• 09 Nov
    AMAT is down more than 50% from its top – has it finally found bottom?

    AMAT is down more than 50% from its top – has it finally found bottom?

    Throughout most of this year, semiconductors have been perhaps the most distressed sector of the market. Before bottoming at the end of the October, the sector had dropped a little over 21% from its high point in mid-March as measured by the iShares Semiconductor ETF (SOXX), and is still down nearly 15% as of Thursday’s close. This is a sector that is dominated by large-cap, well-known names like Intel (INTC), Texas Instruments (TXN), and Qualcomm (QCOM), to name just a few. More →

  • 08 Nov
    Why government gridlock could be a good thing for these 2 sectors

    Why government gridlock could be a good thing for these 2 sectors

    October was a rough month for the stock market, proven by the decline of the NASDAQ and Dow Jones Industrial Average into clear correction territory, while the S&P 500 halted its own slide just shy of that mark. It was enough to put a lot of investors and analysts on edge and start to wonder if the good times were finally coming to an end.

    What a difference a week makes! After closing out the worst October, and one-month period in a decade, the market has rebounded strongly over the last week. The Dow is up a little over 6.6%, the NASDAQ 8.3%, and the S&P 500 6.7% in that time. This week may have provided an unexpected catalyst for the market to push back and retest the all-time highs set in late September. Mid-term elections on Tuesday left Democrats in control of the House of Representatives, while Republicans kept their spot in the driver’s seat in the Senate.



    Depending on your political view, a divided government may not be a good thing; major reforms or initiatives from either side of aisle become more difficult without one party in control of both houses of government. It isn’t unreasonable to suggest that one of the reasons President Trump could afford to be as confrontational as he has, with a consistent, “my way or the highway” attitude about everything from tax reform, trade and most certainly his major staff advisors and political appointees is because Republicans controlled Congress and the Senate. That usually meant that even if a lot of Republicans and conservatives criticized his approach, the party at large generally fell into line behind him.

    As an investor, it’s not always easy to separate investing discipline and objectivity from political opinion and preference. That becomes harder when politics have a clear and direct impact on economic progress and market behavior. The Tax Reform Act at the end of last year is a good example; the tax savings that became available almost immediately to corporate America were certainly a catalyst for the market’s recovery from its first correction at the beginning of the year. In that light, the impact that midterm elections has on the market now could come from the government’s likely inability for the next couple of years to push any major changes.

    I’ve always believed that if there is anything the market really doesn’t like, and is most likely to react negatively to, it’s change. Investors like predictability, and we rely on measurements that offer a certain level of reliability to guide investment decisions. The status quo means that the things we use to drive our decisions remain relatively constant, and we don’t have to worry as much about changing our method or our approach. When something threatens to change the investing landscape, investors naturally get nervous.



    After eight years of a long, sustained bullish run that made a lot of investors think the easiest and best way to make money way in the stock market was to buy a passive index fund and just let it ride – “invest it and forget it,” if you will – the market rediscovered volatility this year. A big part of that was influenced by openly aggressive and confrontational politics from the Trump administration. Tariffs imposed every one of America’s largest and most important trading partners may indeed prove to have been the right move in the long run, but the tensions that came from seeing those long-standing trade relationships continue to keep the market on edge. A split government may not be able to put the cat back int the bag of things the Trump administration has already put back in place, the lack of consensus is also likely to make continued progress and changes that much harder to come by. The hope that the market seems to be keying on right now is that a natural check from a split House against the Oval Office could help restore the status quo and give investors a return at least some kind of  predictability that can help keep the stock market’s bullish trend in place.

    Assuming this happens, it’s entirely possible that the market could stage yet another broad-based rally to a new set of all-time highs. Which are the sectors that might be the biggest beneficiaries? I think there are two; here they are.



    Industrials

    While a divided House may blunt many of the reforms and initiatives the Trump administration still has plans for, one of the things that both sides seem to agree on is the need for improved infrastructure. A major spending bill may be hard to come by, but any progress on this front should act as a positive for this sector. Consider also that tariff and trade concerns have put major pressure on the sector throughout the year; even with the sector’s rebound since the end of October, which is about 10% from October 30th to now as measured by the SPDR Industrial Sector ETF (XLI), it remains down by a little over 10% from its 52-week highs. That gives the industry lots of room to rally even more, with increased chances that the absence of political complications could contribute even more.

    Semiconductors

    This sector has been one of the biggest underperformers throughout the year, as pricing and supply pressures among chipmakers have pushed stocks lower. A major argument for the President’s aggressive trade stance towards China has centered around the semiconductor industry and concerns about intellectual property protections and even theft. Many of the pricing pressures that have pushed semi stocks lower may not abate quickly. I also think, however that a changed political reality could force the Trump administration to try to make a trade deal with China more quickly than it might do otherwise; and I would expect that to provide at least an emotional reason for investors to start making new bets on a sector that has been beaten down by almost 15%, based on the Ishares Semiconductor ETF (SOXX) from its 52-week highs.


  • 07 Nov
    Big discount + buyout rumors = what for SYMC?

    Big discount + buyout rumors = what for SYMC?

    For most of this year, the tech sector has been one of the most profitable areas of the market to be invested. That’s not all that surprising given that the industry’s performance throughout the market’s extended upward trend since 2009 has been led by this sector. Since the beginning of October, however, this sector has also paced the market to the downside, dropping almost 14% as measured by the SPDR Select Technology ETF (XLK) through October. More →

  • 06 Nov
    Black Friday is coming – is COST a good way to profit from holiday sales?

    Black Friday is coming – is COST a good way to profit from holiday sales?

    Over the last year or so, one of the most disruptive companies in the marketplace has been Amazon (AMZN). Their acquisition of Whole Foods in August of 2017 put grocery and food stocks on edge in a big way. Next, rumors began floating across the market that they were thinking about branching into the pharmacy business. Along the way, businesses that AMZN regularly competes with, like Walmart (WMT) and Target Stores (TGT) suffered, while other stocks like Kroger (KR), CVS Health Corp (CVS) and Walgreen’s Boots Alliance (WBA) were caught in the crossfire. More →

    By Thomas Moore Uncategorized
  • 05 Nov
    TTC has jumped 10.5% in the last week – should you ride the wave?

    TTC has jumped 10.5% in the last week – should you ride the wave?

    A few months ago, I wrote about the The Toro Company (TTC) to evaluate the stock as a potential value play based on the stock’s 18% decline since August of 2017. At the time, the stock has trading in the low $60 range, and hovering in a narrow, sideway price channel.  In late September, the stock dropped below that channel to establish a new 52-week low a little below $54 per share; but since October 26 the stock has seen an impressive rally, climbing to nearly $60 as of Friday’s close. More →

  • 02 Nov
    NTRI surged 9% yesterday after beating earnings – should you jump on board?

    NTRI surged 9% yesterday after beating earnings – should you jump on board?

    So far this week stock market has managed to bounce off of support and rally pretty strongly after touching its lowest point since May on Monday. In the last three days the S&P 500 has rallied about 5% higher, using strong earnings reports as a primary driver, along with optimistic comments from President Trump about the chances of reaching a compromise on trade with China even as his administration has started to plan tariffs on all remaining Chinese imports if talks fail later this month. More →

  • 01 Nov
    Does BBBY’s low Price to Book Value point to big value – or big risk?

    Does BBBY’s low Price to Book Value point to big value – or big risk?

    Some of the first important metrics I learned about when I started studying fundamental and value analysis years ago revolved around identifying how much a stock should be worth versus what it’s current trading price really is. At its core, the principle is simple enough; if the stock is trading lower than what the value of the underlying business is, what you may be looking at is a terrific bargain opportunity. More →

  • 31 Oct
    Getting defensive: how GIS might be a calm center amidst the market’s storm

    Getting defensive: how GIS might be a calm center amidst the market’s storm

    There’s nothing quite like a volatile stock market to start rattling nerves and make people wonder how long it’s going to last, or if the market will ever be the same again. After coming within a whisper of official bear market territory on Monday, stocks rebounded strongly, as all three major market indices rallied more than 1.5%, driven in part by good earnings report from the tech sector and comments from President Trump More →

  • 30 Oct
    The market is beating up transport stocks – but that also creates opportunity

    The market is beating up transport stocks – but that also creates opportunity

    Back in July, I wrote about Kansas City Southern (KSU), a mid-cap railroad company that isn’t extremely well-known outside of its normal operating region. Transportation stocks were a good bet throughout the summer, but as fall set in, the market has pushed the Dow Transportation Average down a little over 14% since early September. For KSU, who is the smallest Class 1 railroad in the United States, that broader industry decline has translated to a decline in its price as of this writing of almost 18%. More →

  • 29 Oct
    Dogs of the S&P 500? These 3 stocks crashed 20% or more this week but could be good values now

    Dogs of the S&P 500? These 3 stocks crashed 20% or more this week but could be good values now

    The market closed a volatile week with yet another selloff on Friday, and has managed to push both the S&P 500 as well as the Dow Jones Industrial Average nearly into correction territory with the NASDAQ 100. Along the way, investors, analysts and experts everywhere are now asking the question about where the market is going to go from here. Days where the Dow moves 300 points or more in a single day have seemingly been the norm over the last couple of weeks, and that is something that makes the market a hard place for most investors to keep up with. More →

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