EB Weekly Portfolio Report - Sunday, May 3, 2020
Upcoming Earnings Reports
According to Zacks.com, the following companies will be reporting earnings this week and each is a component of one of our portfolios:
Monday, May 4: SWKS, EVER
Tuesday, May 5: LITE, ENPH
Wednesday, May 6: SHOP, RNG, MAA
Thursday, May 7: CRL, NUAN, SYNA
Friday, May 8: None
PLEASE NOTE: The above companies were provided after scanning the Zacks Earnings Calendar. My research is limited to what Zacks provides and I also can make a mistake from time to time, so please check for earnings dates for all companies that you own. We do hold our portfolio stocks through one earnings report, but every EarningsBeats.com member must make their own investing/trading decisions about holding stocks into earnings reports as it's the most volatile (risky) time to own a stock.
Portfolio Rules and Objectives
Here are the common traits and objectives of each portfolio, some of these were just changed for our February 19th "draft" day last week (changes for the upcoming quarter are in bold italics):
- There are 10 leading stocks from up to 10 leading industries in each portfolio (at the time of selection) - the change here is to allow a second stock within the same industry group
- They are held for an entire 90 day period, with no stops in place - there will be NO stops. All stocks will be held for the entire period (members may choose to have stops, but we will not)
- Every stock will generally be held through ONE earnings report
- The expectation is that relative winners will carry the portfolio to outperformance
- They were all entered into as of close on February 19th
- We decided against having multiple entries for our purposes, but members were encouraged to enter based on whatever felt most comfortable
- Primary objective is to outperform the benchmark S&P 500
Here are several considerations for EB members:
- I would expect the CC (Character Change, formerly Value portfolio) and Aggressive portfolios to be the riskiest, followed by the Model portfolio, and then the Income portfolio
- The CC portfolio's strategy and composition was changed a bit in it second quarter, as we decided to include companies that have broken out of a consolidation range, not just those with breakaway gaps to end a downtrend
- The Income portfolio stocks will all pay dividends, with the expected average dividend yield to be at least 1.5%
- Drawdowns (losses) should be much milder on the Income portfolio, with more volatility expected on the other three; please review inception-to-date charts below to gain an idea of the volatility associated with each
- You should own or trade these stocks in whatever manner is most comfortable for you; while we will buy all 10 stocks in the manner identified above, feel free to trade certain stocks or wait for pullbacks if the stocks are overbought
- We have no idea what risk each member is willing or able to take. We are not registered investment advisors so be sure you understand the risk you take. Please consult your financial advisor.
- EarningsBeats.com shareholders/employees may own all or some of the portfolio stocks from time to time.
Snapshot
Here's a weekly recap:
Overall, it was a fairly strong week for our portfolios, although the Model portfolio cooled off after a few weeks of stellar outperformance.
Weekly Summary
Benchmark S&P 500:
The S&P 500 fell 1.53% last week after testing its 20 week EMA intraweek. A break above that 20 week EMA would be extremely bullish:
A weekly close above the 20 week EMA would add to the bullishness we've seen over the past 5 weeks. Until then, however, it's a good idea to respect this technical failure as a period of consolidation could follow.
Model Portfolio:
The Model portfolio has significantly outperformed the benchmark S&P 500 this quarter, but did trail last week, losing 2.79%. Here's the updated inception-to-date chart of the portfolio:
Here are how the Model portfolio component stocks performed last week:
Earnings played a big role in the Model portfolio's performance last week. After weeks of advancing, there certainly seemed to a "sell on news" mentality as AMD, VRTX and AMZN all were hit by selling after releasing quarterly results. Alphabet (GOOGL) and Apple (AAPL), meanwhile, managed to set new recent highs after posting their results.
Aggressive Portfolio:
The Aggressive portfolio ended the week in positive territory, gaining 0.64% . Here's the Aggressive portfolio chart since its inception on May 19, 2019:
Here are how the Aggressive portfolio component stocks performed last week:
ENPH broke out above short-term price resistance and then held onto price support on selling late last week:
Income Portfolio:
The Income portfolio rebounded last week, rising 1.31%, which was nearly 3 percentage points better than the S&P 500. Here's a look at the inception-to-date chart:
Here are how the Income portfolio component stocks performed last week:
LRCX held back what was otherwise an excellent week. Semiconductors ($DJUSSC) were very weak with the overall index falling 3.40% last week, ranking the group 94th out of 104 industry groups.
Character Change Portfolio:
The CC portfolio performed exceptionally well last week, surging 2.40% and making up for some of its earlier poor relative performance. Here is the inception-to-date chart since November 19, 2019:
Here are how the CC portfolio component stocks performed last week:
CCS reported results and experienced a HUGE week. Last week's net 30% rise was AFTER a more than 5% drop on Friday. Home construction ($DJUSHB) gained more than 11% last week, but like the S&P 500, failed at its 20 week EMA:
That renewed strength clearly benefited CCS and also PHM, which was the Income portfolio's 2nd best performer last week.
Summary
Earnings season remains in focus as we enter the trading week ahead. Last week, 15 of our 38 portfolio stocks reported quarterly results. 10 more of our portfolio stocks report results this week. So after this week, most of the big company-specific news will be behind us. It's hard to believe, but we're only two weeks away from replacing our portfolios with a new batch of relative outperformers. I'll be scouring the market, looking for stocks poised to help us in our quest to outperform the benchmark S&P 500.
Happy trading!
Tom Bowley, Chief Market Strategist
EarningsBeats.com
"Better timing. Better trades."