Market turmoil seems to be the norm versus the deviation these days. The S&P 500 dropped 1.2% last week. It was hard to discern the impetus for the weakness; depending on what news source you read, political, economic and geopolitical events all played some part in encouraging sellers to take action.

I am still in the camp of investors that believe the steady economic improvements the U.S. has enjoyed will not disappear overnight nor be crushed by inflationary trends. However, I do see many overheated stocks and sectors. I’ll be issuing some put option recommendations soon based on my research.

We had four call option series expire worthless last Friday. I won’t bore you with my frustration, but instead, spend my time working to deliver better-performing ideas. I have quite a few that I think look very interesting so expect more trade ideas.

Just this morning I issued a trade alert on Harsco (NYSE: HSC) an industrial stock that’s flown under the radar so far. It’s tied to the volume of new metals plants being reopened in the next year.

Around the Portfolio:

Carbonite (NSDQ: CARB) enjoyed a 14% lift last week, the bulk of the jump on Friday. There was no official news on the company but I think the jump was up due to the incredibly successful IPO of ZScaler (NSDQ: ZS). ZScaler is a software as a service company (SaaS) providing secure connections and firewalls to protect data stored in the cloud.

Sound familiar? Sounds eerily similar to the product that Carbonite originally sold to individuals and is now supplying to enterprises.

I don’t know ZScaler’s fundamentals well enough (yet) to make a perfect comparison but with ZScaler trading up 106% from its IPO price and at 20 times forward revenue, Carbonite looks like a bargain. As a comparison, Carbonite trades at 3 times forward revenue.

Oh, and by the way, Carbonite is profitable and expected to earn $1.49 this year. ZScaler lost $(.18) in the first half of fiscal 2018.

Despite some positive accolades from brokers, Celgene (NYSE: CELG) dropped 3% last week and is down 14% since my January recommendation. RBC sees implied valuation floor and thinks a possible takeout price could be $131.

RBC Capital analyst Brian Abrahams writes that Celgene’s strong near-term cash flows and drug pipeline are overshadowed by the “Revlimid goes generic” cliff in the next 4-7 years. The analyst contends that the company’s economics imply a floor on the stock and he keeps it as his Top Pick.

Another crumb of good news was the granting of orphan drug designation by the FDA for its compound for the treatment of follicular lymphoma. This designation gives a company a longer period of exclusivity with that drug. Investors seem more focused on fears of price restraints and the mergers of big pharma customers, which will give them more bargaining power on price, but this designation is a positive marker.

A strong quarter from customer DSW (NYSE: DSW) implies upside to Steve Madden (NSDQ: SHOO). DSW beat comp sales estimates and called out athleisure as one of its strongest categories.

Steve Madden sells many athleisure styles to DSW. Sales to wholesale (or third party retail customers as opposed to sales from its own stores) make up over 80% of Steve Madden sales so I would expect some healthy repeat orders from DSW. (note that DSW makes up less than 10% of Madden’s sales but other customers might also be seeing the same trends.)

SmartSand (NSDQ: SND) beat revenue numbers by 5% but missed earnings by $.05 due to higher shipping expenses and new mine build-outs. I think the 20% beating the stock received is undeserved.

SmartSand is building out new capacity to meet surging demand. While this is great news, adding more manufacturing hits a company’s numbers in the short term. Think about it like this- a newly opened sand mine might only be operating at 20% capacity but the company’s income statement must absorb 100% of the expenses for running that mine.

The fourth quarter numbers were hit due to build outs and higher freight. However, management noted that deliveries from the new mines will hit their stride in Q2 and profit margins will expand from that point on.

I don’t think I’ve ever heard management quite so bullish on demand trends. In addition, some competitors who have attempted to add white sand capacity (SmartSand’s specialty), have hit some road bumps. Here is the quote from CEO Charles Edwin Young regarding supply from competitors: (italics are mine)

“So what we’ve been seeing is a lot of people that thought they had this Permian sand supply locked up and could potentially be contracted that some of these Permian mines are falling flat on their ability to produce sand. So we have a lot of people all coming at once, and we’re probably one of the few people that actually have built Northern White capacity over the last year. It’s coming up. And we’re really happy with where our contract talks are on that Northern White capacity. So we think the Permian sand is running into a little bit of a problem in being able to produce. I’ll let John comment on a little bit on price.”

Guidance is for the volume of sand sold to grow 56% and for earnings to more than double. The stock currently sells at 6 times 2018 numbers! I think this is a great buying opportunity.

Shipt, a leading online marketplace, and Target Corporation (NYSE:TGT)  announced they will begin same-day delivery of more than 55,000 groceries, essentials, home, electronics, toys and other products in two East Coast cities. Beginning March 29, 2018, Shipt will deliver from Target stores in Washington, D.C., and Baltimore. The race for home delivery between Target, Amazon (NSDQ: AMZN) and Walmart (NYSE: WMT) is on!