Small Gains Still Bring New Highs

The S&P and NASDAQ are in the enviable position where ANY gain means new all-time highs. As a result, even minor advances like what we saw on Monday can bring about record-breaking performances.

The NASDAQ was up 0.19% today to finish at a new high of 8161.85. The S&P was only up 0.11% (or a little over 3 points), but it too made history at 2943.03.

These indices are coming back from an encouraging week brought on by better-than-expected performances for earnings season and first-quarter GDP. In addition to reaching new records on Tuesday and Friday, the NASDAQ was also up nearly 2% last week while the S&P advanced more than 1%.

The Dow is lagging behind its counterparts and remains about 1% from breaking its own new ground. It was also down slightly last week. However, the index advanced of 0.04% (or about 11 points) to 26,554.39 on Monday.

You may not have guessed it from today’s rather quiet session, but we’ve just begun another busy week for the market. Get ready for a slew of earnings reports, including the final two FAANG names, along with some important economic data, especially the jobs report on Friday. And if that's not enough, there’s also a Fed policy meeting this week (though no one expects a change in rates).

One of the first big pieces of news for this busy week was released after the bell today, when Alphabet reported first-quarter results. The parent of Google easily surpassed earnings expectations, but revenue disappointed. Shares are down approximately 7% afterhours as of this writing. It was up about 1.2% during the session. Apple comes after the bell tomorrow.

We’re about halfway through earnings season and stocks are doing better than many had feared when expectations were being lowered. According to Sheraz Mian’s most recent Earnings Preview, 79.1% of S&P companies beat EPS estimates through Friday, April 26th, while nearly 59% topped revenue estimates. Let’s see if we can keep it going! 

Today's Portfolio Highlights:

Stocks Under $10: If you’ve been feeling a bigger push for solar of late, you’re not alone. Brian Bolan noticed companies like Comcast, AT&T and a few others making solar partnerships. As a result, the editor believes that the supply for solar panels is there, which has always been one of the big question marks for the space. He decided this was a good time to add some solar through the addition of SunPower (SPWR), a Zacks Rank #2 with a great earnings history that has amassed an average beat of 53% over the past four quarters. Plus, rising earnings estimates is telling Brian that profitability is coming… perhaps in the second half of the year. He added SPWR on Monday because the stock should take off once it turns profitable. Read the full write-up for more.

Counterstrike: Wow! It’s not every day that Jeremy makes FIVE moves in the portfolio. Earnings season must be doing all right for this usually-cautious editor to be so busy. Firstly, he sold Abercrombie & Fitch (ANF) for a 19% return in just a little over a month and got out of Qualys (QLYS) with a profit of 5.9%. That left room for three buys:

• iRobot Corp. (IRBT): This home robot company has dropped 30% from recent highs after missing its revenue in the most recent quarter. However, this stock was a big winner for the portfolio last year, and Jeremy thinks it could bounce back by 10% to 20% over the next month.

• Bed Bath & Beyond (BBBY): This home furnishings retailer reported a solid quarter recently, including an increased guidance and dividend, and its lackluster management team may be on the way out. Shares slipped on the report, but Jeremy thinks its bound to reverse course.

• Palo Alto Networks (PANW): The stock is about to break the $250 level and “never look back”. Therefore, Jeremy doubled down on this position, which was originally bought on March 12.

The editor plans to put 9% in IRBT, 10% in BBBY and 5% in PANW. Read the complete commentary for a lot more on today’s moves, including a look at their charts.

Surprise Trader: A positive earnings trend has developed for Rent-A-Center (RCII) over the last 18 months, and Dave thinks this momentum will continue after it reports on Monday, May 6. The rent-to-own company has a very impressive Earnings ESP of 21.98% for the quarter and is part of a space (Misc. Consumer Services) in the top 32% of the Zacks Industry Rank. The editor added RCII on Monday with a 12.5% allocation. Read the complete commentary for more.

Healthcare Innovators: The portfolio added a couple Zacks Rank #2s (Buys) on Monday: bluebird bio (BLUE) and Aduro Biotech (ADRO). Kevin has been looking for a good a point to add BLUE since its Q4 meltdown, and now seems to be the time as it carves out a higher base between $130 and $150. ADRO is more speculative, but it has a lot of potential with its clinical-stage STING (stimulator of interferon genes) program, which is partnered with Novartis. Both stocks report on Wednesday. Read a lot more about these new additions in the complete commentary.

Options Trader: With the economy soaring and no recession in sight, Kevin wants to add some positions in the days ahead. On Monday, he picked up HD Supply Holdings (HDS) by buying to open 4 Sept. 47.50 Calls. The company is part of the industrial distribution space, which is in the top 30% of the Zacks Industry Rank. It also has a Zacks VGM Score of “A”. The editor has a price target on HDS of $60 (it closed today at about $45). Read the full write-up for more specifics.

Black Box Trader: Three of the five stocks leaving the portfolio in this week's adjustment were positive. Those names sold today were:

• Costco Wholesale (COST, +6.5%)
• Principal Financial (PFG, +4.6%)
• Darden Restaurants (DRI, +3.3%)
• ProPetro Holding Corp. (PUMP)
• The AES Corp. (AES)

The new buys that were added to fill these spots are:

• Rent-A-Center (RCII)
• PulteGroup (PHM)
• KEYW Holding Corp. (KEYW)
• Cenovus Energy (CVE)
• CBRE Group (CBRE)

Read the Black Box Trader's Guide to learn more about this computer-driven service designed to take the emotion out of investing.

Until Tomorrow,
Jim Giaquinto

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