We’re Selling Four Stocks
As we announced earlier this year, we will be discontinuing covering of the legacy Roadrunner Stocks in December. While some stocks will be worth continuing to hold, we are recommending selling four at this time. Those are DSW, National Presto Industries, NMI Holding and Rackspace Hosting.
Although DSW (NYSE: DSW) is attempting to innovate and continues to add new stores, its organic growth continues to decline over the past few quarters. DSW has posted a 13.6% loss since we picked up the company over a year ago, and organic growth expected to decline over the next year we’ve decided to cut our losses. SELL DSW.
National Presto Industries (NYSE: NPK) reported revenues declined by 14% in the first and second quarters of 2016. Although company continues to add lucrative military contracts, it cites the timing of timing of shipments for its Defense segment for this lackluster performance. The company’s other segment Housewares/Small Appliance also saw a 12.2% decrease due to a slow retail market while its Absorbent Product segment showed modest year-over-year growth of 4%. NPK’s 5.8% dividend makes it a great income play, so it you’re holding it for the income, we rate it as a hold. But this is a growth publication and company has disappointed in terms of the growth. Therefore, we’ve decided to take our 13.5% profit and SELL National Presto Industries.
A potential Fed rate hike before the end of the year led to a 6% drop in mortgage application volume in the first week of October. As this trend is expected to have a big impact NMI Holding (NSDQ: NMIH) near-term business, and with shares currently trading near their 52-week high, we recommend SELLING NMIH and pocketing the 8.3% return since our initial recommendation.
Last month, Rackspace Hosting (NYSE: RAX) announced it entered into a $4.3 billion deal with affiliates of Apollo Global to take the company private. This announcement drove company shares to near its reported sell price per share of $32. Unless the deal falls through, shares of RAX will hover at this level until the deal is completed by the fourth quarter of fiscal 2016. This is the chance to pocket an 18% gain since our initial recommendation. SELL Rackspace Hosting.
W.R. Berkley (NYSE: WRB) reported third-quarter net income of $220.6 million, or $1.72 per share, compared to $152.6 million, or $1.18 per share in 2015. The company’s third quarter was augmented by realized gains of $176 million, including $135 million from the sale of Aero Precision Industries. Revenues for the quarter increased 8.6% to $2 billion. Return on equity improved to 19.2%, from 13.3% last year. Underwriting results were sound, with net premiums written coming in at $1.61 billion, compared to $1.57 billion in 2015. During the first nine months of 2016, the company’s book value per share has increased 8.5%.