Last week’s stock picks put in a mixed performance as stock market conditions remained choppy. Our Marwood Value pick put in a healthy run but overall returns were brought down by Apple shares, which continued to drop.
This week, traders will again be watching Asia as Chinese shares look to hold recent lows. Europe will remain a concern and investors will analyse German ZEW figures on Tuesday morning and GDP figures on Friday. In the US, investors will watch retail sales on Thursday and the University of Michigan confidence number on Friday.
Oil traders will be wondering if there is any bottom in sight and will be looking for clues in Wednesday’s inventories.
Here are this week’s picks:
Disney Inc. $DIS
Disney has been one of the best performing stocks of the last 5 years but the company took a dive last week after reporting earnings to market.
The firm actually beat expectations, posting solid revenue growth and operating leverage in Q3, but managed to sell off on downbeat guidance from management. The shifting of TV habits to online is causing some concern among investors and this induced a selloff across traditional media channels.
However, the sell-off could be overdone and there are positive events on the horizon for Disney, including the release of a new Star Wars movie and the opening of new park, Disney Shanghai in early 2016.
The short-term reversal strategy has identified Disney has a strong buy following the recent decline in share price.
Valero Energy Corp. $VLO
The Marwood Value Model looks for powerful medium-term stocks based on a combination of fundamental ratios and momentum. This week’s pick goes to Valero Energy Corp, a $32 billion oil refiner company on the S&P 500 that trades at under 10 times future earnings.
Despite the massive sell-off in oil, Valero is only 4% away from 52-week highs, suggesting the stock has plenty of support from the investment community.
If oil does find a bottom at some point, Valero could continue to rally.
Nu-Skin Enterprises Inc. $NUS
This week’s short pick goes to Nu-Skin Enterprises, a cosmetics company with a market cap of $2.8 billion.
NUS surged higher last week on heavy volume as the company released earnings that beat expectations. However, the stock failed to close near it’s highs and there could be a shortage of buyers as a new week begins.
Historically, the stock has been a very volatile performer and Friday’s numbers may not be enough to convince bears.
Stop losses can be placed just above the key $50 level.
One to watch
Opko Health Inc. $OPK
I am also watching OPKO Health this week. The stock has been a strong performer this year and has a canny management team behind it. As well, the stock has a high bullish sentiment on StockTwits (96%) and has fallen to a very strong level of support around the $14 mark.
Additional Disclaimer/Disclosure: Please remember to read the disclaimer. Stock picks are not to be construed as investment advice and no responsibility will be accepted for any losses. I may initiate a position in DIS or OPK in the next 48 hours.