2014 Candidate #2: Invest in steel?

Goldman Sachs recently upgraded the steel sector stocks. Its reasons are:

• The price of steel — the final arbiter of any debate surrounding steel’s demand — is as strong as it’s been in more than a year.
• Price of metallurgical coal, the material used to smelt iron, has grown, suggesting that steel producers are already seeing demand ramp up at least enough to merit higher smelting material prices.
• The Baltic Dry Index (of maritime shipping costs) has risen considerably since June, from a low of 806 to the current price of 1600; it had been as high as 2115 in early October. Although dry bulk vessels can carry all sorts of goods, the bulk of the recent charters and subsequent rise in charter prices has been fueled by a serious ramp-up in requests to haul iron ore… and most of it is bound for China, where steel production is already up 10% this year. Yet, it still isn’t enough. Forecasters believe demand for steel in China will grow at an annual pace of 3% to 4% through 2020, and the recent surge in iron ore charters validates the outlook. Considering the country drives 45% of the world’s demand for steel, if China’s buying a lot more steel and iron ore than usual, global supplies will be tightened.

Using T3B screener, US Steel (X, NYSE) stands out as an excellent candidate, trending nicely up since Sep. 

Like most stocks, it looks overextended for now, but definitely deserves a place in my watchlist.

2014 Stock Candidate #1:Pitney Bowles (US)

The local stock market is really unhappening these days, with many listless stocks. It is in the US that things are more exciting, with many stocks that are in nice uptrends. Using the T3B screener, I have located one such stock, Pitney Bowles (PBI, NYSE).

This company, which was once known solely for its postage machines, now provides hardware, software and services to integrate physical and digital communication channels.

Recently, the company announced the completion of the sale of its management services business for $400 million. It said it will use the proceeds to pay down debt.
On Oct. 29, the company reported Q3 earnings that were $0.09 higher than the Zacks consensus estimate, and the stock jumped to a new high over $22. (source: InvestorPlace Insights)

As can seen from the chart above, the stock has doubled this year, and the best time to buy was actually around September. Looks overextended now, and will be watching for pullback to consider entering this stock.

No action is the best course of action

Other than having Apple in my trading portfolio, I currently have no more shares. This is because I see little reason to buy shares, now that market is buoyant. However, I am still bullish on US stocks, and is currently using the T3B system to screen for stocks to buy if market weakens. I will be posting this.

Should we invest in Europe?

BNP Parisbas' Damien Kohler says we should invest in European small and mid-caps. Reasons are these companies are trading at attractive valuations, and could take off in a big way over the next 12 months if things continue to improve in Europe. What are these companies? They are:

1. IMI plc (Britain)
2. Nutreco (Holland)
3. Nokian Renkaat (Finland)
4. DS Smith (Britain)
5. Valeo (France)
6. Klepierre (France)
7. Arkema (France)
8. Atos Origin (France)
9. Scor (France)
10. GEA Group (Germany)
11. Weir Group (Scotland)

Shipping stocks are breaking to the upside

Shipping stocks are breaking to the upside! Why? Supposed the global recovery is really in place, and therefore increased trade.

Look at these:
Diana Shipping (NYSE) 

On a firm uptrend since Jan 2013. Strongest of the lot.

Dryships(Nasdaq)

               

On an uptrend since last month. Definitely on  my watchlist.

Knightsbridge(Nasdaq)

On an uptrend since April. Worth watching.

The locals seem to be following suit.

Yangzijiang (SGX)

It is breaking out to the upside. Watchlist

NOL (SGX)

The weakest of the lot, but also gathering pace to break out on the upside. I already own this counter, and am hoping to get a nice ride on this one.

Is the tide turning for Wilmar?

In a recent report by UBS, the bank sees growing demand for food. On the other hand, global warming and erratic weather patterns, as well as a slower rate of productivity gains in farming, are likely to constrain farming. If these views are correct, the tide may be turning for Wilmar, Noble, Golden Agri and Olam

Let's look at their charts:

The above is a chart of Golden Agri. Looks weak. I will not touch it.

Noble above looks more promising. There were up days on heavy volumes. Insiders were also buying around 0.80 level. Worth a watch.

Olam (above) looks bearish, with prices looking like they are not done declining yet. Give this a miss.

Wilmar chart:

This counter is breaking out of a base and looks likeliest among the commodity players to challenge its
200-D MA. Once the 200-D MA is successfully taken, then it is deemed to have changed to uptrend. Go Wilmar.

NB: I am vested in Wilmar.

Taking a bite of Apple

Apple shares has fallen from its height of 700, to a low of 400 recently. It has since recovered, trading now at 500. The case for buying Apple is tempting.

Legendary investor, Carl Icahn announced his position in Apple on Twitter two days ago: "We currently have a large position in APPLE. We believe the company to be extremely undervalued. Spoke to Tim Cook today. More to come."

 

The Wall Street Journal reports that he's been building his $1.5 billion stake in Apple over the last month.  What's his outlook? Icahn says, "Even without earnings growth, we think it ought to be worth $625." (Wyatt Investment Research)

 

Looking at the charts of Apple:

 

It has broken out of a double-bottom formation, and on a new firmly established uptrend (above 200-d MA). Downside 100, Upside 200, so favourable risk-reward ratio of 1:2. It is time to take a bite at Apple. However, having missed entering it at lower prices (400s), I am a bit reluctant. The stock market is currently up. Will wait for it to slightly correct before entering.