Stock markets hit another new high last week giving US stocks their best weekly performance in four months. At one point, the S&P 500 index was just four points away from the significant 2,000 barrier and it’s likely that this key level will be breached at some point this week.

Optimism in stocks continues after FOMC meeting minutes confirmed that the Federal Reserve would continue to support the US economy. Tensions in Iraq and Ukraine also eased and dovish comments from ECB Chief Mario Draghi gave a boost to European companies. With another interesting week in store, here are this week’s trading picks.

This week’s trading picks

Forex traders

EURUSD – Short

ECB Mario Draghi spoke at the Jackson Hole Summit last week and said that the ECB would take action to support the economy.

This saw EURUSD drop around 60 pips on the day and the currency has since gapped lower on the open this morning by another 40 pips.

Euro traders will not have been surprised by Draghi’s comments given the lacklustre performance of the Eurozone economy and there could be more weakness in store for EURUSD this week.

this week's trading picks EURUSD

Value traders

Copa Holdings $CPA – Long

Copa Holdings is an airline based out of Panama and schedules 327 flights daily in the South American region.

Shares dropped heavily a few weeks ago after the company issued disappointing guidance.

However, this selloff has taken the stock back to an old support level and made the stock look interesting to value traders. PEG is low at 0.46 and forward PE just 10.96. ROE is high at 24.90% and current ratio healthy at 1.50.

Copa has been able to drive EPS at a rate of 28.90% over the past five years and pays a dividend of 3.01%. A conservative DCF valuation of the company gives the stock a 35% margin of safety at these levels.

this weeks trading picks CPA

Trend followers 

Piper Jaffray Companies $PJC – Long

Piper Jaffray is a leading investment bank and asset management firm that has been in operation for over a century. Shares in the company hit a new 50 week high on Friday and the stock is now up 38% year-to-date.

Despite the stellar performance, shares are still attractively valued with a PE of 12.39 and PEG ratio of 0.77.

Piper Jaffray has been able to drive EPS at 18% over the last five years although the stock currently yields no dividend.

this weeks trading picks PJC

Mean reversion

Manitex International Inc $MNTX – Long

Manitex International is a US based provider of engineered lifting solutions including cranes, forklift trucks, reach stackers and excavators. The company supplies to a broad range of customers in the military, commercial and governmental space across the world.

Shares in Manitex fell sharply a few weeks ago and now trade below $12. This has given the stock an oversold daily RSI reading of 27.59 while fundamental statistics show the company could be cheap now. PEG is just 0.51 and price to sales is 0.65.


Trend pullback

Western Union $WU – Long

A new signal from one of the trading systems detailed in my course (number 20) has arrived this week in the form of The Western Union Company.

Western Union is well known for providing money transfer services to customers around the world and shares have recently pulled back from their upward trend. This could be a good opportunity for trend traders to get into the stock which is also cheaply priced with a PE of 11.24.


Short sellers

Chico’s Fas $CHS – Short

Chico’s Fas is a US based clothing retailer which operates over 1,450 boutiques and outlet stores as well as having an online presence.

The stock is in downward trend and has already fallen 15% this year. Despite this, the stock has a hefty PEG of 3.64 and PE is also stretched at 44.31.

The recent bounce in share price has given short sellers another opportunity to sell.



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 understanding the costs to trade including trading commissions and the bid:ask spread.

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