Back-to-Back Weekly Gains as Stocks Continue to Recover

A little bit of good news on a treatment for the coronavirus turned our usual Friday selloff into a solid Friday rally… and helped the indices to a second straight week of gains.

The market was buzzing today over a STAT article that said patients were responding well to Gilead Sciences’ (GILD, +9.7%) remdesivir.

While there’s still tons of questions, investors appreciate any kind of potential progress on fighting the outbreak that could help our shuttered economy get back to work.

This report came out at about the same time the White House released guidelines for opening certain parts of the economy. It will ultimately be up to the governors to make the final decision, but, again, this news suggests that we may be toward the end of this painful ordeal.

So there was no fear heading into this weekend, especially with the coronavirus spread slowing. In fact, stocks rose in the final hour and finished near the highs of the day.

The Dow reclaimed 24,000 for the first time in over a month by jumping 2.99% (or nearly 705 points) to 24,242.49. The S&P rose 2.68% to 2874.56.

The NASDAQ had been leading its counterparts of late due to a strong tech sector. But today it brought up the rear by ‘only’ advancing 1.38% (or about 117 points) to 8650.14. 

Some of the index’s biggest winners in the past week took a break on Friday, as Netflix (NFLX) dipped 3.7% and Amazon (AMZN) was off 1.4%.

And there was a lot of other topsy-turvy trading today. Boeing (BA) had been a drag on the Dow recently, but today the airplane giant jumped nearly 15% after announcing it would resume commercial plane production in Washington next week.

And the financials had a rough time of late as they kicked off earnings season with tough reports that showed how much damage this shutdown is doing. However, many of those companies saved some face on Friday, including Citigroup (C, +12.2%), JPMorgan (JPM, +9%) and Bank of America (BAC, +8.7%), among others.

In the end, the NASDAQ soared 6.1% this week, while the S&P rose 3%. The Dow was the only index still in the red heading into Friday, but this rally helped it finish higher by 2.2% over the past five days.

These advances pale in comparison to last week’s gains, but that’s all right. Stocks can’t soar over 12% all the time! The important thing is that the major indices have now put together back-to-back weekly gains because they are feeling better about recovering from the coronavirus.

And we’re going to need that optimism because a rough earnings season is just beginning…

Today's Portfolio Highlights:

Options Trader: Whenever a premium is doubled, Kevin likes to pull profits and sometimes reposition into new options. That’s what he did on Friday with Johnson & Johnson (JNJ). The editor sold to close the 5 July 160.00 Calls for a profit of 109%, and then immediately bought to open 4 July 165.00 Calls with the same investment as originally committed. Therefore, the portfolio will continue making money with JNJ if the stock remains on an uptrend, but has banked a good deal of profit if it moves lower. Read the full write-up for the specifics on today’s moves.  

Blockchain Innovators: EPS growth for DSP Group (DSPG) is expected to be rather small this year at 6.9%, but Dave is looking toward the future with this provider of wireless chipset solutions for converged communications. And the future looks really bright as EPS growth is expected at nearly 50% next year. This Zacks Rank #2 (Buy) is part of the highly-ranked semiconductor – communications industry (Top 19%). The editor added DSPG on Friday, while also selling Waste Management (WM). Read the full write-up for more. By the way, this portfolio easily had the biggest winner of the day among all ZU names as SecureWorks (SCWX) soared 15.3%.

Home Run Investor: With an infrastructure stimulus package possible as we look to open parts of the economy, Brian thought a construction play would be a good idea. He added MYR Group (MYRG) on Friday, which is a holding company for leading specialty contractors serving the electrical infrastructure market. This company has beaten in three of the past four quarters and surprised by 38% in its most recent report. A ‘smooth trickle’ higher for both quarterly and yearly earnings estimates has made MYRG a Zacks Rank #1 (Strong Buy). The editor also appreciates the valuation, considering 8.5x forward earnings and 1x book to be a ‘steal’ amid topline growth of 28%. Read the full write-up for more on this new addition. This portfolio also had the second biggest gainer of the day as Plantronics (PLT) rose 10.7%.

Surprise Trader: Next week is going to be crazy for this portfolio as several of its positions are scheduled to report quarterly results. And on Friday, Dave added another one! He bought Ardagh Group (ARD), a metal and glass packaging solutions company for food, beverage and consumer brands. This name should benefit from increased demand for canned beverages as folks around the world take refuge at home against this outbreak. ARD has a positive Earnings ESP of 8.2% for the quarterly report coming before the bell on Thursday, April 23. The editor added the stock with a 12.5% allocation. Read the full write-up for more. 

Healthcare Innovators: There’s a lot of talk about health care names these days with Gilead (GILD) becoming the latest to report encouraging data in the fight against the coronavirus. Kevin will be keeping a close eye on the news from this portfolio holding, which was one of the best performers of the day with a gain of 9.7%. But for today, he sold Veeva Systems (VEEV) and Alnylam Pharmaceuticals (ALNY) after strong rallies in the past month pushed these stocks past their average analyst price targets. ALNY brings a nice return of 68%, while VEEV gained 23% during its time in the portfolio. Read the full write-up for more updates on the service and the editor’s gameplan moving forward.

Have a Great Weekend!
Jim Giaquinto

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