Day 248: Best Stocks for 2nd Half?
Mother's Little Helper portfolio was UP today +9,381.11 (+1.20%).
Overall GAIN YTD: +$207,468.52 (+35.53%).
According to CNN Money our benchmark index, the S&P 500 is up +10.40% Year To Date. http://money.cnn.com/data/markets/sandp/
Sorry about missing yesterdays portfolio update. Normally, even if I don't write a blog post I do update the portfolio with the days closing prices. Yesterday was a big day, I had some work to do on one of my show bikes and at work I had a house to draw, the kitchen is looking really good. Did you catch that sunset last night?
You get the point, we all have better things to do than focus on what the stock market is doing on any given day. So while there are those who say I'm quick to report on the days we're up and don't always report on the days we're down, just realize that I'm not trying to hide the truth, I just don't think we should be looking at our investments every day.
By the way, yesterday was a big day for the portfolio and today was even bigger, up +1.20% today alone.
Analog Devices
Yesterday portfolio company Analog Devices (ADI) reported earnings. ADI shares closed up 5.24% with nearly 7 million shares traded and was one of the most active stocks on the NASDAQ after the company beat estimates in its third quarter. ADI reported earnings of $1.26 per share, beating the $1.15 per share expectation. Revenue came in at $1.43 billion, just ahead of the $1.4 billion estimate. Guidance from the company is $1.29 to $1.43 per share for the current quarter. Analysts estimates are for EPS of $1.25. Revenue guidance is $1.45 billion to $1.55 billion. Analysts estimate revenue of $1.46 billion. The stock is up 15.48% YTD in the portfolio and over 32% in last 12 months.
Best Stocks for the Rest of the Year
I’ve been asked many times what stocks I would pick for the rest of the year. I’ve sort of ignored the question so far because it’s counter intuitive to me in the context of what Mother’s Little Helper is all about. To reiterate, we select good companies that have a good outlook for the next 12 months. We buy them in equal amounts and hold them until the end of the year. Wash-Rinse-Repeat is the closest set of instructions I can provide. But I’m also working from the perspective of the calendar year for this portfolio and the questions have been asked by people who are just getting started and don’t necessarily want to wait until December to begin their investing. Wow! There’s a few land mines in that field.
Briefly, if you’re just getting started investing I wouldn’t be looking for stock tips, I would purchase a group of index funds with at least half of the total amount of money you want to invest. Once you’ve established that foundation of index funds you can begin to purchase individual stocks that fulfill specific objectives within a portfolio. I’ll write more about this later. The index funds I’m talking about are listed below. Let’s say you have a total of $100,000 to invest, I’m suggesting that a minimum of half, $50,000 be placed in the group of index funds below, in the allocations illustrated. For more conservative investor put 100% into these funds and just ignore stocks. You might build into these positions over time, or make the investment all at once on a really big market correction, like when the DOW is down 300 points or more. Then everything is on sale and you come out looking like a genius in about 18 months after the correction.
This is the foundation of a portfolio that will participate in the market to get you returns that are as good as or better than the overall market with minimal fees. You’ll also be invested globally, taking advantage of growth in all parts of the world. Re-balance this once a year to maintain the percentages. Set it and forget it.
35% $17,500 VTI Vanguard Total Stock Market ETF
22% $11,000 VEA Vanguard FTSE Developed Markets ETF
28% $14,000 VWO Vanguard FTSE Emerging Markets ETF
5% $2,500 VIG Vanguard Dividend Appreciation ETF
5% $2,500 XLE State Street Energy Select Sector ETF
5% $2,500 MUB iShares S&P National AMT-Free Muni Bond Fund
100% $50,000
But what about those stocks for the rest of the year?
Okay, okay, it’s a fun guessing game and I’ll play along for those that are just starting to read the blog. First I’ll state that I still have strong conviction in the portfolio as it stands, none of the companies have reached the share price estimates I have for them, so there is still room for them all to run up by years end. If you’re doing your own homework, please take a hard look at the top half of the portfolio.
For something new, I like these four companies. I would buy any of these companies at or below the current prices. While I think these companies will do well by year end, I'd probably find myself holding them through 2018 as well.
Progenics Pharmaceuticals (PGNX) $6.73 Clay's YE target $10.00 +48%
Progenics Pharmaceuticals, Inc. develops medicines and other technologies to target and treat cancer. The company’s primary clinical-stage product candidates include Azedra, a radiotherapeutic product candidate, which is in Phase IIb clinical trial under special protocol assessment for the treatment of malignant and/or recurrent pheochromocytoma and paraganglioma; 1404, a technetium-99m labeled small molecule that has completed Phase II testing, as well as acts as an imaging agent to diagnose and detect prostate cancer, as well as soft tissue and bone metastases; and PyL, a fluorinated prostate specific membrane antigen (PSMA)-targeted positron emission topography (PET) imaging agent for prostate cancer. Its clinical-stage product candidates also comprise 1095, a PSMA-targeted Iodine-131 labeled small radiopharmaceutical molecule for the treatment of metastatic castration-resistant prostate cancer; PSMA TTC, a thorium-227 labeled PSMA-targeted antibody therapeutic that is in pre-clinical stage for treatment of metastatic prostate cancer; and EXINI bone BSI range of prostate cancer bone scan indexing products. The company also offers Relistor-subcutaneous injection for the treatment of opioid induced constipation (OIC) in advanced-illness adult patients receiving palliative care when laxative therapy has not been sufficient, as well as for treatment of OIC in patients with non-cancer pain; and Relistor-oral tablets for the treatment of OIC. The company has license agreement with Salix Pharmaceuticals, Inc. for the development and commercialization of Relistor worldwide; and with Amgen Fremont, Inc. to use its XenoMouse technology for generating human antibodies to PSMA, as well as has collaboration agreement with Seattle Genetics, Inc.
United Rentals (URI) $118.06 Clay's YE target $135.00 +14%
United Rentals, Inc., through its subsidiaries, operates as an equipment rental company. It operates in two segments, General Rentals; and Trench, Power, and Pump. The General Rentals segment engages in the rental of general construction and industrial equipment, such as backhoes, skid-steer loaders, forklifts, earthmoving equipment, and material handling equipment; aerial work platforms, such as boom lifts and scissor lifts; and general tools and light equipment comprising pressure washers, water pumps, and power tools. This segment serves construction and industrial companies, manufacturers, utilities, municipalities, and homeowners. The Trench, Power, and Pump segment is involved in the rental of specialty construction products, including trench safety equipment, such as trench shields, aluminum hydraulic shoring systems, slide rails, crossing plates, construction lasers, and line testing equipment for underground work; power and HVAC equipment, which consists of portable diesel generators, electrical distribution equipment, and temperature control equipment; and pumps primarily used by energy and petrochemical customers. It serves construction companies involved in infrastructure projects, municipalities, and industrial companies. The company also sells new equipment, such as aerial lifts, reach forklifts, telehandlers, compressors, and generators; contractor supplies, including construction consumables, tools, small equipment, and safety supplies; and parts for equipment that are owned by the companys customers, as well as provides repair and maintenance services. It sells its used equipment through its sales force, brokers, and Website, as well as at auctions and directly to manufacturers. As of January 1, 2017, the company operated 887 rental locations in the United States and Canada.
Synaptics (SYNA) $41.57 Clay's YE target $55.00 +32%
Synaptics Incorporated develops, markets, and sells intuitive human interface solutions for electronic devices and products worldwide. The company offers its human interface products solutions for mobile product applications, including smartphones, tablets, and touchscreen applications, as well as mobile, handheld, wireless, and entertainment devices; notebook applications; and other personal computer (PC) product applications, such as keyboards, mice, and desktop product applications. Its products include ClearPad, which enables users to interact directly with the display on smartphones and tablets; ClearView products that provide advanced image processing and low power technology for entry-level smartphones; TouchView products, which integrate touch and display technologies to deliver performance and simplified design; and Natural ID, a fingerprint ID product that is used in smartphones, tablets, notebook PCs, PC peripherals, and other applications. The companys products also comprise TouchPad, a touch-sensitive pad that senses the position and movement of one or more fingers on its surface; SecurePad that integrates fingerprint sensor directly into the TouchPad area; ClickPad that offers a clickable mechanical design to the TouchPad solution; and ForcePad, a thinner version of its ClickPad. In addition, its other product solutions include dual pointing solutions, which offer TouchPad with a pointing stick in a single notebook computer enabling users to select their interface of choice; TouchStyk, a self-contained pointing stick module; and TouchButtons, which provides capacitive buttons and scrolling controls, as well as display interface products. The company sells its products through direct sales, outside sales representatives, distributors, and resellers. It serves smartphone, tablet, and PC original equipment manufacturers, as well as various consumer electronics manufacturers.
Nvidia (NVDA) $169.44 Clay's YE target $200.00 +18%
NVIDIA Corporation operates as a visual computing company worldwide. It operates in two segments, GPU and Tegra Processor. The GPU segment offers processors, which include GeForce for PC gaming; GeForce NOW for cloud-based game-streaming service; Quadro for design professionals working in computer-aided design, video editing, special effects, and other creative applications; Tesla for deep learning, accelerated computing, and general purpose computing; and GRID for cloud-based visual computing users. The Tegra Processor segment provides processors that integrate a computer onto a single chip under the Tegra brand name; DRIVE automotive computers, which offer self-driving capabilities; and tablet and portable devices for mobile gaming and TV streaming under the SHIELD name. The companys products are used in gaming, professional visualization, datacenter, and automotive markets. It sells its products primarily to original equipment manufacturers, original device manufacturers, system builders, motherboard manufacturers, add-in board manufacturers, and retailers/distributors.
Stay Invested
Clay Baker
Disclosure: I am personally invested long in these stocks that appear in the MLH portfolio and may purchase or sell shares within the next 72 hours. I am also invested in other stocks that do not appear in the MLH portfolio: BA, BRK.B, CELG, CSCO, CTXS, CVX, DOW, DVAX, FB, IBM, NTES, NVDA, OMER, PFE, PG, RDHL, SCHW, THO, TWX, VEEV, VZ, XLNX, XOM
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. This article is not intended to offer investing advice, guarantee 100% accurate predictions, or to be interpreted as providing a personal recommendation.
