Martin, I guess I didn't get the memo because I'm not sure when Scottish Re is supposed to “pop." I tend to agree with your assessment that the stock is so-called dead money. The market is breaking out and there are incredible gains in numerous sectors, just not insurance. Certainly, I would only be holding this stock if I had a portfolio with exposure to technology, railroads, oil drillers, homebuilders, infrastructure, and biotechnology.
Question: What do you think of Citrix Systems (CTXS)? — Carol (Boca Raton FL)
I happen to be a big fan of Citrix Systems. Our clients are long (we last recommended on February 15th), and we have already raised our target from the original outlook. Our new target is $40.00 but we may raise it, again. That said, I wouldn't ask anyone to chase the stock here. The valuation metrics are well above industry averages, but the execution has been well above the industry average, too. If you're long, I say ride the wave, if not I'd look to pull the trigger around $36.00/$35.00.
Question: I bought a small amount of Cisco (CSCO). It seems to be on a continual downslide and it is now below what I originally paid for it per stock. I have been looking at what analysts are saying, and they all seem to be saying to hold on to the stock. I also have been watching another stock in that same business and it appears to be continuing to go up in value. Would you recommend that I dump Cisco or hold on to it? — Jeanne
A lot of Cisco's rivals are seeing their share prices increase, in part because of possible consolidation in the industry, but also because these nibbler companies have been executing very well of late. That said, Cisco has come on very strongly and you have to expect some kind of pause as gains are consolidated. There are others that might have better percentage gains this year but the company has articulated more confidence of late than it had in the last four years, so the stock is worth keeping.
Question: I heard in the news this week that there is going to be increased usage of ethanol. I also understand that Archer Daniels Midland (ADM) is a top producer of ethanol. Would ADM be a good investment for the small investor? — Ron (Columbia, MO)
Ron, an investment is either good or bad, the size of the investor doesn't matter. I guess if I had to name one concern about ADM, it's that its expectations are sky high. The company moves to the beat of its own drum, and I'm not sure management will take steps to keep up with the hype. Moreover, execution has been okay, but it doesn't match the hype that has sent the share price soaring. Insiders are beginning to sell more shares than normal. This is the kind of idea that one would hold if they were fortunate enough to own cheaper shares, yet, the upside from here (over the next six months) seems limited.
Question: With the Fed raising rates and a presidential election in two years, is it time to get out of the market for a while? — Dick
I must say Dick, I think you're thinking too much. The Fed is almost finished raising rates and the presidential election, as you pointed out, is two years away. The major indices are at multiyear highs — don't miss this move. There is always a reason to be pessimistic and cautious, and if you're only tuned into that kind of stuff you will likely miss all the great opportunities. I do think it is and will be tougher than the "dart-throwing 1990s," but why not get into the market and into areas that will not be impacted by the Fed or elections. Look at rails and oil drillers.
Charles Payne is the founder and CEO of www.wstreet.com and appears regularly on FNC's Cost of Freedom Business Block.
Charles Payne is the host of Making Money with Charles Payne (weekdays 6-7 PM/ET).