Rocco L Russo IIIRocco Russo is an Financial Advisor for Falls Church, Fairfax County

Friday, April 20, 2012

Movers and Shakers

Percentage Change in EPS from current Quarter to corresponding Quarter the previous year of 25% or more
Percentage Change in EPS from Year-To-Date (YTD) to last YTD of 25% or more
Percentage Change in Revenue from Year-To-Date (YTD) to last YTD of 25% or more
Return on Average Equity of 17% or more
Five year Revenue Growth Rate of 15% or more
Market Captialization of $50m or greater
Net Profit Margin of 18% or more.
Recent close of $12 or higher
Average 10-day trading volume of at least 250,000 shares.

Of the 32 stocks returned, the top 8 in descending order of Market Capitalization were:

Apple (AAPL)
Google (GOOG)
Baidu.com (BIDU)
VMware (VMW)
Potash Saskatche (POT)
Priceline (PCLN)
Apache Corp (APA)
Celgene Corporation (CELG)

Gone from the top-8 go Rio Tinto (RIO), Cnooc Ltd. (CEO), Barrick Gold (ABX), HDFC Bank (HDB) and Yanzhou Coal (YZC).

With five of the eight stocks coming from the technology and software sector there is a healthy emphasis on this key bellwether sector, although both Apple and Google have received a sizable dose of pain in recent weeks. Of the two, Google looks better value as it quietly consolidates between $570-670 range. Apple was on course to double its share price over the course of 6 months before investors decided to grab profits. It will likely resolve as a consolidation, much like that of Google, but has yet to find where the low end of this consolidation range will be.

Baidu posted staggering gains from $10 to $165 in just over 2 years. The mini-Google (its $51bn Market Cap is a quarter of Google's $198 bn) has performed well over the last 6 months, but it might find it hard for a push past $165 given recent trading volume. Breaks of 52-week or multi-year highs require strong volume to consume the inevitable supply generated by doubting shareholders.

VMware has experienced a roller coaster 5-years. On its IPO launch it effectively jumped from $30 to $125 in the space of a few weeks, before a reality check sent it back to $17.25 during the nadir of the credit crisis. It has managed to crawl its way back to knock on the door of its IPO year high, doing so on much stronger buying second time around. The fundamentals are there, so the question is can the current price momentum be maintained?

Potash Corp. Saskatch saw tremendous price appreciation from 2006 to 2008; rallying from low $10s to $80 over this period. The credit crunch took its toll on the share price but it has managed to find repeated support at its 200-week moving average (a key long term trend measure). The stock currently trades at this moving average (although is below its 200-day moving average) which may be the call to attract buyers once more.

Priceline has been one of the years best performers and has posted incredible gains since the low of 2008. The stock is screaming for a stock split; daily volume of 450,000 shares at $725 is one which calls for a liquidity boost. Typically, stocks which split continue to perform well as they reflect a healthy stock, ergo a strong performing company.

Apache Corp, like Potash Corp, has kept itself under the radar since posting its high in 2008. The stock has effectively traded inside a $50 - $140 range since the high and doesn't look like changing that behavior anytime soon. The company was able to beat estimates on its last quarter and the estimates for Q1 2012 are 6% higher than for the same quarter last year. So while may be moving sideways, earnings are steadily climbing higher.

Celgene Corporation is the only pharmaceutical company inside the top-8 list. Of all the stocks on the list it's the one in the process of making a break out of a 4-year trading range. What's occurring now in Celgene is what one looks for from Potash and Apache Corp in the year ahead. Driving demand for stock has been incredible - if not relentless - earnings growth; the stock has gone from a reported $0.63 in Q1 2010 to an expected $1.13 for Q1 2012 - close to double its haul. It's no wonder buyers are liking it!

**** INFORMATION PROVIDED IN THIS ARTICLE IS NOT OFFERED AS RECOMMENDED INVESTMENT ADVICE. YOU SHOULD CONSULT A PROFESSIONAL FINANCIAL ADVISOR FOR ASSISTANCE MAKING INVESTMENT DECISIONS ****

**** DISCLOSURE: NO POSITIONS HELD BY DR. DECLAN FALLON ****

**** CONTACT: ROCCO AT (202) 321-5579 TO DISCUSS WHETHER THESE STOCKS ARE APPROPIATE FOR YOU ****

Thursday, February 16, 2012

Energy Sectors to Shine

**** TEST POST ***

The following commentary and opinion is provided by Dr. Declan Fallon, an independent market researcher. If you have a particular interest in any of the stocks mentioned here please don't hesitate to contact Rocco and discuss whether they are suitable for your portfolio.

This is a copy of a post published for the Motley Fool network by Declan Fallon.

Events in the Middle East continues to stoke fears on rising gas prices, not just in Iran but Saudi Arabia too. This uncertainty spills into the broader market, surpressing demand for stocks. However, one sector which is certain to benefit is Energy. The leading Energy Exchange Traded Product, Energy Select Sector SPDR Fund (AMEX: XLE), enjoyed increased volume buying over February, without sparking a rally in price. This controlled buying in the absence of a price rise may seem counter intuitive, but once larger funds have had their fill they will look to stir the hornets' nest and get Energy stocks moving. To give an idea as to the scale of buying in this sector, Hard Assets Investor reported $692 million of investment inflow to Energy based Exchange Traded Products last week; of which $214 million flowed into the Energy Select Sector SPDR Fund (AMEX: XLE) alone. This can be compared to total inflows of $60 million to all Precious metals Exchange Traded Products and just $6 million to Industrial metals Exchange Traded Products.

However, Energy has sharply underperformed relative to other sectors. This under-performance is clearly highlighted when the Energy Select Sector SPDR Fund (AMEX: XLE) is compared to another traditionally defensive sector, Consumer Staples Select Sector SPDR Fund (AMEX: XLP). Both sectors took the pain in the 2008 meltdown, but where Consumer Staples Select Sector SPDR Fund (AMEX: XLP) was able to rally to and above 2008 highs, the Energy Select Sector SPDR Fund (AMEX: XLE) has still to mount its first serious challenge.

If we delve into some of the components of the Energy Select Sector SPDR Fund (AMEX: XLE) we can see stocks attracting individual attention. One such stock is Devon Energy (NYSE: DV). Yesterday Devon Energy (NYSE: DV) traded nearly $1 billion in volume as it beat estimates and boosted reserves. According to Estimize, Devon Energy has comfortably beaten estimates for the last three quarters. Devon Energy stock holders will be happy to see the stock past $70 after months knocking around in the $60s. With $60s history there is a golden opportunity for a move to the last stumbling block of low $90s in early 2011. Yesterday's buying will have done much to set the groundwork for such a move.

But Devon Energy is only one small part of the Energy Select Sector SPDR Fund (AMEX: XLE). Exxon Mobil Corporation (NYSE: XOM) and Chevron Corporation (NYSE: CVX) account for 32% of Energy Select Sector SPDR holdings. How are these two stocks performing?

Exxon Mobil Corporation (NYSE: XOM) is nicely placed to follow Devon's lead. The stock is trading just below $87.50, a stumbling block dating back to 2008, but one which offers plenty of fresh air above if broken. Fourth quarter earnings came in at expectations and the next release is not expected until May; so earnings will have limited influence until then. Therefore it will be left to rising oil prices to drive a break of $87.50. Chevron Corp (NYSE: CVX) has gone a step further than Exxon having surpassed the 2008 high around $90 in 2011 and is currently applying pressure on $110. Note how the price dip in the latter part of 2011 only briefly violated the $90 price level. Ironically, its most recent earnings came in below expectations and it guided lower to boot. But stock holders shrugged off the news and held on to their stock. Despite the strong price advance the stock still pays out a healthy 3.0% dividend yield which will make it more attractive should Chevron suffer any future price weakness.

It could be an interesting few months for Energy stocks and Exchange Traded Products. Buying demand is increasing for Energy stocks. This demand will eventually express itself with higher prices, which will filter through to other stocks in the sector. Exchange Traded Products, like the Energy Select Sector SPDR Fund (AMEX: XLE), offer the best opportunity to benefit from the growing demand for individual stocks while spreading the risk across the sector.

**** INFORMATION PROVIDED IN THIS ARTICLE IS NOT OFFERED AS RECOMMENDED INVESTMENT ADVICE. YOU SHOULD CONSULT A PROFESSIONAL FINANCIAL ADVISOR FOR ASSISTANCE MAKING INVESTMENT DECISIONS ****

**** DISCLOSURE: NO POSITIONS HELD BY DR. DECLAN FALLON ****

**** CONTACT: ROCCO AT (202) 321-5579 TO DISCUSS WHETHER THESE STOCKS ARE APPROPIATE FOR YOU ****

Glossary of Terms

Bear Trend: A sequence of successive lower price lows and lower price highs. Bear trends are accompanied by falling moving average values. Strong Bear Trends will see a falling 200-day moving average.

Bull Trend: A sequence of successive higher price highs and higher price lows. Bull trend are accompanied by rising moving average values. Strong Bull Trends will see a rising 200-day moving average.

Channel: Channels help define Bull and Bear Trends by using two parallel lines to connect successive peaks and troughs. Changes in Trend occur when price breaks outside of one side of the Channel. When this happens a new Channel typically emerges.

'Dead Zone': A stock's Dead Zone is when it trades between its 50-day and 200-day moving average. Stocks caught in a Dead Zone tend to trade sideways as Buyers and Sellers fight for control of the Trend.

'Death Cross': A Death Cross occurs when a stock's 50-day moving average crosses below its 200-day moving average. This is usually the start of a new Bear Trend and is usually a good time to take profits where available (if not taken already).

Downtrend: See Bear Trend.

'Golden Cross': A Golden Cross occurs when a stock's 50-day moving average crosses above its 200-day moving average. This is usually the start of a new Bull Trend.

Moving Average (MA): To calculate a moving average, take the sum of closing prices for a given period (n) days and divide by the period (n); n is typically a value of 10, 20, 50 or 200 depending on whether a short term (10 or 20), intermediate term (50), or long term moving average (200) is calculated.

Resistance: A price (usually a narrow price band, e.g. 1% either side of a defined value) above which sellers exceed buyers, preventing further gains in price. Resistance breaks when the number of buyers exceed sellers; higher prices are the result. Moving Averages and Channel lines can act as Resistance too.

Support: A price (usually a narrow price band, e.g. 1% either side of a defined value) below which buyers exceed sellers, thereby protecting against further price drops. When sellers exceed buyers you get a break of support and lower prices. Moving Averages and Channel lines can act as Support too.

Trend: Trends can be defined by the direction of a moving average; a long term trend is measured by a 200-day moving average; an intermediate term trend with a 50-day moving average; and a short term trend with a 20-day or 10-day moving average. A 'Bull Trend' means the moving average is moving higher. A 'Bear Trend' means the moving average is moving lower.

Uptrend: See Bull Trend.