Congratulations Eagles Fans! Well done.

As a New England resident, Super Bowl weekend did little to help me recover from the exhausting market last week. Those hoping for a reprieve (market-wise) this week best look elsewhere as we are in the heart of earnings season and investors are nervous.

Blame it on wage inflation, payrolls or the Fed’s interest rate plan but the market was overdue for a sell-off. As often happens the selling can be violent and brief, making market timing darn near impossible.

I spent too much time over the past few days lamenting the put options trades I was considering but waiting to recommend due to the incessant bull market. I hate chasing stocks so I’ll be holding on to these trades, which as always with Profit Catalyst Alert, are based on fundamental issues, until the market settles in.

I am in the camp of those that believe some selling in the market is healthy and will reset prices and expectations. I expect interest rates to continue to rise, but for all the right reasons. The domestic economy is in terrific shape.

Halfway through earnings season, more than 80% of S&P 500 companies have beat expectations. Fourth quarter earnings carry more weight than other quarter reports because many companies hold off on annual guidance for the following year until this quarterly report.

In another bullish turn, most companies have issued higher than expected guidance for fiscal 2018. Certainly, lower taxes from the recent tax cut help but adjusting for earnings on a same-tax basis estimates still look robust.

For earnings this week we have just one company reporting. Old Dominion Freight (NSDQ: ODFL), where Profit Catalyst Alert has a stock and a call option position. See guidelines for this call at the end of this recap.

Around the Portfolio:

Celgene (NSDQ: CELG), ANI Pharma (NSDQ: ANIP) and Jazz Pharma (NSDQ: JAZZ) traded lower as the whole drug group sunk on news of the trio banding together to lower healthcare costs.

Berkshire Hathaway, Amazon, and JP Morgan announced they are investigating ways to lower healthcare costs. Although noble, I view this announcement as more of an indication of the nation’s dissatisfaction with the oversized inflation in medical costs versus a near-term game plan on demanding lower prices.

All three of the drug related companies in our portfolio are growing revenue and earnings due to new products, NOT price increases. ANI focuses specifically on generic drugs and lower priced versions of current drugs, so its weakness is more mysterious than that of Celgene and Jazz.

I still like all three stocks and expect these cheap growth stocks with robust balance sheets to trade higher as the fear lifts off this sector.

Celgene also got hit on news that its CEO, Rober Hugin is retiring after 19 years with the company. I don’t see this as a negative. Early this month, the political website Politico reported that Hugin was considering a run for his home state’s U.S. Senate seat, which is up for grabs in November.

Masonite International Corporation (NYSE: DOOR) acquired DW3 Products Holding Limited (“DW3”), a leading UK provider of high-quality premium door solutions and window systems. DW3’s net sales for the twelve months ended December 2017 were approximately £45 million. The purchase price for all of DW3’s outstanding shares was approximately £70 million, net of cash acquired.

“DW3 fits exceptionally well with Masonite’s existing business in the UK,” said Tony Hair, Masonite’s President, Global Residential. “Their online quick ship capabilities and product portfolio both complement and expand the strategies we are pursuing in this important market.”

“DW3’s products and service model are a natural addition to Masonite’s business, and Masonite is an excellent cultural fit for our company,” said Gareth Mobley, CEO of DW3. “We are excited about the opportunities this will bring our employees and customers.”

SAIA (NSDQ: SAIA) reported its December on February 2. Revenue was $10 million or 3% higher, and earnings were in line. The stock initially fell about 6%. This decline is partly due to the overall weakness in the market, and I think partly due to earnings not being carried higher with the better revenue number.

The call at 10 AM was very bullish. Management, which is typically quite staid, sounded more optimistic than I’ve ever heard them. They noted that shipments and pricing improved every month of the quarter and that January has had even more momentum.

SAIA is one of the few LTL shippers actively adding terminals and capacity. Based on the call, it sounds like the company’s margins will grow even more (they improved in Q4 despite eps not blowing away estimates) in the next few quarters.

The call options are not doing well based on the drop in the stock. They do not expire until March, so I suggest holding on to them. I expect the LTL shipper stocks to rebound when the market rights itself as they will enjoy outsized benefits from the strong economy.

Werner Enterprises (NSDQ: WERN) reported EPS of 42c versus consensus 39c last Monday. Revenue was 3% higher than estimates. Both rates, which rose 4% and the company’s operating ratio, which dropped to 88.3% versus 90.3% last year, came in better than I expected.

Although Werner does not host an investor conference call, management included this very bullish commentary in its press release:

“Freight in October 2017 was seasonally better than normal, and demand strengthened further in November and December. Freight volumes thus far in January 2018 have been much stronger than normal for January.”

WEEKLY EARNINGS:

Thursday, February 8: (NSDQ: ODFL) before market open. Call at 10 AM (EST)

Directions: An online, real-time webcast of Old Dominion’s quarterly conference call will be available at www.odfl.com on Thursday, February 8, 2018, at 10:00 a.m. (Eastern Time). The online replay will be available at approximately 1:00 p.m. (Eastern Time) and continue for 30 days. A telephonic replay of the call will also be available through February 18, 2018, at 719-457-0820, confirmation number 6862987.

What to Listen For: Old Dominion reported that October revenue had grown 18% as of its third quarter call on October 26. It then reported that November revenue rose 13.6%. Both months saw a double-digit increase in volumes and low single-digit jumps in rates.

What is guidance for 2018? Street estimates are for revenue up 12%, a number that looks plausible based on recent trends. A rate increase higher than 3% is bullish. Old Dominion’s operating ratio started improving in the second quarter of 2017, look for continued improvement with a ratio lower than 83.5% considered a good sign for future earnings.