Last week’s picks*:

VA: CPA +0.25%
FX: AUDUSD -60 pips
SC: WILC -0.69%
SS: VGR +0.63%
VA: FCX -2.23%

Not a great week for the picks as stock markets tapered off on Friday. The problem with doing weekly stock picks is that five days is rarely enough time to see any decent moves. Nevertheless, it’s good practice and interesting to see how they pan out.

Coming up this week we have another FOMC meeting. Investors seem nervous that the Fed might do something hawkish but it’s very difficult to predict a change in policy at this point in time. Here’s some picks to keep an eye on:

Read more »


Stock screeners are great because they allow you to narrow down a list of companies and eliminate those that aren’t good investments and don’t forget that Benjamin Graham was a big proponent of stock screens in his time.

How to use Finviz

I think Finviz is the best free stock screener online, simply because it has the largest number of filters. But it’s also easy to use and great for seeing an overview.

As you can see, if you click on the screener there are over 60 filters that you can use to screen for stocks and if you look you can see there are almost 7000 stocks in the database. Read more »


Last week’s picks*:

FX: GBPUSD -50 pips
VA: PKG +4.84%
SC: INTT +12.15%
SH: CHH +1.34%
TF: CYY -0.14%

My stock picks performed better than my forex picks last week as I vastly underestimated the significance of the Scottish Independence vote in the UK. A Scottish breakaway would impact UK GDP and that is bearish for the pound, which gapped lower again this morning.

Looking to this week, there is not an awful lot on the calendar but traders will be watching the unveiling of the new iPhone 6 on Tuesday. As I said on Friday, I like Apple shares but I wouldn’t want to be a buyer this week as I don’t know what to expect from the event.

This week’s trading picks:

Value

Copa Holdings $CPA

Copa Holdings is an airline based out of Panama that schedules flights across a number of countries in South America. I’ve tipped Copa Holdings before but I’m still bullish based on the company’s financials. The stock has a PE of 10.89, PEG of 0.41 and has been able to grow EPS at a rate of 28.90% over the past five years. Shares rebounded off a support line on Friday, climbing 1.40% even as Morgan Stanley analysts downgraded the company. I see this as a bullish sign and agree with The Street that CPA is a buy.

this weeks stock picks CPA

Forex

AUDUSD

I failed to do my homework last week and paid the price as GBPUSD fell heavily and hit my stop of 50 pips.

This week, I”m looking at AUDUSD which rose on Friday but is currently off it’s highs. The currency climbed after US non-farm payrolls came in lower than expected, prompting speculation that the Fed will delay raising rates. Right now I can’t see anything on the horizon that could change that view.

Taking an economic standpoint, Australian growth has been healthy but inflation is tight at 3.0% so I feel the Australian dollar is mildly undervalued here. 60 pip stop on this one.

AUDUSD forex chart

Small-cap growth

G Willi-food International Ltd $WILC

G Willi-food International specialize in the development, manufacture and marketing of kosher foods and with over 600 food products is one of the world’s leading suppliers of kosher food products.

The company is small, with a market cap of just $94.48 million, but the stock might be worth a punt this week. Volume has tailed off and the quiet period could give way to a break to the upside if enough buyers come in. The stock’s financials look solid with very little debt and a current ratio of 11.60. Furthermore, PE is 11.05 and PEG 0.74.

this weeks picks g willi

Short sellers

Vector Group Ltd. $VGR

Short sellers who sold $CHH last week may want to hold onto their shorts for a few more days. Those who didn’t may want to take a look at Vector Group Ltd. which manufactures and markets cigarettes in the US and has a proud history going back to 1873.

Vector Group shares are not cheap right now and have a PE ratio of 62.87 and a PEG ratio of 5.72. AS well, the daily RSI reading is overbought at 79.56 and we have seen a decent amount of insider selling in recent weeks. SEC filings reveal that at least one company director has sold 150,000 shares over the last few weeks.

trading picks VGR

Value

Freeport-McMoRan Inc $FCX

Another value pick this week, Freeport-McMoRan Inc has been on my watch-list for a while as a result of the company’s solid financial position. The stock has had a poor couple of months and now trades with a PEG ratio of just 0.38. I can see the shares rebounding this week.

freeport mcmoran stock pick

 

*Hypothetical results. Commissions and slippage not applied.

Disclosure: I am long CPA.

Additional disclaimer: Please be aware of the usual risks to trading in financial instruments. Please remember the importance of doing your own research and understand the cost to trade including trading commissions and the bid:ask spread.

 



prognosis-jesse-livermore-trading-rulesAn interesting jobs number on Friday. an increase of 142,000 jobs which was lower than expected by analysts. This was a dovish result and saw stock markets move higher over the course of the day. Here’s some weekend reading:

Dividend growth investing for dummies.

5 new extremely overvalued shorts.

The problems of back-testing.

A cool website for tracking news.

Money in a time of zero.

Get $5 free credit from Udemy

 



Today’s post was going to be about trading systems but half way through writing it my nine month old MacBook Pro decided to freeze and give up completely.

Hard disk failure seems to be the cause — and for the second time in a couple of months; which gives the impression that there’s something more serious going on. A 40 minute phone call to Apple Care later and I am advised to take the computer in for fixing. In the meantime, I will have to make do with a newly purchased (and hopefully reliable) Dell Inspiron.

Given these events and considering the fact Apple shares led declines in the main indices yesterday (falling by -4.22%) it seems apt to write up a little post about Apple stock $AAPL. Should you still be buying? Or is it time to sell?

Is it time to sell apple shares chart

Is it time to sell Apple shares?

Earlier this year I put forward a strong case on Seeking Alpha for going long Apple and since then the stock has advanced by around 30%.

Of course since then I have had two MacBook failures so you may understand if I am no longer as endeared to Apple products as I once was. I have also experienced several iPod battery failures and some issues with the desktop models.

Nevertheless, I can’t write off the company based on my own experience so let’s take a look at some other factors.

Recent events

Although I don’t pay too much attention to short term news and events, Apple shares did drop heavily yesterday and it seems there are at least a few reasons for this.

First, traders seem nervous to enter new long positions with the next iPhone unveiling scheduled for just a few days time. Second, there has been some negative publicity surrounding the security flaws of Apple products that led to the stealing of celebrity photos. And third, the unveiling of new Samsung smartphones at a trade show in Berlin.

Personally, I don’t think these events say much for the future direction of the share price but overall I do note some pressures that may indicate a slightly reduced rate of earnings. No-one knows how the next iPhone will be received and that uncertainty should keep the stock price under pressure over the next few days.

Technicals

On a technical outlook, Apple shares are at all-time highs having gained 26% year-to-date. But even so, they are not overbought and the RSI daily reads at a reasonable 49.25. The monthly chart could easily see a stronger correction but that is not particularly likely. In fact, so long as broad stock indices continue to climb, chances are that Apple shares will also climb. Overall, the technical picture is bullish but traders would prefer to enter on a more significant pullback.

Financials

For me, the most important piece of the investing puzzle are the company’s financials and in this regard Apple still looks in great shape. Price to earnings is just 16 and illustrates good value, as does the forward PE at 14. Price to sales and price to book are reasonable and so is the current ratio of 1.50, which takes account of the company’s healthy balance sheet. ROE is strong (31%) and profits equally so (net profit margin of 21.6%).

right time to sell apple shares financials

Looking at these numbers, the near 2% dividend, and the trend of improving earnings included, I just can’t make any case for selling Apple shares here. In fact for me, Apple remains one of the best stocks around for long term holders.

The only thing I will say is that at these prices I am not a buyer. I could be wrong but I don’t see Apple growing earnings at the same rate we’ve seen in the past and I wouldn’t disagree with current analyst predictions of around 12% a year. That would give a conservative DCF valuation that is not far away from where we are now.

Maybe I am nit-picking, and it might never happen, but I would prefer to wait for prices to come down a bit before making an entry. As well, I would like to see the PEG ratio come down a bit as a guide to cheapness.

So despite my recent experiences with Apple products I’m just about still a fan. If shares were to drop, to $80 say, I doubt I would have much hesitation in buying.