The following is provided by Navellier with technical comment from South Ocean Management – pls do your own due diligence.
Navellier says,
CME Group, Inc.
CME Group, Inc. (CME) is staying as a Top 5 Stock for January due to its continued strong relative performance. As a quick refresher: CME runs the world’s leading derivatives marketplace, the Chicago Mercantile Exchange.
Simply put, CME Group dominates the world of options trading. In fact, its tagline is that it is “where the world comes to manage risk.” For those of you who aren’t as familiar with the CME, or “the Merc,” it trades several types of financial instruments: Interest rates, equities, currencies and commodities (like energy, agricultural products and metals). CME Group executes trades through its electronic trading platforms, and it also provides hosting, connectivity and customer support for electronic trading.
CME posted double-digit earnings growth for the third quarter. Last quarter, the company earned $411.8 million, or $1.21 per share, on $904 million in revenue. Compared with Q3 2017, this represented 33% annual earnings growth and 1.6% sales growth. Adjusted earnings came in at $1.45 per share. Analysts were expecting adjusted earnings of $1.43 per share on $913.3 million in revenue, so CME Group posted a 1.4% earnings surprise and a slight sales miss.
For the fourth quarter, the consensus estimate calls for earnings of $1.61 per share on $1.06 billion in sales, which represents 17.8% annual sales growth and 43.7% annual earnings growth. The analyst community has raised their earnings estimates over the past two months. As you know, this is a good indication of upside earnings surprises.
The company also has a history of rewarding shareholders. The quarterly dividend of $0.70 per share will be paid on December 27, so all shareholders of record on December 10 will receive the dividend. Buy this Conservative stock up to $200.
SOM Technicals:
11-30-18: Closed at 190.08. Trade pressures are down. Volumes are neutral. Support at 184.15.
12-8-18: Closed at 187.11. Trade pressures are down. Volumes are bearish. The 25×5 day MA is holding as support.
12-15-18: Closed at 187.54. Trade pressures are up in the neutral zone. Volumes are bearish. Holding support at the 25×5 MA.
12-22-18: Closed at 182.65. Trade pressures are down. Volumes are bearish.Now in the downtrend with support at 181.
12-29-18: Closed at 186.11. Trade pressures are rising into the neutral zone. Volumes are bullish. Resistance is at the 189.70 target.
1-5-19: Closed at 184.68. Trade pressures are down into the neutral zone. Volumes have changed to bullish. In the move up. The next target up is 190-86.
1-12-19: Closed at 180.55. Trade pressures are down. Volumes are now neutral. The 200 day MA at 171 is support.
1-19-18: Closed at 183.43. Trade pressures are up. Volumes are now bullish. In the new move up to the 186.91 target.
DexCom, Inc.
After one month on the Buy List, I’d like to add DexCom (DXCM) to our Top 5 Stocks list given its strong growth potential. I really like this company because it has been innovating the continuous glucose monitoring (CGM) industry. In case you are unfamiliar with CGM, it’s a technology that enables patients and their doctors to better manage diabetes.
With DXCM’s technology, a diabetic does not need to prick their finger to test their blood glucose levels. Instead, he or she inserts a small sensor under the skin. The diabetic will then be notified via a display device when their glucose levels are either too low or high. It’s simple, user-friendly and pain-free.
As the leader in CGM, DXCM offers a variety of products, including the Dexcom G6 CGM System, Dexcom G5 CGM System, Dexcom CLARITY, Dexcom Apps, Dexcom Studio and insulin pumps. These products have helped improve patient experiences, add real-time glucose data with alerts and alarms, share data and reduce costs.
Here’s the opportunity: The current CGM market includes six million people. That market will expand to 60 million people who suffer from diabetes, as CGM is expected to play a key role in helping to manage the disease. So, DXCM should see strong demand for its products and services going forward.
This was evident in the company’s third quarter report. Sales rose 44.5% year-over-year to $266.7 million, compared to $184.6 million a year ago. During the same period, adjusted earnings were $0.52 per share versus an earnings per share loss of $0.02 in the third quarter of 2017. Excluding extraordinary items, operating earnings were $0.17 per share, beating the Street view for an operating loss of $0.10 per share. This equates to a massive 270% earnings surprise.
Continue to buy this Aggressive Stock below $125.
SOM Technicals:
12-22-18: closed at 108.32. Trade pressures are down. Volumes are bearish. The next target down is 99.47. Now sitting on support at the 200 day MA.
12-29-18: Closed at 118.28. Trade pressures are down but rising. Volumes are bullish. The next target up is 127.38.
1-5-19: Closed at 116.24. Trade pressures are down into the neutral zone. Volumes are now neutral. At the 200 day MA and support.
1-12-19: Closed at 142.00. Trade pressures are up. Volumes are bullish. Moved sharply up off the 200 day MA. Now at the retracement target and should consolidate here.
1-19-18: Closed at 149.62. Trade pressures are up and extended. Volumes are bullish. At the 141.18 target, expect consolidation here.
Fortinet, Inc.
Fortinet, Inc. (FTNT) is another premium cybersecurity play on the High-Growth Investments Buy List, which is why I’m keeping it on our Top 5 Stock list this month. Fortinet provides unified security solutions that can be deployed over digital networks to protect users against malware, spam and network intrusions. The company provides its security solutions to data centers, enterprises, carriers and distributed offices around the globe. Fortinet currently boasts a portfolio of more than 530 patents worldwide.
Clearly, the company’s products are in high demand. For the third quarter, the company brought in $453.9 million in revenue. This represented a 21% increase over Q3 2017. This also beat the $450.9 million consensus estimate. Meanwhile, net income soared 120% year-over-year to $58.7 million, or $0.33 per share. Adjusted earnings came in at $0.49 per share. Analysts were expecting earnings of $0.42 per share, so Fortinet posted a 16.7% earnings surprise.
Looking ahead to FY 2018, Fortinet expects revenue will range between $1.785 billion and $1.795 billion. The company is also targeting adjusted earnings in the range of $1.72 to $1.76 per share. This represents 19.8% to 20.5% annual revenue growth and 65.4% to 69.2% annual earnings growth.
In the meantime, the company has made some positive headlines, which should help continue to fuel strong growth. Its FortiMail received a top AAA rating in a SE labs email security test, with 100% detection of phishing attacks with zero false positives. Given the continued phishing onslaught people and companies receive, this is solid proof that Fortinet’s software works and will drive more customers.
In addition, it expanded its partnership with Symantec. Fortinet’s Next-Generation Firewall (NGFW) capabilities will be integrated into Symantec’s cloud-delivered Web Security Service (WSS). The company wants to “work with an industry leader, and Fortinet was at the top of our list,” which is high praise coming from another platform security giant.
I like that FTNT has held up well amid the broader market selling, and I see a great future ahead for the company. Buy this Moderately Aggressive stock up to $73 per share.
SOM Technicals:
9-29-18: Closed at 92.27. Trade pressures are up. Volumes are bullish. The next target up is 99.90.
10-7-18: Closed at 86.10. Trade pressures are down into the neutral zone. Volumes are bearish. Support is at 83.83.
10-13-18: Closed at 79.95. Trade pressures are down. Volumes are bearish. The old upside target of 277.70 could hold support.
10-20-18: Closed at 81.20. Trade pressures are down but rising. Volumes are now bullish. 84.20 signals a new long entry.
10-28-18: Closed at 78.19. Trade pressures are down but showing some divergence. Volumes are neutral. The next target down is 76.14.
11-3-18: Closed at 72.56. Trade pressures are up into the neutral zone. Volumes are bearish. The 200 day is the next support at 65.28.
11-10-18: Closed at 74.73. Trade pressures are neutral. Volumes are neutral to bearish. Need a close above 79.15 to get going again.
11-17-18: closed at 73.45. Trade pressures are in the neutral zone. Volumes are bearish. At support/ Need the close above 79.16 to resume the move up.
11-24-18: Closed at 67.96. Trade pressures are now down. Volumes are mixed bullish to neutral. At the 200 day MA. Need a close above 72.11 to resume any move up.
11-30-18: Closed at 73.84. Trade pressures are up into the neutral zone. Volumes are bullish. The 200 day MA was support. the next target up is 77.70.
12-8-18: Closed at 71.61. Trade pressures are up but turning down. Volumes are neutral. At the new long entry of 72.11.
12-15-18: Closed at 72.91. Trade pressures are down into the neutral zone. Volumes are bearish. 68.91 is support at the 200 day MA.
12-22-18: Closed at 65.84. Trade pressures are down. volumes are bearish. At the 200 day MA support. The prior low is 64.65.
12-29-18: Closed at 70.34. Trade pressures are down but rising. Volumes are bullish. A close above 72.11 would start another move up.
1-5-19: Closed at 66.91. Trade pressures are back down into the neutral zone. Volumes are bearish. The next target down is 58.81.
1-12-19: Closed at 73.27. Trade pressures are up. Volumes are bullish. The downtrend resistance is just above at 74.53. Need a break above that level.
1-19-18: Closed at 70.50. Trade pressures are down into the neutral zone. Volumes are bearish. Sitting on the 200 day MA and the new short entry at 70.17.
Lamb Weston Holdings
Lamb Weston Holdings (LW) was added to the Buy List in our November issue. I liked it so much I made it a Top 5 Stock in December and am keeping it on that list for January. The company is a leading supplier of frozen potato and vegetable products. When it comes to frozen potatoes, Lamb Weston is the top supplier in the United States, and the second-largest in the world.
Lamb Weston caught my eye because it’s a strong, predominantly domestic company that’s not adversely impacted by a strong U.S. dollar. Also, Lamb Weston is benefitting from strong restaurant sales—about a third of its revenue comes from the foodservice industry. When it comes to French fries and other potato products, Americans can’t seem to get enough.
Just look at the company’s latest quarterly results. Last quarter, Lamb Weston’s sales climbed 11.9% year-on-year to $914.9 million. Meanwhile, earnings jumped 30.4% year-on-year to $107.8 million, or $0.73 per share. This beat the $0.68 consensus estimate by 7.4%.
And Lamb Weston is expected to keep that momentum going. The company will report its fiscal second-quarter results on January 4, and analysts are very positive. They are calling for earnings of $0.72 per share on $897.1 million in revenue. This represents 33.3% annual earnings growth and 8.8% annual sales growth. For the full year, expectations are for $3.65 billion in revenue, a 6.5% increase from a year ago
As we’ve discussed, domestic companies should do well in 2019, and I expect LW to be one of the go-to domestic names for specialty food. Buy this Conservative stock up to $79.
SOM Technicals:
11-30-18: Closed at 76.70. Trade pressures are down. Volumes are bearish. The next target down is 73.69. The 200 day MA is 67.40. Need a close above the 25×5 MA at 79.72 to get the uptrend moving again.
12-8-18: Closed at 73.45. Trade pressures are down. Volumes are neutral. Some consolidation here at the 73.69 downside target.
12-15-18: Closed at 75.83. Trade pressures are down but rising. Volumes are neutral. Consolidating after reaching the downside target of 73.89.
12-22-18: Closed at 73.60. Trade pressures are down. Volumes are bearish. Support at the 73.69 downside target level.
12-29-18: Closed at 73.61. Trade pressures are down. Volumes are bearish. Support is now at the 69.35 200 day MA.
1-5-19: Closed at 75.59. Trade pressures are now up. Volumes are neutral. This close above 75.53 starts anew leg up.
!-12-19: Closed at 69.47. Trade pressures are down. Volumes are bearish. Sitting on the 200 day MA.
1-19-18: Closed at 70.88. Closed at 70.88. Trade pressures are up. Volumes are bullish. The new long entry is at 70.89.
Lululemon Athletica, Inc.
Lululemon Athletica, Inc. (LULU) stays on our Top 5 list following its excellent third-quarter earnings report. Over the past two decades, Lululemon has led the athleisure fashion movement. Initially, LULU grew by word of mouth, pop-up shops in yoga studios and brand ambassadors. Lululemon has more than 400 stores across four continents. And for workout buffs who are too busy to drive to their nearest store, there are multiple Lululemon e-commerce sites and mobile apps.
Even as it has grown its global footprint and customer base, Lululemon has kept true to its founding values. It differentiates itself by making some of the highest quality and most comfortable workout clothing that money can buy.
The company is also expanding into mass sports distribution and capturing market share from big-name athletic apparel companies like Nike (NKE) and Under Armour (UAA). And that expansion is already being reflected in Lululemon’s top and bottom lines.
For the third quarter, earnings of $0.75 per share topped the consensus estimate, which called for $0.70 per share. This represented a 7.1% earnings surprise, and it was also well above the $0.43 per share earned a year ago. Revenues increased 21% year-over-year to $748 million. This was also above expectations for $737.5 million. Same-store sales increased 18%, also above the expected 13.9%.
Looking forward to the fourth quarter, LULU is expecting earnings of $1.64 per share to $1.67 per share on revenue of $1.1 billion. That represents 23.3% to 25.6% annual earnings growth and 21% annual sales growth. Analysts have also upped their earnings per share estimates by 3%, which means a quarterly earnings surprise is likely.
I look for LULU to head higher in the New Year, so buy this Moderately Aggressive stock up to $128 per share.
SOM Technicals:
7-30-18: Closed at 120.00. Trade pressures are down. Volumes are bearish. Consolidating at the prior 119.00 target level.
8-4-18: Closed at 126.08. Trade pressures are rising into the neutral zone. Volumes are bullish. Still in the consolidation zone. Need a close above 130.05 to start a new move up.
8-10-18: Closed at 130.52. Trade pressures are up. Volumes are bullish. The next target up is 150.12.
8-18-18: Closed at 130.19. Trade pressures are up. Volumes are neutral. One of the few with an upward bias in August.
8-26-18: Closed at 138.76. Trade pressures are up. Volumes are bullish. The next target up is 150.12.
9-1-18: Closed at 154.93. Trade pressures are up. Volumes are neutral. Big earnings surprise puts LULU above the 150.12 target. The next target up is 170.18.
9-8-18: Closed at 150.82. Trade pressures are up. Volumes are neutral. The next target up is 170.18.
9-15-18: Closed at 153.71. Trade pressures are up and trending. Volumes are neutral. The next target up is 170.18.
9-23-18: Closed at 156.99. Trade pressures are up and trending. Volumes are bullish. The next target up is 170.18.
9-29-18: Closed at 162.49. Trade pressures up and trending. Volumes are bullish. The next target up is 170.18.
10-7-18: Closed at 153.84. Trade pressures are up but turning down. Volumes are bearish. The next target down is the 25×5 moving average at 148.50.
10-13-18: Closed at 143.71. Trade pressures are down. Volumes are bearish. The initial long entry at 130.05 is the the next support.
10-20-18: closed at 136.77. Trade pressures are down. Volumes are bearish. the prior long entry at 130.05 is support.
10-28-18: Closed at 134.82. Trade pressures are down. volumes are bearish. the next target down is 131.02.
11-3-18: Closed at 142.02. Trade pressures are down but rising. Volumes are bullish. 144.25 is the new long entry.
11-10-18: Closed at 137.56. Trade pressures are neutral. Volumes are bearish. support at the 133.13 low pivot.
11-17-18: Close at 139.02. Trade pressures are in the neutral zone. Volumes are mixed, bullish to bearish. At support need a close above the 144.35 level to resume the move up.
11-24-18: Closed at 120.86. Trade pressures are down. Volumes are neutral. At the 200 day MA. Need a close above 129.64 to start a new move up.
11-30-18: Closed at 132.55. Trade pressures are up into the neutral zone. Volumes are bullish. Again a nice bounce off the 200 day MA. This close above 129.64 restarts the move up.
12-8-18: Closed at 113.87. Trade pressures are into neutral zone. Volumes are very bearish. Next target down is 103.91.
12-15-18: Closed at 119.12. Trade pressures are down but showing divergence. Volumes are bearish. At the 200 day MA and holding.
12-22-18: Closed at 113.74. Trade pressures are down. Volumes are bearish. Now below the 200 M day MA and at the 114.68 downside target level.
12-29-18: Trade pressures are up into the neutral zone. Volumes are bullish. Need a close above the 131.20 level to restart the move up.
1-5-19: Closed at 128.55. Trade pressures are up. Volumes are bullish. The next target up is the downtrend resistance at 130.
1-12-19: Closed at 131.52. Trade pressures are up but rolling over. Volumes are now bullish. In a new move up, the next target up is the old high of 164.
1-19-18: Closed at 152.07. Trade pressures are up and trending. Volumes are bullish. In the new move up from the 137.77 level. The next target up is 164.82.
Elite Dividend Payers
Arbor Realty Trust
Arbor Realty Trust (ABR) remains one of my favorite REIT plays right now. For more than two decades, it has partnered with real estate clients to reach their financial goals. As a real estate investment trust (REIT), Arbor Realty primarily deals with loans and services for senior housing, multifamily housing, healthcare and other commercial real estate assets. And the REIT has a fee-based servicing portfolio that amounts to more than $16.6 billion.
For the latest quarter, the REIT announced net income of $27.7 million, or $0.36 per share, up 68.9% from the $16.4 million, or $0.26 per share posted in the third quarter of 2017. Analysts were looking for earnings of $0.37 per share, so ABR missed earnings estimates by a hair.
Arbor Realty Trust also reported that adjusted funds from operations (AFFO) came in at $36.4 million, or $0.37 per share. That’s a 73.3% jump over the $21 million, or $0.25 per share achieved in the same quarter a year ago.
As a REIT, ABR is required to distribute at least 90% of its taxable income to shareholders in the form of dividends. Its annual dividend yield now stands at 10% with a 98.2% payout ratio. A special treat for investors is the $0.15 per share special dividend, which company management announced on Monday. Shareholders of record on December 28 will receive the $0.15 per share on January 31, 2019. ABR is a Conservative Buy below $11.
SOM Technicals:
1-5-19: Closed at 10.62. Trade pressures are up into the neutral zone. Volumes are bullish. Rising to the 200 day MA and the new buy level at 10.63.
1-12-19: Closed at 11.32. Trade pressures are up. Volumes are bullish. In the move up. The next target up is 12.50.
1-19-18: Closed at 11.33. Trade pressures are up and extended. Volumes are bullish. The 9% percent dividend yield is supporting the equity, but watch the interest rates.
Capital Southwest Corporation
We added Capital Southwest Corporation (CSWC) in our last monthly issue, and I like it as a Top 3 Stock for us now. It is an internally managed business development company based in Dallas, Texas. The company focuses on providing flexible financing solutions to support acquisition and growth of middle market businesses, like emerging growth, buyouts, recapitalizations and growth capital investments. CSWC has supported 285 companies over the last 57 years.
For the fiscal second quarter, the company beat both top- and bottom-line forecasts. It reported earnings of $0.34 per share, well ahead of the Street view for $0.28 per share. That represented a 21.4% earnings surprise. This isn’t too surprising, as the company beat earnings estimates three out of the last four quarters.
Revenues were also strong, coming in at $12.60 million versus the consensus estimate of $11.35 million. This was a 48% year-over-year increase from $8.51 million in the same quarter a year ago. Again, the upside surprise isn’t very surprising since revenues have beat estimates over the last four quarters.
For the next quarter, analysts are looking for earnings of $0.36 per share and fiscal 2019 earnings of $1.44 per share. CSWC is a Conservative Buy under $19.
SOM Technicals:
1-5-19: Closed at 18.11. Trade pressures are up. Volumes are now neutral. 18.90 is the new long entry just above the 200 day MA.
1-12-19: Closed at 20.72. Trade pressures are up. Volumes are bullish. In the move up . The next target up is 21.66.
1-19-18: Closed at 21.60. Trade pressures are up. Volumes are bullish. At the 21.68 target. Expect consolidation.
Insperity, Inc.
Insperity, Inc. (NSP) stays as a Top 3 Stocks list for us this month. Remember, Insperity offers full-service human resources solutions that range from health insurance options to payroll, accounting and benefits services to employee relations, workman’s comp and liability advice. More recently, it has been benefiting from the record low unemployment levels as more people reenter the workforce, which has boosted its professional employer organization (PEO) solutions revenues, as well as the growth in average number of worksite employees paid per month.
For the most-recent quarter, net income soared 89% to $36.2 million, or $0.86 per share. Excluding special items, adjusted earnings came in at $0.96 per share. Analysts were expecting earnings of $0.82 per share, so Insperity posted a 17.1% earnings surprise.
Over the same period, revenues jumped 16% to $925.1 million. While this missed the $935.6 million consensus sales estimate by 1.1%, investors didn’t react to the sales miss. That’s because Insperity also updated its guidance for the fourth quarter and FY 2018. This quarter, Insperity expects adjusted earnings will range between $0.63 and $0.67 per share. This represents between 15% and 22% annual earnings growth.
For FY 2018, Insperity is targeting adjusted earnings between $3.69 and $3.73 per share. This represents between 51% and 52% annual earnings growth.
NSP also continues to reward its shareholders. The company declared a quarterly dividend on November 30 of $0.20 per share. Shareholders of record on December 13 will receive payment on December 28. This represents a 33% increase from the $0.15 per share dividend declared last year. Continue to buy this Aggressive Stock up to $97.
SOM Technicals:
1-5-19: Closed at 92.56. Trade pressures are in the neutral zone. Volumes are now neutral. Tracking just below the 200 day MA in the downtrend.
1-12-19: Closed at 95.21. Trade pressures are up. Volumes are bullish. At the lows and below the 200 day MA. Need a close above 106.03 to get moving again.
1-19-18: Closed at 100.69. Trade pressures are up and extended. Volumes are bullish. Just above the 200 day MA. 106.30 would start a new move up.
