EB Weekly Portfolio Report - Sunday, February 14, 2021
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, February 15: None
Tuesday, February 16: None
Wednesday, February 17: SHOP, SPWR, LASR
Thursday, February 18: AMAT, ROKU
Friday, February 19: DE
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 our portfolios:
- 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 were all entered into as of the close on Thursday, November 19th; members may choose to try to time better entries, but EB.com "purchased" as of November 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 is the 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 1.0%
- 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 at the beginning of the pandemic was an anomaly, occurring 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:
Our performance last week was very strong on both an absolute basis and on a relative basis vs. the S&P 500. We have one more week before we close out this quarter, but currently two of our portfolios - Aggressive and Strong AD - are higher by more than 40% this quarter.
Weekly Summary
Benchmark S&P 500:
It was an interesting week for U.S. equities as energy (XLE, +4.96%) rebounded and four of the five aggressive groups advanced. However, both consumer sectors - discretionary (XLY, -1.11%) and staples (XLP, -0.11%) - fell, along with utilities (XLU, -1.53%). While the S&P 500 did manage to close on Friday at an all-time high (3934.83), we did not see full participation on the week. Still, weekly momentum overall remains quite strong as we head into February monthly options expiration week.
Model Portfolio:
The Model Portfolio gained 2.11% last week, outperforming the benchmark 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:
FIVN could be setting up for another run. Software ($DJUSSW) has come to life and FIVN turned higher on Friday with volume beginning to pick up slightly. A breakout above 190 is what I'd be looking for:
The AD line here has held up strong so I believe institutions remain long.
Aggressive Portfolio:
The Aggressive Portfolio tacked on 5.66%, pulling further and further away from the S&P 500 this quarter. Here's the updated inception-to-date chart of the portfolio:
Here are how the Aggressive portfolio component stocks performed last week:
LASR, SPWR, and SQ all surged last week to carry this portfolio. After two months of consolidation, LASR broke out to a fresh high on solid volume:
Income Portfolio:
The Income Portfolio gained 3.64%, and is still trying to catch the S&P 500 since its inception 21 months ago. Here's the updated inception-to-date chart of the portfolio:
Here are how the Income portfolio component stocks performed last week:
AMAT led a charge from the semiconductor equipment companies last week. AMAT will report its latest quarterly results this week. Obviously, Wall Street is expecting a very solid report. CARR was on the other side of a not-so-great earnings reaction and will be looking to recover some in the week ahead.
Strong AD Portfolio:
The Strong AD Portfolio surged 8.83% for tremendous back-to-back weekly performances, pulling away substantially from the S&P 500. Here's the updated inception-to-date chart of the portfolio:
Here are how the Strong AD portfolio component stocks performed last week:
9 0f 10 component stocks beat the S&P 500 with 5 gaining 10% or more. The top of the list was GNRC and ZBRA, both after reporting exceptional quarterly results.
Summary
Well, we're one week away from closing the books on another very successful quarter. Not only do U.S. equities keep pushing higher, but the leaders that we've lined our portfolios with keep accelerating to the upside as well. On Friday, the Volatility Index ($VIX) closed below 20 for the first time since the pandemic began in late February. I wrote an article in my Trading Places blog at StockCharts.com, detailing the historical significance of this drop. If you didn't get a chance to read this article, you can CLICK HERE.
Model ETF Portfolio
It was another very strong week for our Model ETF Portfolio as it climbed 3.50%, nearly tripling the S&P 500's return. And while the S&P 500 has gained 3.58% since this quarter began on 1/19/21, three of our component ETFs have soared more than 10%, including ARKW, which is up nearly 17%.
Here's the updated inception-to-date chart of the Model ETF Portfolio:
Here are how the Model ETF Portfolio component ETFs performed last week:
Only HACK trailed the S&P 500 last week. All the others at least doubled that benchmark. It was a solid week for sure.
Happy trading!
Tom Bowley, Chief Market Strategist
EarningsBeats.com
"Better timing. Better trades."