. You’ll see that there is some overlap in between the Asia Edge portfolio and the current Bull Market Alert portfolio — specifically Seadrill Limited (SDRL), Michael Kors Holdings Ltd. (KORS) and, this week’s recommendation, CVR Partners, LP (UAN).
Although I have had many profitable Asia-related recommendations in China and Asia in the past, as those markets cooled in recent years, I shifted my attention to other — frankly, more profitable — sectors of the investment universe. Bull Market Alert‘s motto is “there is always a bull market somewhere.“ Consistent with my background as a hedge fund manager based in the heart of London’s financial district, you will find that my Bull Market Alert recommendations extend beyond Asia-related stocks into any of a wide variety of investment themes that I think will make you money. Today, these investment themes range from 3D printing (3D Systems Corp. (DDD) to U.S. real estate (Standard Pacific Corp. (SPF) to a Danish biotechnology play (Novo Nordisk A/S (NVO) — all of which are showing double-digit percentage profits in the current Bull Market Alert portfolio.
You can find out more about me and my investment services on www.NicholasVardy.com.
Again, welcome aboard, and I hope that we will have a long and — above all — profitable relationship in the years ahead!
Portfolio Update
Bank of Ireland (IRE) jumped 11.58% last week. IRE moved to a "Buy" in your portfolio last week in a big way as the European Central Bank’s (ECB) bond-buying announcement was the news that Europe, and the rest of the world, was waiting for. IRE managed to breech both its 50-day and 200-day moving averages. IRE is now a BUY.
National Bank of Greece SA (NBG) closed the week up 16.47%. NBG followed suit with IRE’s gains as Greece’s economic outlook jumped on hopes that the ECB’s “Monetary Outright Transactions” program will help ease Europe’s financial woes. NBG is a BUY.
Novo Nordisk A/S (NVO) gained 1.77%. With shares up 36.3% in 2012 alone, this drug sector giant’s expanding profit margins, new and promising drugs in the pipeline, and good earnings per share growth are signs of good news ahead. NVO is a BUY.
3D Systems Corp. (DDD) fell 6.91% over the past four trading days. DDD suffered this week from news reports citing concerns over DDD’s stellar growth rate. That contrasts sharply with DDD’s own estimates of itself – anticipating 15-fold growth by 2018. DDD’s trading price dipped to its 50-day moving average last Friday, but never broke through. A strong recovery ensued, keeping DDD’s nearly perfect 2012 record of staying above the 50-day moving average intact. DDD remains a BUY.
Standard Pacific Corp. (SPF) rose 2.39%. Barclays reissued its “Overweight” rating on SPF last Friday. The ratings firm also issued a “Buy” on Standard Pacific competitor Lennar (LEN), citing its positive net income over the precious six consecutive quarters. SPF is a BUY.
Ross Stores Inc. (ROST) dipped 1.53% last week, but managed to hold its 50-day moving average and its “Buy” rating in your portfolio. Twenty-six hedge funds held ROST in their portfolios during Q1 2012. This number rose to 30 hedge funds by the end of Q2. ROST is a BUY.
ProShares Ultra Nasdaq Biotechnology (BIB) rocketed 7.68%. Biotechnology continued to heat up last week as BIB’s double-leveraged nature reflected in your ultra-hefty gains. BIB is a BUY.
American Capital Agency Corp. (AGNC) continued its move upwards, adding 0.52%. AGNC’s year-over-year revenue growth jumped an incredible 157% last quarter, and AGNC has outperformed the S&P 500 Index by nearly double over the past year. AGNC is a BUY.
Seadrill Limited (SDRL) lost 0.85%. SDRL announced its intentions last Friday to offer $1.0 billion of unsecured notes to repay existing debts and fund future growth capital expenditures. SDRL is a BUY.
Michael Kors Holdings Ltd. (KORS) jumped 3.86% for its opening week in your portfolio. Wedbush Securities maintained its “Outperform” rating on KORS last Friday and raised its price target from $52 to $62 – nearly an 11% jump from Friday’s closing price. KORS is a BUY.
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