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▪ David and Jeremy Agree to Disagree on whether the equities markets are out-pacing the Main Street recovery
▪ Sheraz and David choose one portfolio to give feedback for improvement
▪ Market conditions from both fundamental and technical views
▪ And much more
Simply log on to Zacks.com and view the July episode here. And please let us know what you think of this format. Email all feedback to [email protected].
This may come as a bit of a shock, but apparently the market isn’t going to move higher every session this month!
On Tuesday, all of the major indices closed lower after a late-day selloff, which ended a couple of impressive winning streaks.
The NASDAQ had closed at a new high in each of the previous three sessions, and it looked to be on the way to a fourth as tech again opened strong.
However, the momentum didn’t last and the index eventually slipped by 0.86% (or nearly 90 points) to 10343.89. The FAANGs each rose by more than 2% on Monday, but today only Facebook (FB) could muster a slight advance.
The S&P was down 1.08% to 3145.32. This index and the NASDAQ had 5-day winning streaks heading into the session… but it’s over now.
The Dow couldn’t get anything going on Tuesday and finished lower by 1.51% (or nearly 400 points) to 25,890.18. However, it had gained more than 550 points in the previous two sessions.
Most investors will tell you: “it’s about time!”
“Don’t be scared of a market sell off, they happen,” said Jeremy Mullin of Counterstrike.
“This environment is very bullish, but some of the big stocks are due to sell. Hopefully, we get some good opportunities as we head into earnings season in just a couple weeks.”
We’ve enjoyed a great start to July, despite the rising coronavirus cases and paused reopening plans in parts of the country.
Plus, we’re coming off the best quarter in over 20 years and have put together three straight months of gains.
So a break right here isn’t a bad idea.
Today’s Portfolio Highlights:
Income Investor: Shares of software staple Microsoft (MSFT) have surged nearly 60% since the coronavirus low on March 23. That’s fantastic news… unless you’re an investor that focuses on dividends like Maddy. Price increases mean dividend yield decreases, so the editor thought that the start of the second half was a great time to take the profit on this tech leader. She sold MSFT on Tuesday for an impressive return of 251.1%.
The new buy is auto parts maker Genuine Parts Company (GPC), which may seem like an odd replacement for an innovative and influential tech company like MSFT. However, the stock has been hiking its annual dividend for over 60 years. And despite feeling the pinch from this pandemic, GPC made sure shareholders knew that it would be able to continue paying the divided despite all the uncertainty. That’s exactly what the editor likes to hear. She also thinks the stock is poised to advance as auto sales bounce back in this economic recovery. Read the full write-up for more on today’s moves.
Surprise Trader: Last time Sleep Number (SNBR) reported earnings, the company beat the Zacks Consensus Estimate by more than 97%! And now this provider of innovative sleep solutions and services has an Earnings ESP of 33.2% for the report coming after the bell on Tuesday, July 15th. Dave thinks SNBR is going to beat again next week, which would be its seventh in a row. He added the stock on Tuesday with a 12.5% allocation. The portfolio also sold Constellation Brands (STZ) for a 5.9% return in less than two weeks. See the complete commentary for more on these moves.
Stocks Under $10: This portfolio pulled a nearly 30% profit from Bed Bath & Beyond (BBBY) last week, and today Brian put that money back to work. The editor picked up Solaris Oilfield Infrastructure (SOI), a Zacks Rank #2 (Buy) provider of patented mobile proppant management systems. In other words, it’s an oil patch name that has pulled back a bit from $9 in early June and could be poised to move higher again. The company beat earnings estimates in the past two quarters, including a positive surprise of 88% most recently. Annual earnings estimates are improving and Brian thinks that SOI could become profitable if the economy continues to pick up steam. Read the full write-up for a lot more on this new addition.
Counterstrike: Shares of RV manufacturer Thor Industries (THO) have soared as people find different ways to travel during the coronavirus. However, a recent pullback gave Jeremy a chance to open up a starter position with a 5% allocation. He plans to buy even more if it continues to pullback. Meanwhile, the editor is a bit nervous about the NASDAQ continuing to rise and setting new all-time highs. It has to end at some point, so he bought some protection on Tuesday with a 2% allocation in ProShares UltraPro Short QQQ (SQQQ). If the index continues pushing higher, then he’ll buy even more. The portfolio also sold a third of United Natural Foods (UNFI) today for an 8.6% return in a little over a month. Read the full write up for more on all these moves, including a look at their charts.
Healthcare Innovators: What a day for this portfolio! It secured four of the top five winners of the day among all ZU services. The biggest winner was bluebird bio (BLUE, +10.66%), followed by CRISPR Therapeutics (CRSP, +8.7%), Sangamo Therapeutics (SGMO, +7%) and Intellia Therapeutics (NTLA, +6.85%). But that’s not all! A deeper look in the portfolio shows several other strong performers on Tuesday just outside the Top 5, including ACADIA Pharmaceuticals (ACAD, +6.17%), Alnylam Pharmaceuticals (ALNY, +4.97%) and Editas Medicine (EDIT, +4.86%).
Zacks Short List: More than half of the portfolio was replaced in this week’s adjustment. The positions that were short-covered include:
• Ryman Hospitality (RHP, +28.2%)
• Las Vegas Sands (LVS, +15.6)
• IAC/InterActiveCorp (IAC)
• China Lodging (HTHT)
• Royal Dutch Shell (RDS.A)
• Alteryx (AYX)
The new buys that filled these open spots were:
• Marathon Petroleum (MPC)
• NeoGenomics (NEO)
• StoneCo (STNE)
• The TJX Cos. (TJX)
• Twitter (TWTR)
• Xylem (XYL)
Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short List Trader Guide.
All the Best,
Jim Giaquinto
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