Last week I began the pruning process in the PCA portfolio. As you may have noticed, the stock market is on an absolute tear (S&P 500 up 7.5% less than one month into the year), and I fear any slight miss in earnings will result in sharp sell-offs.

I don’t want to let any gains slip through our fingers so if my research shows there might be a blip in a company’s earnings; I will likely sell that stock.

I am on the hunt for new ideas but also spending quite a bit of time stress testing the assumptions behind earnings estimates for our current portfolio holdings.

Last week I recommended selling The Chemours Company (NYSE: CC) and buying Celgene Corp. (NSDQ: CELG) in the main stock portfolio.

For those of you holding The Chemours who do not want to sell and risk missing out on any further upside, you can consider placing a stop loss on the position. This has been a fabulous stock for subscribers (a gain of 92% in less than one year) but growth is slowing, and I fear it will sell off if revenue misses expectations. The company reports its next quarter on February 15 before the open.

We bought call options in Celgene in December which in retrospect was a bit early. Soon after the purchase, the stock fell due to fears of overpaying for acquisitions. Now that the smoke has cleared, I’ve recommended the stock in our portfolio and re-recommended the March 110 calls, which are trading much lower (around $2.36) than my December recommended price ($6.35).

For those of you who bought the calls at a higher price, I recommend holding them as I expect the stock to move much higher over the next month and a half. Obviously, those buying at these lower levels have the potential for a much greater gain.

As we enter earnings season, I’ll be giving you a weekly calendar of earnings dates and calls.

Not every call is critical. Stocks in which we hold option positions, are hypersensitive to stock movements so I will be closely following those calls. As always I will do my best to keep you up to date on all earnings events, especially those that result in dramatic price changes.

If you don’t see a comment regarding a stock, please post a question on the Stock Talk board, and I will respond as quickly as possible.

WEEKLY EARNINGS:

Monday, January 29: (NSDQ: WERN) after market close.

Directions: Unfortunately Werner does not host investor conference calls. All of the necessary details will be in the press release, which is quite detailed.

What to Look For:
The operating ratio in the Truckload and Transportation services segment. A lower operating ratio is positive. Last year’s operating ratio in the fourth quarter was 90.7% so any number below that is a good sign.
Higher rates should help offset rising labor costs. Werner’s comparison is fairly easy as last year’s fourth quarter showed a decline in rates, which have only recently started jumping. I expect rates to be up at least 2%.

Thursday, February 1: (NSDQ: MWA) after market close.

Directions: Friday, February 2, 2018 at 9:00 a.m. ET. The conference call will be webcast live on Mueller Water Products’ website, www.muellerwaterproducts.com

What to Listen For:
I’m not expecting any fireworks on Mueller’s call. However, Cowen downgraded the stock earlier this month noting the company would not benefit from tax reform and that it was not impressed with sales growth. I expect Mueller to continue to gain slow and steady new orders as infrastructure spending ramps. Current estimates look for 5% revenue growth to $176 million.

Friday, February 2: (NSDQ: SAIA) before market open.

Directions: Friday, February 2, 2018 at 10:00 a.m. ET. The conference call will be webcast live on SAIA’s website, http://www.saiacorp.com

What to Listen For:
SAIA has been successful at raising its Less Than Truckload (the company uses the acronym LTL in its press releases) rates for the past four quarters. Any growth in pricing greater than 2% would be a good number.
I expect SAIA to finally gain some ground in its operating ratio, which has gone in the wrong direction (up) for the past few quarters. Any improvement here will illustrate the company’s ability to grow revenue faster than expenses. Fourth quarter last year this number was 94.3%, quite high, so I expect it should be in the 92-93% range.

Around the Portfolio:

After pre-announcing its quarter earlier this month, Celgene (NSDQ: CELG) formally reported its quarter last week. Earnings beat by $.03 and revenue beat by $10 million. Guidance for the year is higher than expected.

Fiscal 18 earnings are expected to be $8.80 versus the consensus of $8.64. Its biggest drug, cancer drug Revlimid grew 21% in the quarter and is expected to grow 15% to $9.4 billion in fiscal 2018.

Mueller Water (NSDQ: MWA) raised its quarterly dividend to 5c per share from 4c per share The dividend is payable on or about February 20, 2018, to stockholders of record as of the close of business on February 9, 2018. Earnings will be reported this week