Tag Archives: request

How A Savvy Stock Portfolio Manager Got The Oil Trend Right

Oil explorer stocks have done what at least one savvy money manager expected this year. Back in January, Fidelity Investments energy portfolio manager John Dowd weighed in with commentary that rejected the gloom and doom crowd. Dowd took more of a  gloom and room to run position. Valuations had fallen to levels where oil stocks historically had “rebounded and delivered positive performance,” he noted. “All of the gloom is generally reflected in the historically low valuations for energy stocks as if this environment is permanent, but I don’t believe it is,” Dowd wrote. Fidelity published his comments Jan. 20, which happened to be the same day that IBD’s industry group Oil & Gas-U.S. Exploration & Production notched a low. How low was it? The market hadn’t seen a lower level since early 2009. Stock moves based on valuations aren’t IBD’s forte. IBD’s method involves buying the best stocks in the best markets. Oil explorers aren’t the best stocks in fundamentals, and this market certainly isn’t the best. One choice available to the individual investor is the swing trade. These sometimes involve stocks that are more of a relative strength story than a great fundamentals story. In swing trades, the investor is not looking for what could become another of history’s greatest stocks. The swing trader is looking for favorable conditions for a smaller profit over a shorter period of time. The oil explorer group was No. 27 Thursday, up from No. 174 at the end of 2015. Within the oil explorer group, three stocks have done especially well this year. Range Resources ( RRC ) is up 72% year to date. The company focuses on unconventional plays, such as shale, coal bed methane and tight gas sand reservoirs. The stock’s three-month Relative Price Strength Rating is 97, putting it in the top three percentile. Continental Resources ( CLR ) is up 71% this year. The company is a major producer in the Bakken of North Dakota and Montana. The big cap also has positions in Oklahoma. The three-month RS rating is 98. Rice Energy ( RICE ) is up 69% this year. The small cap company is a natural gas and oil player in the Appalachian Basin. The three-month RS rating is 98. Apart from the bounce off valuations, a wildfire in Alberta is destroying supply and thereby boosting oil prices and oil stocks. Canada is a big player in the oil patch, sending about 100 million barrels of crude oil monthly to the U.S. and 240 billion cubic feet of natural gas monthly. Oil markets have generally had a modulated reaction, probably because U.S. inventories are high. More than 80,000 people have fled Fort McMurray, Alberta, including oil workers. The impact on prices hinges on whether or not oil facilities are damaged.

Apple Stock Hits 2016 Low Amid Doubts About Its Future

Apple ( AAPL ) CEO Tim Cook should keep CNBC host Jim Cramer on speed dial. The only day that Apple shares have risen during the past two weeks was the day after Cook appeared on Cramer’s financial news show “Mad Money.” Cook reassured investors on the May 2 show that Apple’s business is healthy and has a great future. His calming appearance on the show stopped an eight-day losing streak for Apple stock. Not everyone was swayed by Cook’s comments. Chamath Palihapitiya, CEO of venture capital firm Social Capital Partnership, told CNBC that Cook’s television interview was “like human Ambien. I mean, it was pretty boring.” Palihapitiya criticized the Apple boss for leaving so much money “rotting” on its balance sheet and spending more money on its new campus than on research and development, Business Insider reported . Apple ended the March quarter with $233 billion in cash and securities. Apple stock hit a 2016 low of 91.85 in intraday trading on the stock market today . Apple shares ended the regular session Friday down 0.6%, at 92.72. Apple stock has fallen for 14 of the last 16 trading days. Apple shares have been hammered by a downbeat March-quarter earnings report and the perception that the company is lacking innovation. In its fiscal second quarter, Apple reported its first year-over-year sales decline since 2003 and first-ever drop in iPhone unit sales. Apple also is facing slowing sales in China and growing interference by Chinese regulators. Cook is scheduled to travel to China this month to meet with high-level government officials, Reuters reported Friday . Last month, Chinese authorities shut down Apple’s online book and video services, following the introduction of regulations that imposed strict curbs on online publishing, especially for foreign companies, Reuters said. The next possible catalyst for Apple stock is not expected to come until June 13-17, when the company hosts its annual Worldwide Developers Conference in San Francisco. At WWDC, Apple is expected to unveil an overhaul of its Apple Music subscription service, 9to5Mac reported earlier this week . The Apple Music revamp will feature a redesigned user interface, simplified features and several new features such as adding song lyrics. At the conference, Apple also is expected to announce new versions of its Mac and Apple Watch operating systems.

Generic Drug Stocks Crash, As Endo Warns Of Price Erosion

Drugmaker Endo International ( ENDP ) plunged 39% Friday after it delivered a hefty guidance cut driven by weakness in its generics business, dragging nearly every other generic-drug stock down with it. Endo actually beat analysts’ consensus in Q1, but it cut its full-year earnings guidance by 23% — now $4.50 to $4.80 a share — and trimmed the revenue outlook by 11% to a range of $3.87 billion to $4.03 billion. In the company’s earnings release, CEO Rajiv De Silva blamed “new competitive entrants, including for Voltaren Gel; greater-than-expected price erosion across the Generics sector; and delays on regulatory actions related to certain Endo products.” IBD’s Take: How healthy are shares of Endo and Teva and how do they stack up vs. rivals? Find out at IBD Stock Checkup It was the second factor that rattled the rest of the generics industry. Teva Pharmaceutical Industries ( TEVA ) stock fell 6.8% to 50.22, and hit a 19-month low of 50.01. Allergan ( AGN ), already staggering from the cancellation of its buyout by Pfizer ( PFE ), hit a two-year low of 195.50 and ended the day at 201.63, down 4.1%, even though it’s selling its generics business to Teva. Perrigo ( PRGO ), which cut its own guidance last month, fell 4.8%, to 92.42. Smaller drugmaker Akorn ( AKRX ), down as much as 20%, ended the day off 7.9%, at 22. Akorn, which has fallen way behind on its accounting due to internal issues, late Friday finally set dates for its Q4 and Q1 earnings releases, for May 9 and May 17, respectively. Leerink analyst Joseph Schwartz wrote in a research note that Endo’s problems read through most directly to Teva, Akorn and Perrigo, and more moderately to Allergan. Essentially, whoever’s done the most price-hiking on products representing more than 5% of generic sales lately is in the most trouble. Referring to industrywide data from IMS, Schwartz wrote: “Based on our analysis, Akorn has taken 13 price increases matching the above criteria (44% of IMS generic sales), Perrigo eight (18% of generic IMS sales) and Endo took 17 (17% of generic IMS sales).” Teva, meanwhile, is due to report its own Q1 earnings and guidance on Monday morning, and Allergan is due before the open the following day. Endo itself got at least four downgrades from Wall Street analysts Friday, mostly to neutral but one to underweight. It ended the day at 16.17, a seven-year closing low.