This healthy stock market continues to take two steps forward and one step back. That is how and why it has been able to continue to climb so steadily over the last several years. All the conditions for further gains remain in place. The cheap money environment that has been fueling share buybacks and acquisitions is not going to end overnight. The trend remains firmly up. However, we are short term over-bought again and that suggests to me we may see another healthy bull market breather. Investors can stay put, active traders may want to raise a little cash by harvesting some gains.
Many of our holdings have made stunning runs recently and as a result I have trimmed them in our actively managed accounts. I continue to see dozens of great looking Top Ranked Magnet stocks in almost every sector. I just don’t believe in chasing stocks or sitting through “round trips”. It remains a great market “to buy the dips and sell the rips”. So while I have raised some cash, I have dozens of alerts set- the stocks I want to own on pullbacks- and others getting ready to emerge out of bases.
Boom in Construction Markets
Spinoffs are notoriously great investments, once they finally get some sponsorship. The Home Depot spun off Home Depot Supply Holdings Inc. (HDS) in 2013.This much smaller company is growing faster than its parent, something very common with spinoffs. Since then HDS has delivered steady revenue growth and double digit earnings, with nice profit margin growth as well. The valuation is reasonable and its relative strength is improving- but the company with 10 billion in sales in still under the radar for most. The stock is still gaining its footing with a big potential breakout at $30. I have already starting buying and will add to my position when it breaks out over $30. In this case it will not be an extended breakout, but a breakout from a long base. Moves out of long bases tend to have nice moves.
The housing and construction markets are healthy but still unloved. I am building positions. I’ll add to my best building companies on pullbacks- HDS is something that looks good to me to start building positions right here.
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