Compared to recent weeks, financial markets should be relatively quiet, as we have President’s Day on Monday before a fairly light economic calendar. We will see FOMC and BOE meeting minutes and there will be some CPI data for traders to extrapolate but on the whole it’s a quiet week. With that in mind, my best stock picks this week are mostly based on those smaller companies who will be reporting earnings. These stocks will hopefully get the volatility needed to give decent profits.
My best stock picks this week
CF Industries Holding Inc (CF) – LONG
I had some success picking earnings numbers last time out so here I am at it again. CF, to me, are a good quality company operating in a high growth industry. They manufacture and distribute nitrogen and phosphate fertilizers globally, mainly for the agricultural sector and are the second largest producers of nitrogen fertilizer in the world. They also have some compelling fundamentals; low PE, low PEG, good P/S and current ratio.
I am somewhat bullish on the agriculture sector given issues of population growth, the rise of Chinese middle classes and the lack of new farmers. (As Jim Rogers keeps telling us, the average of farmers in most of the world is over 55).
CF are expected to report EPS of 4.52 after the close on Tuesday. The stock is currently trading near a strong trend line and could quite easily jump if EPS is positive. I recommend going long on Tuesday open.
American Railcar Industries (ARII) – LONG
My second best stock pick this week goes for American Railcar Industries (ARII). ARII is company that I covered previously in an article that I recently wrote for Seeking Alpha. The stock ticks all of the boxes in terms of valuation, growth and dividend and PEG is less than 1. Investor Carl Icahn has a big stake ARII and I can see the stock moving higher this week. The company is expected to report earnings before the open on Wednesday. I recommend going long before Tuesday’s close, anywhere below $51.
Cabot Oil & Gas Corp (COG) – LONG
Cabot Oil & Gas Corp report earnings on Thursday after the close. Broker analysts are all positive for Cabot so could they know something we don’t? Barclays analysts have an outperform on the stock with an upper price target of $48 and the stock currently trades near a strong support line. Future earnings are optimistic but this one is high risk. I recommend buying before Wednesday’s close and placing a stop loss at $37.90, or a little way below the market.