Today’s news: ConocoPhillips (COP) and KLX Inc. (KLXI) each move from Strong Buy to Hold; bullish price action on ConocoPhillips (COP), KLX Inc. (KLXI) and Skechers (SKX).
ConocoPhillips (COP – yield 1.8%), a global energy exploration and production company, broke out from its 2018 trading range this week, and is now actively climbing. Consensus estimates point toward EPS growth of 363% and 5.4% in 2018 and 2019. (Profits were small in 2017, and they’re more normal this year.) I don’t want to hold COP in 2019 unless the earnings growth projection ramps up well into the mid-teens—which could happen after the upcoming earnings season. But if that doesn’t happen, I’ll be selling COP after the current run-up, in favor of a stock with better multi-year earnings growth expectations. Therefore, I’m moving COP from Strong Buy to Hold today. Hold.
KLX Inc. (KLXI), a company in the aerospace and energy service industries, broke out from its one-month trading range this week to new all-time highs. The stock is only slightly undervalued based on my normal measurements, although it’s also been considering “strategic alternatives” – meaning that there might be a takeover offer or a spinoff in the near future. The shareholder value of potential M&A activity could easily exceed my normal valuation measurements. I’m moving KLXI from Strong Buy to Hold, and will leave it there until we receive definitive news about M&A activity. Hold.
Skechers USA Inc. (SKX), a footwear company, broke out from its 2018 trading range this week. Nobody has missed the run-up in the share price. I currently plan to hold SKX until it retraces its high of 53 from 2015. Buy SKX now. Strong Buy.