Weekly Market Overview

U.S. stocks continue to set records as the dow matched its 80-year record for the longest streak. This move was helped by higher M&A action, falling oil prices, and falling yields on long-term treasury bonds. However, many traders and investors will be closely watching the Federal Reserve meeting on interest rates later this week for any signs of weakness. While this is definitely a great market, remember that all good things must come to an end. Given the extreme streak that we are seeing now, this day of reckoning could come soon.

Top 10 Stocks to Watch this Week

Fundamental Analysis

1. Brinks Company (BCO) – The Brink’s Company remains on our watchlist since both MMI and Pirate Capital still hold significant stakes in the company. The company recently announced higher than expected earnings along with a dividend increase. We are still waiting to hear about the activist situation.
   
2. Ceridian Corporation (CEN) – Bill Ackman’s activist play also continues to hold appeal with us since the breakup could unlock substantial value. We have not seen an announcement of an official date, but as of March 13th, Pershing Square is still engaged in a proxy contest with the company’s board of directors.
3. Hexcel Corporation (HXL) – OSS Capital demanded today that the company engage an investment bank to explore strategic alternatives. The company’s shares are worth $14 per share above the current market price if priced at its peers’ levels. All we are waiting on is the support of the board of directors!
4. Applebees International (APPB) – Breeden Capital Management first approached Applebees several months ago suggesting that the company put itself up for sale. Last week, the company announced that it had received several takeover offers and would review the bids before taking final offers. While we don’t know what these bids are priced at, we do know that they exist.
5. Universal Power Group (UPG) – 3V Capital Management announced last week that they weren’t pleased with the company’s valuation. They recommended several changes that they hope would enhance shareholder value. We are still waiting on more details and a response from the company, but this was definitely a stock worth following!
   

Technical Analysis

1. Mobility Electronics (MOBE) - Long-term bullish bottom triangle.
   
2. Darden Restaurants (DRI) - Intermediate-term bullish upside breakout.
   
3. Syntax-Brillian (BRLC) - Intermediate-term bullish symmetrical continuation triangle.
   
4. Centex Corporation (CTX) - Intermediate-term bullish head and shoulders bottom.
   
5. Silver Wheaton (SLW) - Long-term bullish continuation diamond.
   

Stock of the Week: Wendy's International (WEN)

Applebees is our stock of the week this week since speculation has recently pushed shares higher ahead of what many are hoping is a buyout bid for the company. Billionaire investor Nelson Peltz and famed activist Bill Ackman have both pressured the company to unlock shareholder value through a sale of the company. The board established a committee to evaluate possible strategic alternatives on April 26th and many are hoping that this recent rumor holds true - that a buyer has surfaced! This is definitely one to watch as any buyout would likely come at a substantial premium.

Tip of the Week: Watch the Hedge Funds

Hedge funds are increasingly becoming activist institutions that take action to unlock value in their investments. Investing alongside these funds can yield great results; in fact, there is record of one such tracking fund that returned over 40%! The key to following these activist hedge funds is to track their motivations and plans through their Schedule 13D filings with the SEC. These filings can provide details as to whether or not they plan on pushing for a sale of the company along with indicators as to how receptive management and the board is to their plans.

You can find and track these SEC filings on SECFilings.com!

Final Words

Everyone will be closely watching the Fed's meeting notes later this week to give hints as to just how far the market will go before finally retracing. By focusing on unique situations and sectors, investors can still profit in any market!