Another Round of Slight Gains Amid Choppy Session

The Fed provided a momentary diversion today from our heavy focus on the trade talks in Washington, but the major indices still finished slightly positive for the second session in a row.

Remember back on January 30th when Fed Chair Jerome Powell told us that the Fed would be patient in deciding future rate increases? It’s one of the big reasons why January’s success has carried over into February. Well, today we got the minutes from that meeting, where we read that the Committee might stop reducing the Federal Reserve’s asset holdings sometime this year.

Furthermore, they are a bit concerned with slowing global growth, which is also a worry on Wall Street at the moment.

The market will always pay attention to what the Fed has to say, but its heart is currently with the second week of trade discussions between the U.S. and China. As a result, the major indices chopped around a bit when the minutes were released and even slipped into the red for a moment, but they eventually recovered in what turned out to be another quiet day with slight gains.

The Dow increased 0.24% (or about 63 points) to 25,954.44, while the S&P was up 0.18% to 2784.70. The NASDAQ edged higher by 0.03% to 7489.07.

Let’s hope we get a few positive trade headlines in the coming days like last week. More importantly though, the talks need to continue without any breakdowns. President Trump’s recent reiteration that the March 1 deadline isn’t set in stone should help in the discussions. The market wants a deal and seems willing to be patient for now. But eventually we are going to need an agreement. 

Today's Portfolio Highlights:

Home Run Investor: The portfolio is almost full as Brian Bolan picked up Yext (YEXT) on Wednesday, which marks the 13th name out of the editor’s ideal target of 15. This Zacks Rank #1 (Strong Buy) provides digital media technology services. Results should be coming out in a few weeks, so we’ll see if the stock can continue its solid earnings history. In the past four reports, YEXT has beaten three times and matched once. Brian feels pretty good that this young company will keep moving in the right direction. Read the full write-up for more.

Surprise Trader: Shares of Mallinckrodt (MNK) have improved with the rest of the market since the start of the year, and now this pharma company is set to report again next Tuesday before the bell. The positive Earnings ESP of 5.36% suggests that it could continue its excellent history of beating expectations. While the stock came under pressure late last year, earnings estimates have always remained elevated and support its status as a Zacks Rank #2 (Buy). Dave added MNK on Wednesday with a 12.5 allocation. The editor made room for the new pick by selling SkyWest (SKYW), which has been stalling of late but still brings a nice 12.6% return to the portfolio in less than a month. Read the full write-up for more on today’s moves.

Large-Cap Trader: The portfolio split half of its sidelines cash on Wednesday and invested in a couple of companies. Firstly, Synnex (SNX) is an info tech, business-to-business multi-national that didn’t exactly capture the market’s attention. But its been on an acquisition spree for the past several years, including the acquisition of Convergys. Now, SNX has plenty of growth catalysts, for EPS and Revenue expansion, along with a terrific P/E valuation. On top of that, this company plays ball in the highly-ranked Info Tech industry.

The other buy is Rockwell Automation (ROK), which provides industrial automation and information technology. The stock has beaten the Zacks Consensus Estimate for five straight quarters and in 12 of the past 13. Plus, Industrial Automation is in the Top 7% of the Zacks Industry Rank with the 17th spot out of 255 spaces. After splitting half of the remaining cash, SNX and ROK should each get an allocation of about 6%. Read a lot more about these buys in the complete commentary.

Stocks Under $10: When Canada became the biggest country yet to legalize pot late last year, Brian Bolan quickly picked up Corbus Pharma (CRBP). This biotech treats inflammatory and fibrotic diseases by targeting the endocannabinoid system. The stock has been a good performer for the portfolio, but it has also been very volatile. Since the editor is all about taking profits more often these days, he felt that this was a great time to sell CRBP and take a 15.8% return in about four months. Brian also sold Great Lakes Dredge & Dock Corp. (GLDD) for a gain of 3.9%.

Healthcare Innovators: It was only a week ago that the portfolio sold Tandem Diabetes (TNDM) for an 18% gain, but Kevin got back into the name on Wednesday after the insulin pump maker scored a “nice win” with the FDA. Basically, TNDM’s t:slim X2 insulin pump was classified into a new device category dubbed Alternate Controller Enabled Infusion pumps, which means the system can predict blood glucose and communicate with other monitoring devices. Analyst reaction to the news was very positive, so the editor decided to get back into TNDM. Read his complete commentary for more on this pick, including details on what the analysts are saying.

Blockchain Innovators: The plan at Premier Inc. (PINC) is to use M&A to bulk up on all types of technologies… including blockchain of course. The company operates as a healthcare alliance, which means it brings together hospitals, health systems, physicians and other healthcare provides. However, one thing that has not been brought together is PINC’s earnings estimates and stock price. Dave noticed the divergence between the two that he loves to see, as earnings estimates remain elevated while the stock has not. It looks like the price has plenty of space to move higher, so the editor added PINC on Wednesday. Read the full write-up for more.

Until Tomorrow,
Jim Giaquinto