Zacks Investment Research

The market continues to run in place just below all-time highs despite a number of positive developments, including the solid earnings season and a good jobs report. So what’s the hold up? Ultimately of course, stocks want to see tax reform and other pro-growth initiatives that were promised during the election. But that will likely take a while.

Fortunately, a few of the editors think we’re poised to make a move. “I truly believe we will soon break above 2400 touching 2450 or even 2500 before the next consolidation period,” said Steve in Reitmeister Trading Alert.

The S&P has crossed 2400 intraday, but keeps scurrying to the negative side by the closing bell. The index was down 0.10% today to 2396.9. The Dow also spent a good part of the session in the green, but ended lower by 0.17% to 20,975.8. Only the NASDAQ has been able to reach all-time highs and stay there. It was up 0.29% on Tuesday to 6,120.6.

The portfolios found plenty to do even if the market didn’t. Zacks Counterstrike banked a double-digit profit for the second time on one of its positions, and still has some shares left over for the next leg higher. TAZR added a pharma company, Stocks Under $10 bought a French telecom and Insider Trader picked up a fertilizer company in hopes that the industry is finally bottoming. Finally, Short List swapped out three names this week. Give it all a look below:

Today's Portfolio Highlights:

Zacks Counterstrike: The $60 price target for Applied Optoelectronics (AAOI) was hit and surpassed this morning, giving Jeremy a great opportunity to sell half of the remaining position for a return of 34.4% in less than a month. The editor sold part of AAOI last Friday for a more than 36% return. He’s holding onto the final third of the original position in anticipation of a move above $70.

TAZR Trader: Alexion Pharmaceuticals (NASDAQ:ALXN) has been basing between $110 and $120 over the past year, but Kevin feels that this profitable biotech company will be heading back to around $150 moving forward. The company’s focus on rare conditions allows it to command premium pricing and a quicker regulatory path to market. EPS and sales are expected to grow 19% and 13%, respectively, this year, and then accelerate even further by 23% and nearly 16% next year. The editor added ALXN on Tuesday with a 7% allocation. Make sure to read his complete commentary to learn about the special risks coming out of Brazil and the funds that continue to buy the stock.

Zacks Short List: There were three swaps this week, and two of the short-coverings were positive for the portfolio:

• Incyte Corp. (INCY, +3.9%)
• Halliburton (NYSE:HAL, +1%)
• BIDU was also short covered

The new buys that replaced these names are:

• ConocoPhillips (NYSE:COP)
• GoDaddy (GDDY)
• Inphi (IPHI)

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

Stocks Under $10: Brian Bolan went overseas for his next addition by adding the French telecom Sequans Communications (SQNS). This Zacks Rank #2 is growing revenue on a year-over-year basis and reported a 25% earnings surprise last time. The editor thinks this company could be profitable by the end of the year and is getting in at a great price as the CAC (the Paris stock exchange index) tumbled yesterday in the aftermath of the election. The full commentary has a lot more on this new buy. While you’re there, check out the portfolio’s three tech stocks that are each up in the triple digits.

Insider Trader: Is a bottom forming for the slumping fertilizer industry? A few insiders at Mosaic (MOS) seem to think so. Shares of this phosphate and potash fertilizer company are down nearly 20% year to date, but it mentioned some positive developments in its recent earnings report from earlier this month. Subsequently, the CFO and two directors bought shares in their own company. Do they see a light at the end of the tunnel? Tracey decided to take a chance that they do and bought a 10% position in MOS on Tuesday. The full commentary has more specifics on this new buy.

Until Tomorrow,
Jim Giaquinto

One More Thing...

Remember, the third episode of the Zacks Ultimate Strategy Session will be available for viewing this Wednesday, May 10th. Steve Reitmeister, Sheraz Mian, Dr. John Blank and David Bartosiak will cover the investment landscape from most every angle in this "must-see-TV" event.

Don't miss your chance to hear:

• Sheraz and John Agree to Disagree on Risk and Earnings Growth
• Steve's answers to your questions in Reity's Mailbag
• Tips for improving your portfolio
• And much more

So be sure to mark your calendar then log on to Zacks.com and bookmark this page.

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Zacks Investment Research