Friday, August 28, 2015

Selloff made these tech stocks cheap, says analyst: $FB, $AMZN, $NFLX, $GOOG

With numerous analysts highlighting "FANG" stocks-Facebook (NASDAQ: FB), Amazon (NASDAQ: AMZN), Netflix (NASDAQ: NFLX) and Google (NASDAQ: GOOGL)-as technology trades to buy on the stock market's latest dip, one analyst took a different stance. 

"Yesterday, you were able to buy Alibaba (NYSE: BABA) at below the IPO price," Youssef Squali, Internet company analyst at Cantor Fitzgerald said Thursday on CNBC's "Squawk Alley." "Which we always think is a great price to own a strong franchise like that." 

For Squali, Facebook, Amazon and Google are in the top five tech stocks to buy amid the carnage-but instead of Netflix, he's eyeing Chinese e-commerce giant Alibaba and travel-booking company Priceline (NASDAQ: PCLN).

Though a steep stock selloff Monday followed fears surrounding China's growth, Alibaba remains a strong pick based on market dominance, growth in excess of peers, and valuations, he said.

"We find concerns about China to be overblown," Squali wrote in a note Wednesday night. "Recent market turmoil appears to have had little impact on retail spending." 

While online travel company Priceline also does business in China through a local partner, it mainly focuses on getting Chinese travelers abroad, a travel market which shows no signs of weakening, he wrote. 

Despite shares of content-streaming service Netflix trading up almost 7 percent Thursday midday, Squali didn't see the FANG darling as a top buy, because it was still trading at a high valuation compared to the other stocks.

"We do like Netflix over time, we have a buy on it, but it wasn't able to make it into the top list," Squali said.
Still, the recent pullback has caused many companies to come back to more attractive prices, especially among smaller and mid-size companies, he said. 

"There have been a number of people that have stayed on the sidelines, and this pullback has given them an opportunity to jump in," Squali said. "People are looking at these as good opportunities, probably great opportunities if you look at the next couple of years." 

On Thursday at midday, closely followed technology barometers such as the S&P 500 Information Technology sector were trading up 2.21 percent, and the Nasdaq 100 was trading up 2.46 percent, right in line with the overall indexes.

Global Grain Stocks At 30 Year Highs Mean Food Deflation Is Next

Everywhere you look there’s still more evidence that the world economy is grappling with a  global deflationary supply glut.
To be sure, this wasn’t supposed to happen.
Trillions in central bank cash and seven years of ZIRP across DMs was supposed to give a defibrillator shock to global demand and trade. Instead, the wealth effect never trickled down (surprise!) and wide open capital markets only served to keep insolvent producers in business, contributing to still more supply as everyone hangs on until the bitter end. As China’s slowdown continues unabated, the commodity hoarding becomes more evident and indeed on Thursday, The International Grains Council reported that global grain stocks are forecast to hit 447 million metric tons, the highest level in 29 years.  (more)


GNC Holdings Inc (NYSE: GNC)

GNC Holdings, Inc. operates as a specialty retailer of health and wellness products. The company operates through three segments: Retail, Franchise, and Manufacturing/Wholesale. Its products include vitamins, minerals and herbal supplements, sports nutrition products, diet products, and other wellness products. The company sells its products under GNC proprietary brands, including Mega Men, Ultra Mega, Total Lean, Pro Performance, Pro Performance AMP, Beyond Raw, GNC Puredge, GNC GenetixHD, and Herbal Plus, as well as under third-party brands. It operates a network of approximately 8,900 locations worldwide.
Take a look at the 1-year chart of GNC (NYSE: GNC) with the added notations:
1-year chart of GNC (NYSE: GNC)
GNC looked like it might have been rounding out a top from November through July, but then the stock shot to new highs instead. Now, the stock seems to be coming back down to that same July low. Over the past year, GNC has found support at that same $41.00 support (green) on multiple occasions. Traders could expect some sort of bounce if the stock reaches that support again. However, if the $41.00 support were to break, lower prices should follow.

The Tale of the Tape: GNC has an important level of support at $41.00. A trader could enter a long position at $41.00 with a stop placed under the level. If the stock were to break below the support a short position could be entered instead.