Weekly Performance Review May 10th – 14th, 2021

Stocks slipped from record highs this week as investors faced stark signs of higher inflation.  On Wednesday the April Consumer Price Index (CPI) report surprised investors.  The Labor Department reported that core consumer prices, excluding food and energy, jumped by 0.9% in April, representing the biggest jump in almost four decades and nearly triple consensus estimates.  The headline consumer price index (CPI) rose 4.2% over the 12 months ended in April, exceeding forecasts for a 3.6% increase.  Consequently, the S&P 500 had its worst day since February 25th and the Dow had its worst day since October 28th.  

 A late week rally helped stocks to recover some momentum.  The boost came along with a bigger-than-anticipated drop in weekly jobless claims, reported Thursday, and a positive revision to March retail sales on Friday.  The economy’s ongoing recovery was reflected in healthy increases in spending at restaurants, and the CDC surprised many by changing its recommendations to declare that fully vaccinated people do not need to wear face masks or socially distance themselves in most indoor situations.  

The S&P 500 finished the week with a loss of 1.4% and the Dow dropped 1.1%.  The Nasdaq was the big loser for the week, dropping 2.3%.  Read on to find out how our trades stacked up.

   

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05-10-2021_ORI down 0.04%

Old Republic International Corp. (ORI) is a holding company engaged in insurance underwriting and related services.  ORI has an impressive record of positive earnings surprises, as it hasn’t missed an earnings consensus estimate in any of the last four quarters.  Most recently, Old Republic reported EPS of $0.69 versus consensus estimate of $0.45.

ORI saw its share price increase 70% in the last year, slightly above the market return of around 56% (not including dividends). 

The stock currently trades at just 4.68 times earnings and sports a 3.37% dividend yield.  

05-11-2-21_GNRC up 2.35%

 Generac was the first company to engineer affordable home standby generators.  Today, it is the leading manufacturer of home backup generators.The analyst community is highly bullish on the portable generator company.  Of the 15 analysts covering this midcap stock tracked by S&P Global Market Intelligence, nine rate it at Strong Buy, three say Buy and three call it a Hold.

“The company is well positioned for future trends such as climate change and energy market disruption, 5G deployment, and automation in manufacturing,” writes Argus Research analyst John Eade, who rates the stock at Buy.

Their average target price of $402.77 gives GNRC implied upside of about 33%.

05-12-2021_MIME up 4.02%

Mimecast Limited (MIME) offers email management services that protect the large and small organizations against spam, viruses, malware, emerging threats and other challenges.    

Mimecast, like most growth software stocks, is down substantially YTD.  The mid-cap stock has fallen 24% since the beginning of the year.  With the growing threat of ransomware attacks, companies are beefing up their cybersecurity.  Mimecast seems set to gain as one of the top cybersecurity firms tackling this looming threat. 

The pros on Wall Street are largely bullish on MIME stock.  Of 16 analysts polled, 12 rate the stock a Buy, 3 rate is Hold and only 1 analyst calls MIME a Sell.  The current average price target among analysts offering recommendations is $55.56, which represents a more than 20% upside for MIME share price. 

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05-13-2021_MLM up 2.76%

The company blew past analyst expectations when it reported earnings for first-quarter 2021.  Its earnings and revenues were up year-over-year, backed by improved pricing in upstream aggregates and cement businesses as well as disciplined cost management.

Ward Nye, Chairman and CEO of Martin Marietta, said, “Our record-setting first-quarter results underpin our confidence in Martin Marietta’s ability to continue delivering sustainable growth and superior shareholder value creation in 2021 and beyond.  The Company’s unrivaled growth opportunities and steadfast commitment to disciplined pricing and operational excellence, combined with emerging demand tailwinds that are expected to support construction activity over the long term, firmly and uniquely position Martin Marietta to SOAR to a Sustainable Future.”

MLM stock is up 117% for the past year and is outperforming its sector YTD.  So far this year the construction and materials sector is up 17.89% versus MLM’s rise of more than 30% in the same time period.  Going forward, MLM will be looking to continue its solid performance and will likely get a boost along with increased infrastructure spending.  

05-14-2021_NTES up 2.23%

NetEase Inc (NTES) develops and operates mobile and PC games, communities, and eCommerce platforms.  NTES’s leading position in the video game market is expected to grow at a double-digit CAGR over the next decade.  NTES also has shown the ability to develop and launch new games that are well-received by the public and partner with foreign developers to bring popular games to the Chinese market. 

The current consensus among 42 polled analysts is to buy NTES.  There are 36 Buy ratings, 3 Hold ratings and only 3 Sell ratings for the stock.  A median price target of $136 represents a more than 33% upside.

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