The stock picks are back this week, stay tuned for more interesting blog developments coming soon.
News is likely to be dominated by Greece this week after the country failed to come to constructive agreements with international creditors over the weekend. This has moved the country close to default and an exit from the euro.
Authorities have imposed capital controls on Greek banks which will now be shut on Monday and could remain closed until the 6 July. Citizens have been queuing up at ATM machines and the threat of potential contagion has seen Asian stock markets fall at least 2% overnight. Meanwhile, the euro is currently trading lower by 1.5%.
Professor of NYU Stern School of Business Nicholas Economides said it was “a very dark day for Greece. The Greek economy, already at a standstill, will go to deep freeze.”
The Week Ahead
Uncertainty will be the biggest issue for traders this week and that could cause significant volatility. However, I am not expecting the situation in Greece to contribute to a major selloff in US stocks. It must be remembered that Greece is relatively tiny in global terms. (At least 11 US cities have larger economic output that Greece).
As a result, traders should be cautious. Look to buy dips in stocks with low correlation but try to stay hedged. Here are this week’s picks:
Marwood Value Model:
Pointer Telocation Ltd $PNTR
The Marwood Value Model attempts to identify deep value investments trading below intrinsic value based on financial ratios and historical performance.
This week’s pick goes to Israeli small cap stock Pointer Telocation which has a market cap of $67 million and a PE ratio of 5.01. Pointer is involved in the unsexy but potentially lucrative mobile resource management market.
The market is pricing in hardly any growth for PNTR so it would not be a surprise to see the stock defy expectations. A falling wedge pattern on the monthly chart suggests that a solid break could lead to a new uptrend developing.
Small cap discretion
OvaScience Inc. $OVAS
The small cap discretion strategy looks for low float stocks with high bullish sentiment and uses discretion to time entries and exits.
This week’s pick goes to OvaScience, a biotech stock dedicated to improving fertility treatment options for women around the world.
OVAS saw a sharp sell-off last week losing almost -15% and boasts a very high short float of over 30%.
Nevertheless, there is great potential in this company and last week’s sell-off looks overdone. The stock has a high amount of bullishness and a short squeeze could see big gains.
Cleveland BioLabs Inc. $CBLI
With bad news out of Greece it’s a good idea to stay hedged this week. One stock that could struggle is CleveLand BioLabs Inc. Not because it has any connection to Greece but because it doubled last week and could fall back to close the gap.
The stock hit $7 on Thursday but failed to support the move higher and ended up closing near it’s lows in an inverted hammer formation (bearish). The stock is also in a long-term down trend and has seen it’s positive sentiment turn negative in recent days.
Additional disclaimer/disclosure: 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. I am long OVAS.