EB Weekly Portfolio Report - Sunday, June 21, 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, June 22: None
Tuesday, June 23: None
Wednesday, June 24: None
Thursday, June 25: None
Friday, June 26: 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 changed for our May 19th "draft" day recently (changes for the upcoming quarter are in bold italics):
- We have removed the Character Change portfolio and added a new Strong AD portfolio
- There are 10 leading stocks from up to 10 leading industries in each portfolio (at the time of selection). Generally, there will only be one stock per industry group, but there could be exceptions.
- They are held for an entire 90 day period, with no stops in place. We strive for consistency, transparency, and simplicity in our portfolios. EB.com members may hold these stocks for the entire 90 days, trade them, use stops, etc., but for purposes of our calculation, we will make no exceptions to our "buy and hold for three months" strategy.
- Every stock will generally be held through ONE earnings report
- The expectation is that relative winners will carry the portfolio to outperformance
- They will all be entered into as of close on Tuesday, May 19th; members may choose to try to time better entries, but EB.com will "purchase" as of May 19th's closing price
- Primary objective is to outperform the benchmark S&P 500
Here are several considerations for EB members:
- I would expect the Strong AD and Aggressive portfolios to be the riskiest, followed by the Model portfolio, and then the Income portfolio
- The Strong AD portfolio will be selected from a combination of rising accumulation/distribution lines and SCTRs above 80 at the time of selection. It will be our only portfolio that does NOT require a revenue and EPS beat in its most recent quarterly earnings report
- 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
- I believe the larger drawdown on the Income portfolio last quarter was an anomaly occurring as a result of the pandemic as many defensive, higher-yielding companies uncharacteristically underperformed during a market decline.
- 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.
Weekly Snapshot
Here's a weekly recap:
It was a great week for all four of our portfolios and it's worth mentioning that our Model Portfolio is now +93.72% since its inception on November 19, 2018. That compares to just +15.13% on the S&P 500. These results are over a 19 month period, or well under 2 years. Our Strong AD Portfolio, in its very first quarter, has now pulled ahead of the benchmark S&P 500. Only the Income Portfolio trails the S&P 500 on a "since inception" basis.
Weekly Summary
Benchmark S&P 500:
The S&P 500 gained 1.86% last week. As usual, however, not all stocks (and ChartLists) were treated equally. The following is a weekly performance breakdown by EarningsBeats.com ChartList:
The stocks that struggled during the pandemic (Weak AD ChartList) couldn't keep pace last week, while our Strong Earnings ChartList (SECL) and Strong AD ChartList (SADCL) performed extremely well. The SECL remains our flagship ChartList and the one where I'll continue to focus most of my time.
Model Portfolio:
The Model portfolio surged 7.28% last week and further distanced itself from the S&P 500. Here's the updated inception-to-date chart of the portfolio:
Here are how the Model portfolio component stocks performed last week:
All 10 Model portfolio stocks outperformed the S&P 500, a complete shellacking. SHOP, ZM, and REGN each closed at fresh new all-time highs on Friday.
Aggressive Portfolio:
The Aggressive portfolio gained 6.15% to easily beat the benchmark S&P 500. Here's the Aggressive portfolio chart since its inception on May 19, 2019:
Here are how the Aggressive portfolio component stocks performed last week:
Only 6 of the 10 component stocks outperformed last week, but three of them - W, SGEN, and DXCM - all cruised to gains of 10% or more.
Income Portfolio:
The Income portfolio climbed 5.21% to make up ground vs. the benchmark S&P 500. Here's a look at the inception-to-date chart:
Here are how the Income portfolio component stocks performed last week:
The rebound in health care stocks last week (the XLV gained 3.23% to lead all sector ETFs) was evident in the performance of our Income Portfolio. LLY and AMGN led the resurgence in this portfolio with significant gains, while one health care laggard, HUM, failed to keep pace with the S&P 500.
Strong AD Portfolio:
The Strong AD Portfolio spiked 7.06% and finally overtook the S&P 500 in quarter-to-date performance. Here's a look at the inception-to-date chart:
Here are how the Strong AD portfolio component stocks performed last week:
Like the Model Portfolio, the Strong AD Portfolio saw all 10 of its components outperform the S&P 500, including its top performer last week - WING - move to an all-time high close.
Summary
Many of our portfolio stocks are maintaining very high SCTR scores, which suggests to me that Wall Street is anticipating big things from many of these companies as earnings season approaches. Quad witching day on Friday resulted in heavy volume, as it usually does, and also a mid-day crisis as Apple (AAPL) announced that it would be re-closing stores in parts of Arizona and Florida as coronavirus cases spike. I believe that, in part, led market participants to show more support for stocks positioned to benefit from the pandemic. Biotechnology ($DJUSBT) broke out and those stocks that were able to grow market share during the March and April lockdown all seemed to see their shares bid higher.
If continued focus remains on an increase in COVID-19 cases, I would expect to see more of the same in the upcoming week.
Happy trading!
Tom Bowley, Chief Market Strategist
EarningsBeats.com
"Better timing. Better trades."