EB Weekly Portfolio Report - Sunday, May 10, 2020
Happy Mother's Day!
Happy Mother's Day to all the moms in our EarningsBeats.com community!!! Enjoy your special day!
Spring Special
I want to make sure that everyone knows that we kicked off a Spring Special, which was announced in our Saturday WebinAR (WAR) Rom. It will run for two weeks. If you have a monthly subscription or if you're an annual member and would simply like to extend your membership at the best terms possible, the deal won't get any better than right now. Our regular annual membership is $697 for 12 months ($58/month), but for a limited time, you can extend for 14 months for that same $697 ($50/month), so there's a two month bonus. I feel like the timing of returning to EarningsBeats last September could not have been much better given the recent volatility. I hope that my work and the work of our entire team at EB.com has helped guide you through a very difficult period in 2020. We all are wishing you health and prosperity over the remainder of 2020. We would like to thank you for your support and loyalty by offering this Spring Special, so I hope you'll take us up on it. For more details, you can go to earningsbeats.com and click on the "Webinar Special" tab at the top of the page.....or simply CLICK HERE. Thanks again for supporting me in my return to EarningsBeats!
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 11: CDLX
Tuesday, May 12: HLI
Wednesday, May 13: None
Thursday, May 14: None
Friday, May 15: 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:
It was a strong week on Wall Street and an even stronger week for the EarningsBeats.com portfolios. The Aggressive Portfolio, gaining more than 16%, literally had a great year last week.
Weekly Summary
Benchmark S&P 500:
The S&P 500 rallied past 2900 and closed higher by 3.50% last week . Just one week after printing an ominous shooting star candle on its weekly chart with a failed 20 week EMA breakout, this benchmark index rallied back and this time cleared its 20 week EMA. The following chart still shows overhead resistance at 2972 (gap resistance) and 2994 (50 week SMA):
This was the chart that I posted last week, highlighting the 20 week EMA failure. The bearish conclusion to this failure should have been another big leg down. Yet we once again saw the bulls rallying their troops as one key resistance level after another falls. There's still much resistance ahead and it's options expiration this Friday and that can always spell trouble for equities after a significant rally. Thus far, however, little has been able to stop this runaway freight train.
Model Portfolio:
The Model portfolio had another monster week, surging 8.08%. Here's the updated inception-to-date chart of the portfolio:
Here are how the Model portfolio component stocks performed last week:
Every stock in the Model portfolio outperformed the S&P 500 last week, including huge weeks from TSLA and SHOP.
Aggressive Portfolio:
The Aggressive portfolio rocketed higher last week, gaining a remarkable 16.29%. Here's the Aggressive portfolio chart since its inception on May 19, 2019:
Here are how the Aggressive portfolio component stocks performed last week:
Like the Model portfolio, every stock in the Aggressive Portfolio outperformed the S&P 500 last week. Considering that it's been an absolutely horrific environment for mid caps ($MID) and small caps ($SML) since the inception of our Aggressive portfolio, and that this portfolio has 6 small caps and 3 mid caps, beating the S&P 500 by 20 percentage points in just under a year is no small feat! I'm very proud of this portfolio's performance in its first year.
Income Portfolio:
The Income portfolio has finally begun to see some relief and is now making a bit of headway against the S&P 500. It rose 5.35% last week. Here's a look at the inception-to-date chart:
Here are how the Income portfolio component stocks performed last week:
One week after posting a horrible week, LRCX rebounded and led the Income portfolio higher. Also, home builders are starting to look much more attractive technically and that aided PHM.
Character Change Portfolio:
The CC portfolio is attempting a late-quarter comeback vs. the S&P 500, climbing 6.73% last week. Here is the inception-to-date chart since November 19, 2019:
Here are how the CC portfolio component stocks performed last week:
CCS performed extremely well last week with homebuilders flexing their muscles. But another key development was CRL breaking out on Thursday after crushing revenue and EPS estimates. CRL looks very solid in that strengthening biotech space ($DJUSBT).
Summary
Many companies have now reported their latest quarterly results, although we'll still see quite a few into this week and next. Overall, Wall Street seems to be very pleased with performance and guidance (where provided). There's no doubt that the bullish bias remains with those sectors, industries, and individual companies that are best able to weather the paradigm shift to a more online-collaboration-friendly market environment. But I expect as the economy reopens in various parts of the country that we'll begin to see other stocks recover as well. Longer-term, nothing has really changed in terms of valuation metrics. We are in an extremely low interest rate environment with economic stimulus packages and full dovish endorsement by the Federal Reserve. If companies can thrive and produce solid earnings growth, it will be rewarded quite handsomely, as we've been seeing with an increasing number of companies moving to 52 week highs.
Happy trading!
Tom Bowley, Chief Market Strategist
EarningsBeats.com
"Better timing. Better trades."