Last week was another good one for US stock markets, in fact US equities had their best August since 2000 and it was the best monthly performance since February. That took the S&P 500 to another record close past the 2,000 level while the Dow Jones Industrial Average and Nasdaq also remained strong.

This week will start off slow with US Labour Day on Monday but things will pick up later in the week with a number of central bank meetings and important events. Events will include interest rate decisions from the Reserve Bank of Australia (Tuesday), Bank of Canada (Wednesday) and Bank of England and European Central Bank (both on Thursday). On Friday, traders will be eagerly anticipating the latest US non-farm payrolls number with analysts currently expecting an increase of 216,000 jobs.

Here are some trade ideas for the upcoming week:

This Week’s Trading Picks

Value 

Packaging Corporation of America $PKG – Long

In the world of the Internet and e-commerce, cardboard packaging solutions are in high demand and Packaging Corp prides itself on being able to cover all bases from packaging ‘watermelons’ to the ‘kitchen sink’.

The stock is attractive to value investors right now after a recent dip and currently trades at 12 times forward earnings with a PEG ratio of 0.70. Current ratio is healthy at 1.50 and the company pays a steady dividend of 2.35%.

There was also news today that the company’s Longview mill has been certified to the highest levels of sustainable forestry certifications. On a conservative DCF estimate the stock gives traders a 40% margin of safety.

this week's trading picks PKG

Forex

GBPUSD: Long

GBPUSD moved between the first support and first resistance nicely on Friday, giving pivot traders some healthy opportunities as the currency moved higher for the first time in 8 weeks.

In fact, the British pound managed to diverge from global trends on Friday as every other major currency, when put against the US dollar, lost ground. This points to more strength ahead for the currency pair and traders should be looking for opportunities to buy this week. A more hawkish view from the BOE could be the most likely catalyst for fresh gains.

this week's trading picks GBPUSD

Small Cap Growth

inTest Corp – $INTT

inTest Corp is a small cap (total market capitalisation of just $50 million) semiconductor that has shown impressive growth so far this year, returning investors over 17% since January. The company pays no dividend and is not without risk, but does look cheap with a PE of 14.69, PEG of 0.98 and current ratio of  6.60. The stock also boasts a high percentage of insider ownership at just over 10%.

this week's trading picks INTT

Trend regression

Cypress Semiconductor Corporation $CY – Long

One of the trading systems detailed in my course (number 20) looks to buy stocks just as they break out into new multi-week trends. This week’s signal is for Cypress Semiconductor Corporation, a semiconductor company with a wide portfolio.

Cypress has a market cap of $1.76 billion and trades at 16 times forward earnings.

this weeks trading picks cypress cy

Short sellers

Choice Hotels International Inc – $CHH

Choice Hotels International franchises more than 6,300 hotels incorporating such reliable brands as Comfort Inn, Comfort Suites and Sleep Inn. That equates to more than 500,000 rooms across the US and 35 other countries.

However, one look at the chart shows how the stock has surged this quarter and the stock is looking lofty at these high prices. The daily RSI reading points to an overbought level of 82 and the PEG ratio has moved past the expensive level of 3 (now 3.08).

Not only does the stock look pricey, there has also been a high level of insider selling recently. According to finviz.com, there has been a 67% negative change in insider ownership over the last 6 months.

this week's trading picks CHH Choice Hotels

Disclosure: I am long PKG.
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.

 


 

Tags: , , ,


Leave a Reply

%d bloggers like this: