Relief – Thursday Recovery Yields Weekly Gain!

A sigh of relief as a strong recovery on Thursday helped ensure a weekly market gain. The market has been on a roller coaster the last few weeks with sharp rises in volatility as the correction passed through. Hopefully the strength shown last week will provide the support level needed for the market to begin another upward rise. The recovery late in the week is encouraging, but caution is in order as overall trading volumes were light so conviction is difficult to judge. The positives last week included optimistic reports on China trade and other international markets. The Euro decline still dominates overseas news, but the currency did strengthen last week providing additional support to equity markets. The biggest negative surprise was retail sales, which dropped unexpectedly in May. The encouraging sign is that the equity market took the news in stride and still finished the week with 2.5% gains. The market has been very rocky over the past month, although volatility appears to be declining slowly. We suspect it will take another month or so before the market settles down and resumes its advance. We remain optimistic that the market will finish the year higher. Now is an excellent time to buy stocks.

Momentum And Value (MAV Screen): Breakout Stocks To Buy!

What Stock Tips do we have? For this week, we have five stocks on our Breakout list. Amerigroup (AGP, Healthcare Facilities), Delta Apparel (DLA, Apparel/Accessories), LaCrosse Footwear (BOOT, Footwear), and Clearwater Paper (CLW, Paper Products) remain on our list from the prior week. Delta Apparel declined last week in sympathy on reports of declining May Retail Sales. We have kept Delta on our buy list, now is a good time to take advantage of the discounted price due to the recent selling pressure. We also added one new stock this week, APAC Customer Services (APAC, Business Services). APAC provides customer care services and solutions to companies across several industries through 15 domestic and offshore centers. The stock is up 13% over the past three months despite the broad market decline of 5% over the same time period. The company has been profitable since second quarter 2008, and EPS and Sales growth are both much higher than the company PE of just 6.5. Return on Equity is outstanding and industry trends are positive as customer care outsourcing continues to gain traction. Institutional Ownership is only 43%, so the stock could get a really big boost if big market players begin to buy in. The stock is a low priced, currently $6.50, so percentage price changes could be large. However, the stock price can be rocky, so patient investors should be prepared to give the stock plenty of leeway while waiting for price appreciation. Overall, we think the market is beginning to establish the required support levels. The pressures from overseas markets and technical trading appear to be moderating. Overall, we think this is an excellent time to buy equities.

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