Q2 Half-time Report (15 Winners and 15 Losers)

Once the closing bell rings tomorrow, May 13, we’ll be halfway through the second quarter. And if could only use one word to summarize the past six weeks, I’d say it was unpredictable, above all else. Once earnings season kicked off on April 11, Wall Street enjoyed a multi-day rally; both the Dow and S&P 500 got within a stone’s throw of their respective all-time highs.

However, it turns out that corporate earnings weren’t strong enough to keep up the momentum. Towards the end of April, there were a number of high-profile disappointments: Alexion Pharmaceuticals (ALXN), Apple Inc. (AAPL), Coca-Cola Inc. (KO) Microsoft Inc. (MSFT), Netflix Inc. (NFLX) and United Continental Holdings (UAL).

So, despite a handful of blowout earnings reports—such as AYI, FB, TSS and TDG—investors reacted to the bad earnings news. So, the Dow and S&P 500 are back to where they were on April 1. Understandably, this roller coaster action is frustrating to many. It’s never fun to experience the highs of a broad stock market rally, only to have those gains wiped out over the next few weeks.

If the recent stock market activity has you feeling this way, I have just the resource for you. You see, at the beginning of April I published my Q2 Portfolio Grader 500 report, which highlights 250 promising stocks to buy—and 250 stocks to sell. (If you’re already a member of my premium newsletters, or have purchased The Portfolio Grader 500 separately, you can view it here.)

For those of you who may not be familiar with my Portfolio Grader stock rating system, it uses my eight-point formula to assess the fundamental health of nearly all publicly-traded companies. Portfolio Grader also measures the institutional buying pressure supporting each stock, so that we can predict a stock’s upside (or downside) potential.

Portfolio Grader 500 uses the best elements of Portfolio Grader to be your guide to investing in the second quarter. For example, if you had read this report at the beginning of the quarter, you would have known to avoid duds like Fossil Group (FOSL), Gap Inc. (GPS), Macy’s (M) and Valeant Pharmaceuticals (VRX), all of which have sustained double-digit losses over the past quarter. Here is a list of the 15 worst-performing stocks from my “stocks to sell” section of Portfolio Grader 500:

<td class="excel3" title="cssbody=[tabchrtbdy] cssheader=[tabchrthdr] body=[
 American Airlines Group Inc.
 Major Airlines | USA | 19.92B] offsetx=[100] offsety=[0] delay=[0]”>American Airlines Group Inc.

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 AmerisourceBergen Corporation
 Drugs Wholesale | USA | 17.41B] offsetx=[100] offsety=[0] delay=[0]”>AmerisourceBergen Corp.

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 CVR Energy, Inc.
 Oil & Gas Refining & Marketing | USA | 1.85B] offsetx=[100] offsety=[0] delay=[0]”>CVR Energy Inc.

<td class="excel3" title="cssbody=[tabchrtbdy] cssheader=[tabchrthdr] body=[
 Fossil Group, Inc.
 Textile – Apparel Footwear & Accessories | USA | 1.36B] offsetx=[100] offsety=[0] delay=[0]”>Fossil Group Inc

<td class="excel12" title="cssbody=[tabchrtbdy] cssheader=[tabchrthdr] body=[
 The Gap, Inc.
 Apparel Stores | USA | 7.46B] offsetx=[100] offsety=[-220] delay=[0]”>Gap Inc.

<td class="excel3" title="cssbody=[tabchrtbdy] cssheader=[tabchrthdr] body=[
 Impax Laboratories Inc.
 Drug Manufacturers – Major | USA | 2.31B] offsetx=[100] offsety=[0] delay=[0]”>Impax Laboratories Inc.

<td class="excel12" title="cssbody=[tabchrtbdy] cssheader=[tabchrthdr] body=[
 Jabil Circuit Inc.
 Printed Circuit Boards | USA | 3.30B] offsetx=[100] offsety=[-220] delay=[0]”>Jabil Circuit Inc.

<td class="excel3" title="cssbody=[tabchrtbdy] cssheader=[tabchrthdr] body=[
 Macy’s, Inc.
 Department Stores | USA | 9.85B] offsetx=[100] offsety=[-220] delay=[0]”>Macy’s Inc

<td class="excel12" title="cssbody=[tabchrtbdy] cssheader=[tabchrthdr] body=[
 Office Depot, Inc.
 Specialty Retail, Other | USA | 1.99B] offsetx=[100] offsety=[-220] delay=[0]”>Office Depot Inc.

<td class="excel3" title="cssbody=[tabchrtbdy] cssheader=[tabchrthdr] body=[
 Boston Beer Co. Inc.
 Beverages – Brewers | USA | 1.93B] offsetx=[100] offsety=[-220] delay=[0]”>Boston Beer Company, Inc.

<td class="excel12" title="cssbody=[tabchrtbdy] cssheader=[tabchrthdr] body=[
 Seagate Technology Public Limited Company
 Data Storage Devices | Ireland | 5.86B] offsetx=[100] offsety=[0] delay=[0]”>Seagate Technology PLC

<td class="excel3" title="cssbody=[tabchrtbdy] cssheader=[tabchrthdr] body=[
 Trinity Industries Inc.
 Railroads | USA | 2.65B] offsetx=[100] offsety=[-220] delay=[0]”>Trinity Industries, Inc.

<td class="excel12" title="cssbody=[tabchrtbdy] cssheader=[tabchrthdr] body=[
 Valeant Pharmaceuticals International, Inc.
 Drug Delivery | Canada | 10.40B] offsetx=[100] offsety=[-220] delay=[0]”>Valeant Pharmaceuticals International

Ticker Company Name Total Grade Quantitative Grade Fundamental Grade Quarterly Performance
AAL D F B -11.2%
ABC D F B -11.2%
CVI F F C -20.0%
ERJ Embraer S.A. D F B -22.6%
FOSL D F C -14.6%
GPS F F C -17.0%
IPXL D F C -10.4%
JBL D F C -11.2%
M F F C -18.5%
ODP D F C -27.8%
SAM F F C -14.4%
STX F F D -36.0%
TRN D F C -16.8%
VRX F F C -69.4%
WNR Western Refining Inc. F F D -15.2%

Conversely, my “stocks to buy” section included some of this earnings season’s biggest break out stories, including Abiomed Inc. (ABMD), Edwards Lifesciences Inc. (EW) and ULTA Salon (ULTA). You can view my top 15 Portfolio Grader 500 leaderboard here:

<td class="excel19" title="cssbody=[tabchrtbdy] cssheader=[tabchrthdr] body=[
 CoreSite Realty Corporation
 REIT – Office | USA | 3.60B] offsetx=[100] offsety=[0] delay=[0]”>CoreSite Realty Corp.

<td class="excel28" title="cssbody=[tabchrtbdy] cssheader=[tabchrthdr] body=[
 Citrix Systems, Inc.
 Business Software & Services | USA | 12.66B] offsetx=[100] offsety=[-220] delay=[0]”>Citrix Systems Inc.

<td class="excel19" title="cssbody=[tabchrtbdy] cssheader=[tabchrthdr] body=[
 Edwards Lifesciences Corp.
 Medical Appliances & Equipment | USA | 22.39B] offsetx=[100] offsety=[-220] delay=[0]”>Edwards Lifesciences Corp.

<td class="excel28" title="cssbody=[tabchrtbdy] cssheader=[tabchrthdr] body=[
 Global Payments Inc.
 Business Services | USA | 11.32B] offsetx=[100] offsety=[0] delay=[0]”>Global Payments Inc.

<td class="excel19" title="cssbody=[tabchrtbdy] cssheader=[tabchrthdr] body=[
 Herbalife Ltd.
 Personal Products | Cayman Islands | 5.30B] offsetx=[100] offsety=[0] delay=[0]”>Herbalife Ltd.

<td class="excel28" title="cssbody=[tabchrtbdy] cssheader=[tabchrthdr] body=[
 China Lodging Group, Limited
 Lodging | China | 2.47B] offsetx=[100] offsety=[-220] delay=[0]”>China Lodging Group Ltd.

<td class="excel19" title="cssbody=[tabchrtbdy] cssheader=[tabchrthdr] body=[
 Middleby Corp.
 Diversified Machinery | USA | 6.26B] offsetx=[100] offsety=[0] delay=[0]”>Middleby Corp.

<td class="excel28" title="cssbody=[tabchrtbdy] cssheader=[tabchrthdr] body=[
 NVIDIA Corporation
 Semiconductor – Specialized | USA | 19.44B] offsetx=[100] offsety=[0] delay=[0]”>NVIDIA Corp.

<td class="excel28" title="cssbody=[tabchrtbdy] cssheader=[tabchrthdr] body=[
 Total System Services, Inc.
 Credit Services | USA | 9.62B] offsetx=[100] offsety=[0] delay=[0]”>Total System Services Inc.

<td class="excel24" title="cssbody=[tabchrtbdy] cssheader=[tabchrthdr] body=[
 ULTA Salon, Cosmetics & Fragrance, Inc.
 Specialty Retail, Other | USA | 12.55B] offsetx=[100] offsety=[-220] delay=[0]”>Ulta Salon Cosmetics & Fragrance

Ticker Company Name Total Grade Quantitative Grade Fundamental Grade Quarterly Performance
ABMD ABIOMED Inc. B A B 32.8%
AYI Acuity Brands Inc. A A B 37.7%
COR A A B 33.5%
CTXS A A A 32.7%
EW A A B 33.0%
GPN A A B 36.0%
HLF B A B 41.9%
HTHT A A B 36.2%
LGND Ligand Pharmaceuticals Inc. A A C 31.9%
LKQ LKQ Corp. B A B 32.7%
MIDD B B B 32.3%
NVDA A A B 42.3%
QSR Restaurant Brands International Inc. B B B 35.4%
TSS A A B 37.0%
ULTA A A B 31.9%

So as you can see, as uncertain as the market has been recently, there are ways to stack the odds in your favor. My Portfolio Grader 500 report is a good place to start, as well as this daily blog, in which I’ll continue to point you to the profit opportunities and pitfalls in the stock market.

Sincerely,

Louis Navellier

Louis Navellier

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