Weekend Blitz: Alibaba Stock, Rite Aid (RAD), & Fannie Mae (FNMA) Stock

- January 21, 2017

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Welcome to the Weekend Blitz, where we provide both our best investment ideas of the week and share important information with BNL members. This week we are looking at stories related to Alibaba Group Holding Ltd (NYSE:BABA), Rite Aid Corporation (NYSE:RAD), and Federal National Mortgage Association (Fannie Mae) (OTCMKTS:FNMA).

Before getting to BABA, RAD, and FNMA stock stories, let’s start with our big announcement.

Must know news

Liam Hunter will be joining us as a former biotechnology sell-side analyst. He will play a big role in BNLMarketAnalytics.com and will start a biotech focused forum in the members only section, for BNL Members. He will also act as an advisor to the BNL Portfolio.

We think his 15 years of expertise will add tremendous value to BNL Members.

BNL’s best of the week

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Alibaba (BABA) is going to be acquisitive

There is a reason that Alibaba Group Holdings CEO Jack Ma has such a renewed interest in the U.S., and specifically with the new President Donald Trump. We think there are two reasons.

First, Ma wants Alibaba to acquire in the U.S. without regulatory interference. Second, Ma wants to build awareness for Alibaba and make it a household name. Ma likely looks at Amazon.com and wonders how BABA stock is not more valuable. He would not be crazy to wonder.

With that said, we identified a list of seven companies that Alibaba may acquire, any one of which would be good for BABA stock. These range from smaller companies like Shopify to larger ones like Salesforce.com, and everything in between (read here).

What’s next for RAD stock

RAD stock fell 13% after Bloomberg reported that the FTC is still not happy with the Walgreens Rite Aid merger despite a year of ongoing talks and the met requirement of store divestments. If accurate, this is truly shocking to me.

Nonetheless, I did say that I expected the deal to close as expected. Yet, as members know, I also my 56,000 share stake last week at $8.64. BNL Members received text, email, and app notifications the minute I sold, along with an explanation. After years of owning RAD stock, I finally concluded it just was not worth the risk.

That said, with neither Walgreens nor Rite Aid yet to confirm the news, and RAD stock down 13%, I immediately responded to the “buy RAD stock?” question. Yes, Rite Aid is going to get a nice termination fee, but be advised that Rite Aid Corporation is no longer growing revenue and margins have been dwindling for some time.

Without the Walgreens merger as a catalyst, it’s hard to imagine that RAD stock is worth more than $5/share. So at $7.50/share, RAD stock is simply too big of a risk (read here).

Buy & forget Fannie Mae, FNMA stock

Steven Mnuchin’s confirmation hearing to become the next Treasury Secretary turned into a circus on Thursday. The reaction does not surprise me, because Mnuchin wants complete GSE reform, which would put an end to the Treasury’s cash cow.

While I was already bullish on the prospect of GSE reform, and have owned FNMA stock since it was under $2/share, I explained why FNMA stock presents such a great investment opportunity right now for those who don’t currently own.

Fact is the likelihood for GSE reform has never been higher, which bodes well for FNMA stock owners. In addition to our previous FNMA stock coverage, this week’s piece is a must-read. After all, there’s a really good chance that FNMA stock ends up a multi-bagger (read here).

 

 

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2 Comments

  1. David Dawalt
    Posted January 21, 2017 at 7:28 am | Permalink

    As regards RAD stock, yes, I did get your warning and I sold mine the day after you sold yours. I do like to check out your reasoning before I trade and in this case the downside risk was far greater than the upside potential for me. As a result, I made enough to cover my subscription for three years. Thanks for the tip.

    • Posted January 21, 2017 at 8:31 am | Permalink

      That’s great David. Certainly timed that one perfectly. And I did have good reason: NYPost liked it, so I’m selling

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