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Small Gains Still Enough for New Highs

SPECIAL ALERT: The February episode of the Zacks Ultimate Strategy Session is now available for viewing! Tune in to this “must-see” event when Kevin Matras, Sheraz Mian, Ben Rains, Dan Laboe and Kevin Cook discuss the investment landscape from several angles.

Don’t miss your chance to hear:

▪ Ben and Dan Agree to Disagree on which FANG stocks will still rule in the 2020s
▪ Kevin Matras covers how to stay bullish when the media is constantly sounding alarm bells, and covers topics including GDP, Employment, Consumer Sentiment, Interest Rates and Coronavirus in Zacks Mailbag
▪ Sheraz and Kevin Cook choose one portfolio to give feedback for improvement
▪ And much more

Simply log on to Zacks.com and view the February episode here. And please let us know what you think of this format. Email all feedback to mailbag@zacks.com.


Stocks were nowhere near as vibrant as they were yesterday, but the S&P and NASDAQ still logged another round of new highs as any positive close meant history would be made.

The major indices each hit intraday highs early in the session, but couldn’t hold on as investors decided to do a little profit taking.

The S&P inched forward 0.17% to 3357.75 and the NASDAQ rose 0.11% (or approximately 10 points) to 9638.94.

Doesn’t seem like much to write home about, except when you realize that those are new all-time closing highs for the indices.

The Dow was only about 100 points away from its own record when the day began… and it briefly got over that mark. But it pulled back and slipped 0% (or less than a point) to 29,276.34.

In other words, it was breakeven… so it’s still just a little over 100 points from a new high!

Stocks are coming off their best week of the year with each of the indices soaring at least 3%, which carried over into a solid Monday session yesterday. Today they took a bit of a breather.

Fed Chair Jerome Powell had his first day of testimony on Capitol Hill. He pretty much said what we were all expecting with no real surprises.

The Fed is closely watching the coronavirus situation, though its too early to tell what kind of impact it will have on the global or U.S. economies.

Overall, he said the economy was in a good place, though there are always potential challenges. The Chair will be testifying in front of the Senate tomorrow.

Other news today included the FTC announcing that it will examine past acquisitions by large tech companies. But editors like Jeremy Mullin and Brian Bolan, among others, do not feel this investigation is a real risk.  

Also today, the $26 billion merger of Sprint and T-Mobile was approved by a U.S. District judge. Both stocks soared in the session.

Today's Portfolio Highlights: 

Commodity Innovators: That's right! We've got a brand new service that's about to be launched and it's helmed by Counterstrike editor Jeremy Mullin. "Let’s face it, most of us don’t think twice when we drive by a corn field, a pig farm or even an oil well," says Jeremy. "I want to change that and give us a new perspective on the economics of commodities. And of course, make some money at the same time." The first trades and full commentary will be coming on Tuesday, February 18 with weekly write-ups on Mondays thereafter. In the meantime, check out the Guide and the FAQs. And make sure your email and text message preferences are correct right here. Read the welcome post for more. 

Stocks Under $10: Over the past four quarters, Mitek Systems (MITK) has topped the Zacks Consensus Estimate by 31% on average. The most recent beat was less than two weeks ago when it surprised by 50%! Revenues were better than expected as well. In addition to the impressive history, Brian also likes its valuation and thinks it’s poised to move into the double digits. MITK is a Zacks Rank #1 (Strong Buy) software products company with a focus on intelligent character recognition and forms processing technology, products and services for the document imaging markets. The editor thinks it’s a good time to get in this name. Meanwhile, he also thinks it’s a good idea to get out of Digital Turbine (APPS), Vapotherm (VAPO) and Celestica (CLS), so he sold all those names on Tuesday. Read the full write-up for more on all of today’s moves.

Surprise Trader: The portfolio is adding some diversification with today’s addition of Essent Group (ESNT), a Zacks Rank #2 (Buy) private mortgage insurance company. The service doesn’t have anything from the Financial – Mortgage & Related Services space, which is in the Top 11% of the Zacks Industry Rank. ESNT beat by 6.5% last quarter, and has an Earnings ESP of 1.26% for the quarter coming before the bell on Friday, February 14. Dave added the stock on Tuesday with a 12.5% allocation. The editor made room for this addition by selling Legg Mason (LM) for a 6% return in less than 3 weeks. Read the full write-up for more on today’s moves. 

Zacks Short List: The portfolio swapped four positions this week. The stocks that were short-covered included:  

• China Lodging (HTHT, +0.73%)
• Alteryx (AYX, +0.58%)
• MGM Resorts (MGM)
• Shake Shack (SHAK)

The new buys that replaced these names were:

• Ceridian HCM (CDAY)
• GDS Holdings (GDS)
• Las Vegas Sands (LVS)
• World Wrestling Entertainment (WWE)

Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short List Trader Guide.

All the Best,
Jim Giaquinto

Recommendations from Zacks' Private Portfolios:

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