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25 Stocks For November 2015

Summary

Every month we construct a theoretical long/short portfolio of stocks that demonstrate solid relative value with potential for ongoing cash flow growth and ROIC expansion.

Last month's Core Long model portfolio generated a 10.23% theoretical return, with every single healthcare stock that we highlighted beating the S&P 500, including our preliminary favorite Gilead Sciences.

In this report we highlight 25 long stock ideas and 24 short stock ideas.

Two long stock ideas look especially compelling to us this month: 1) United Therapeutics Corporation and Spirit AeroSystems Holdings, Inc.

Interestingly, Netflix, Inc. appears in our short model. While a potentially high-risk short idea, it is clear the party is over for NFLX.

In this report we highlight stocks that demonstrate solid growth prospects at a reasonable price (GARP) and provide an update of last month's report. For older reports you can visit this link.

As described previously, stocks selected for our long model portfolio strategies all rank highly for the following metrics, with an emphasis on proxies for cash flow growth and ROIC. Stocks in the short portfolio rank poorly for the same traits, which are:

  • Relative Value
  • Operating Momentum
  • Consensus Estimate Revision Momentum
  • Fundamental Quality

This month 25 long stock ideas and 24 short stock ideas compose our "dollar neutral" long/short model portfolio.

25 Long Stock Ideas for November 2015

New Long Ideas
United Therapeutics Corporation (NASDAQ:UTHR)
Cardinal Health, Inc. (NYSE:CAH)
Spirit AeroSystems Holdings, Inc. (NYSE:SPR)
Delta Air Lines, Inc. (NYSE:DAL)
Canadian National Railway Company (NYSE:CNI)
Texas Instruments Inc. (NASDAQ:TXN)
Linear Technology Corporation (NASDAQ:LLTC)
VeriSign, Inc. (NASDAQ:VRSN)
Leidos Holdings, Inc. (NYSE:LDOS)
Paychex, Inc. (NASDAQ:PAYX)
FactSet Research Systems Inc. (NYSE:FDS)
Tech Data Corp. (NASDAQ:TECD)
Juniper Networks, Inc. (NYSE:JNPR)
Visa Inc. (NYSE:V)
CDW Corporation (NASDAQ:CDW)
Euronet Worldwide, Inc. (NASDAQ:EEFT)

"Rebalanced" Long Ideas
The Interpublic Group of Companies, Inc. (NYSE:IPG)
Omnicom Group Inc. (NYSE:OMC)
PrivateBancorp, Inc. (NASDAQ:PVTB)
Gilead Sciences Inc. (NASDAQ:GILD)
Centene Corp. (NYSE:CNC)
Amgen Inc. (NASDAQ:AMGN)
Manhattan Associates, Inc. (NASDAQ:MANH)
Apple Inc. (NASDAQ:AAPL)
NVIDIA Corporation (NASDAQ:NVDA)

24 Short Stock Ideas for November 2015
When the market anticipates an improving economy from low price levels, low-quality stocks will at times out-perform high-quality stocks as the expected improvements in fundamentals are discounted from a relatively more depressed price level. On extremely rare Black-Swan-type occasions, we will actually suggest going long these particular stock ideas. The surge in low-quality stocks this past October 2015 was a perfect example of this.

Given the lower levels in market volatility at the beginning of the month, we do not expect this short model to perform particularly well in November. This basket of stocks will be our "go to" list for shorts in our discretionary derivations of the model posted here.

New Short Ideas
Wynn Resorts Ltd. (NASDAQ:WYNN)
Netflix, Inc. (NASDAQ:NFLX)
PetroChina Co. Ltd. (NYSE:PTR)
Cimarex Energy Co. (NYSE:XEC)
Eni SpA (NYSE:E)
TOTAL S.A. (NYSE:TOT)
Exxon Mobil Corporation (NYSE:XOM)
Weatherford International plc (NYSE:WFT)
Royal Dutch Shell plc (NYSE:RDS.B)
Sunoco Logistics Partners L.P. (NYSE:SXL)
Golar LNG Ltd. (NASDAQ:GLNG)
Whiting Petroleum Corp. (NYSE:WLL)
Deere & Company (NYSE:DE)
Cree, Inc. (NASDAQ:CREE)
NCR Corporation (NYSE:NCR)

"Rebalanced" Short Ideas
Melco Crown Entertainment Limited (NASDAQ:a>


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