70 Trades To Make Now That Rates May Rise

If I had to sum up the state of the market right now in one word, it would be "weird." There seems to be little rhyme or reason to the way Wall Street has reacted to some of the latest headlines.

Take last week. First, the market rallied on the decisive news of Putin’s annexation of Crimea–clear evidence that the market wants to go higher since the referendum in Crimea to leave the Ukraine and join Russia didn’t spook investors, but just seemed to provide some closure to an international crisis.

Of course, the market subsequently sold off after Fed Chairperson Janet Yellen surprised markets by stating that interest rates may rise six months after the Fed winds down its quantitative easing, and the FOMC statement gave a target rate for Fed Funds of 1% at the end of 2015 and 2.25% in the subsequent year. The FOMC statement also confirmed that the Fed would taper its quantitative easing another $10 billion to $55 billion. This is the third month in a row that the Fed has trimmed its bond buying by $10 billion per month, so if the Fed continues with it current pace, its quantitative easing could be entirely wound down by as early as October.

I already discussed my thoughts on the Fed in a previous blog, but it’s clear that the Fed’s announcement spooked investors. It seems that rates may rise earlier than expected; many are concerned that higher interest rates may kill the bull market that we’ve been in for the past few years. I certainly don’t agree with that hypothesis, but in the face of this kind of uncertainty it never hurts to prepare. So let’s look at the 70 big blue chips that have been upgraded and downgraded this weekend. After taking a close look at the latest data on institutional buying pressure and each company’s fundamental health, I decided to revise my Portfolio Grader recommendations for each of the stocks listed below.

Upgrades

Last Week’s Holds, Now Buys

Symbol Company Name Quantitative Grade Fundamental Grade Total Grade
APD Air Products and Chemicals, Inc. B C B
ASML ASML Holding NV NY Registered Shs B B B
CF CF Industries Holdings, Inc. B C B
GRFS Grifols, S.A. B B B
JNPR Juniper Networks, Inc. B B B
KLAC KLA-Tencor Corp. B B B
LB L Brands, Inc. B C B
MET MetLife, Inc. C B B
NVO Novo Nordisk A/S B C B
ROK Rockwell Automation, Inc. B B B
SNDK SanDisk Corp. C B B
STX Seagate Technology PLC B C B
SWN Southwestern Energy Company B B B
TD Toronto-Dominion Bank B C B
TXN Texas Instruments Inc. B B B
USB U.S. Bancorp B C B
XEC Cimarex Energy Co. B B B

Last Week’s Sells, Now Holds

Symbol Company Name Quantitative Grade Fundamental Grade Total Grade
ADI Analog Devices, Inc. D C C
BK Bank of New York Mellon Corp. C C C
BMO Bank of Montreal D C C
CAT Caterpillar Inc. D B C
CLR Continental Resources, Inc. C C C
CMI Cummins Inc. D C C
CNQ Canadian Natural Resources Limited D B C
DHR Danaher Corp. D B C
ECA Encana Corp. C C C
EIX Edison International C C C
EMC EMC Corp. D B C
ETR Entergy Corp. C C C
JPM JPMorgan Chase & Co. C C C
KMX CarMax, Inc. D C C
LUX Luxottica Group S.p.A. D C C
PH Parker-Hannifin Corp. D B C
RBS.PQ Royal Bank of Scotland Group plc C C C
RIO Rio Tinto plc D C C
TSU TIM Participacoes S.A. C C C
WFT Weatherford International Ltd. C D C

Downgrades

Last Week’s Buys, Now Holds

Symbol Company Name Quantitative Grade Fundamental Grade Total Grade
BMY Bristol-Myers Squibb Company C B C
BP BP p.l.c. C C C
CMCSK Comcast Corp. C C C
DFS Discover Financial Services C B C
ENL Reed Elsevier NV C C C
GSK GlaxoSmithKline plc C B C
LVS Las Vegas Sands Corp. C B C
MMC Marsh & McLennan Companies, Inc. C B C
NKE NIKE, Inc. C B C
REGN Regeneron Pharmaceuticals, Inc. C C C
RYAAY Ryanair Holdings Plc C C C
TJX TJX Companies, Inc. C B C

Last Week’s Holds, Now Sells

Symbol Company Name Quantitative Grade Fundamental Grade Total Grade
AME AMETEK, Inc. D B D
AMX America Movil SAB de CV D B D
BBBY Bed Bath & Beyond Inc. D C D
COP ConocoPhillips D C D
CP Canadian Pacific Railway D C D
DLTR Dollar Tree, Inc. D C D
DTE DTE Energy Company D C D
EBAY eBay Inc. D C D
GIS General Mills, Inc. D C D
IX Orix Corp. D C D
JWN Nordstrom, Inc. D C D
KRFT Kraft Foods Group, Inc. F B D
LINTA Liberty Interactive Corp. D C D
MDLZ Mondelez International, Inc. D C D
MPC Marathon Petroleum Corp. D B D
NVS Novartis AG D C D
OKS ONEOK Partners, L.P. D C D
PEP PepsiCo, Inc. D C D
TU TELUS Corp. D C D
WMB Williams Companies, Inc. D D D
WPZ Williams Partners L.P. D D D

Sincerely,

Louis Navellier

Louis Navellier

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