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AlphaProfit Newsletter: February Indicator Update
February 1, 2006
Dear Valued Subscriber:
The AlphaProfit™ model portfolio returns as of January 31, 2006 are as follows:
Strong gains in January enabled the cumulative return for the Focus model portfolio since the start of the newsletter to cross the 100% mark for the first time. The Focus model portfolio has doubled in 28 months translating into an annualized return of 39.1%.
The U. S. equity market put in a relatively strong showing as 2006 earnings forecasts suggested further growth in the periods ahead. Rising oil prices did little to dampen investor enthusiasm. Exposure to the energy service group enabled the AlphaProfit model portfolios to outperform the Dow Jones Wilshire 5000 Total Market Index.
Given the backdrop of generally favorable first-quarter earnings reports, we maintain the ‘Buy’ reading for the AlphaProfit Sector Portfolio Indicator™. We believe it is timely for Subscribers to either get started in tracking the AlphaProfit model portfolios or add capital to their investment accounts subject to the following comments on Fidelity Select Energy Service (FSESX).
As of January 31, 2006, Fidelity Select Energy Service is up 19.5% on a Y-T-D basis. The rally in the energy service group is supported by rising crude oil prices as well as strong earnings reports. We believe the $67.92 per barrel oil price at the end of January embeds a fair amount of ‘supply disruption’ premium in response to the potential for disruption of supplies from Iran and Nigeria.
We continue to like the prospects for the energy service group for the intermediate-term. Our near-term enthusiasm is tempered by the consideration that the ‘supply disruption' premium currently included in the price of oil may get unwound in the coming months. A declining oil price environment could in turn provide the backdrop for a measurable correction in the energy service group. As such, Subscribers seeking to build positions in Fidelity Select Energy Service may consider dollar cost averaging in this fund over a period of time. [The January 24 AlphaProfit Bulletin includes additional discussion on the energy service group. This document is available in the Subscriber Login area of the website.]
At the present time, most of the Fidelity Select funds included in the model portfolios are equally attractive while downside risk is more pronounced in Fidelity Select Energy Service. As such, none of the funds garners a 'Favored Buy' rating at the present time.
The model portfolio composition as of February 1, 2006 is provided in the login area of the web site.
Factors driving model portfolio performance and investment outlook will be discussed in the next issue of the AlphaProfit Report™ published on February 12th.
We welcome your comments.
AlphaProfit Investments, LLC
Ideas. Insights. Results.
Notes: The AlphaProfit Sector Investors' Newsletter™ is for information purposes only. AlphaProfit Investments, LLC is not soliciting any subscriber to buy or sell any security. Nothing herein should be construed as an offer to buy or sell securities or to give individual investment advice. Before buying any mutual fund, read its prospectus carefully. AlphaProfit Investments, LLC cannot and does not give any assurance that the present or future model portfolio changes will be profitable. Past performance is not a guarantee for future results. Factual material is obtained from sources believed to be reliable and is provided without warranties of any kind. AlphaProfit Investments, LLC is not responsible for any errors or omissions. AlphaProfit Investments, LLC neither is affiliated with nor receives any compensation from Fidelity Investments. Please review our Terms and Conditions of Use and Subscriber Agreement which is available on our website at www.alphaprofit.com; they govern your relationship with AlphaProfit Investments, LLC, including, but not by way of limitation, use of this newsletter. No part of the AlphaProfit Information may be reproduced or re-transmitted in any manner without written permission of AlphaProfit Investments, LLC.
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