Stocks Under $10 Portfolio: Not Resting on Our Laurels

 | Sep 04, 2016 | 12:00 PM EDT
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The following is an excerpt from the Stocks Under $10 Weekly Roundup originally sent to Stocks Under $10 subscribers on Sept. 2. Click here to learn more about this dynamic portfolio managed by David Peltier.

U.S. stocks pushed higher on Friday and resumed their winning ways this week.

Traders bought stocks on Friday after the August jobs data fell short of expectations. The economy added 151,000 non-farm payrolls in the month and readings from the previous two months were revised a net 1,000 lower. Drilling down further, the headline unemployment rate remained at 4.9% and average hourly earnings increased less than expected.

Following this data, we reiterate our belief that the FOMC will not increase rates before the U.S. elections in November. Fed funds futures are pricing in a 24% probability of an interest rate hike at the next meeting on Sept. 21 and a 61% chance of an increase by the end of the year.

We used the strength this week to book profits in Ballantyne Strong (BTN) and OraSure Technologies (OSUR) . We also cut our rating on OraSure to Three from Two.

On the other hand, we added to our positions in TherapeuticsMD (TXMD) and Yamana Gold (AUY) . We also raised our rating on Yamana to Two from Three.

As a reminder, U.S. markets will be closed on Monday for the Labor Day holiday. Despite the short trading week, we expect volume will pick up significantly as traders return from summer vacation. Next week will be relatively quiet on the economic front.

We've had a solid first eight months of 2016, as the model portfolio has outperformed the benchmark Russell 2000 index by more than 400 basis points. We are confident of our current positioning, regardless of the near-term interest rate fluctuations.

That said, we are not resting on our laurels as we've built up a relatively high 39% cash position that we're willing to put to work when the market provides buying opportunities.

-- Peltier is also manager of Dividend Stock Advisor, a newsletter service that seeks solid stocks that are likely to both increase dividends and appreciate in value. Click here to get access to a portfolio that lays out a strategy for safe, sound, money-making solutions from companies you will recognize.

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