Sell SFM, SSTK

Stocks have opened primarily flat to start this final week of 2014, but I see a good opportunity to roll out of two positions that have come under pressure due to increased competition.

First is Sprouts Farmers Market (SFM). The stock has popped over 13% for us in less than three months as the company’s strong growth and reputation as a safe haven amid declining gas prices helped support shares through a brief post-earnings sell off. However, I believe Whole Foods Markets’ (WFM) decision to become more price competitive will start to impact Sprouts going forward, and even minor disappointments can lead to a meaningful price drop in the current market environment. With our profits looking vulnerable, I want us to take them off the table now. Sell SFM.

It’s also time to move on from Shutterstock (SSTK). While the company is well positioned to compete with Adobe Systems following its acquisition of Fotolia, this is another situation where an aggressively valued stock could be damaged by even minor disappointments in growth. The shares have bounced nicely since I moved the stock to a ‘hold’ on our Buy List after the unexpected news, giving us a good opening to rotate out of the name. Sell SSTK.