EB Weekly Portfolio Report - Sunday, February 21, 2021
The DRAFT is today at 7:00pm ET
Just a reminder that we begin a new quarter for our portfolios this week. I'll be hosting our quarterly "Top 10 Stocks" webinar at 7:00pm ET where I'll summarize last quarter's results, identify key trends and themes in the quarter ahead, and fill out each of our 4 portfolios with 10 equal-weighted leading stocks for the quarter ahead. I hope you can join me!
We'll be providing room instructions later today. If you cannot attend, no worries. We record all of our events and we'll do our best to get the recording edited and out to everyone as quickly as we can after The DRAFT ends.
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 22: N/A - we're unveiling a new list of 40 portfolio stocks later today
Tuesday, February 23: N/A
Wednesday, February 24: N/A
Thursday, February 25: N/A
Friday, February 26: N/A
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:
At first glance, the most surprising development might have been the surge higher in the Pandemic Index. But then we should consider that it was options expiration week. The industry groups included in this index are those that performed the worst during the initial stages of the pandemic. Because they've been mostly underperformers, they are not likely subject to the market maker manipulation that attempts to take high-flying stocks lower into options expiration Friday. Instead, many likely received a boost higher.
Weekly Summary
Benchmark S&P 500:
While it was a mostly frustrating week for longs, there wasn't any technical damage done. A slight negative divergence on the hourly chart has now played out, so it could be that we resume our uptrend in the week ahead. Here's the negative divergence that had printed just prior to the weakness we endured late last week:
The key price support levels to watch now are (1) the double bottom at 3885 (green arrows) and (2) the breakout from 3863 (red arrow).
Model Portfolio:
The Model Portfolio lost 0.22% last week, but ended the quarter with a solid 32.28% gain, easily outperforming the benchmark S&P 500, which gained 9.07%. Here's the updated inception-to-date chart of the portfolio:
Here are how the Model portfolio component stocks performed last week:
Aggressive Portfolio:
The Aggressive Portfolio fell 3.15% last week, but crushed the S&P 500 for the quarter, +37.98% vs. 9.07%. Here's the updated inception-to-date chart of the portfolio:
Here are how the Aggressive portfolio component stocks performed last week:
Income Portfolio:
The Income Portfolio dropped 0.34% last week, but was able to beat the S&P 500 for the quarter, 15.45% vs. 9.07%. Here's the updated inception-to-date chart of the portfolio:
Here are how the Income portfolio component stocks performed last week:
Strong AD Portfolio:
The Strong AD Portfolio ended the quarter on a sour note, falling 1.89% last week, but it crushed the S&P 500 for the quarter, 40.08% vs. 9.07%. Here's the updated inception-to-date chart of the portfolio:
Here are how the Strong AD portfolio component stocks performed last week:
Summary
It was an absolutely spectacular quarter for our portfolios. The Strong AD Portfolio's quarterly gain of 40.08% set a new record for best quarterly performance since we began tracking these portfolios. The Aggressive Portfolio's gain of 37.98% would have set the record, if not for the Strong AD Portfolio's incredible surge, and is the second best quarterly performance ever. The Strong AD Portfolio's outperformance of the S&P 500 by 31 percentage points is another record that will be difficult to top.
Model ETF Portfolio
Our Model ETF Portfolio fell 1.45% last week and trailed the S&P 500's smaller loss of 0.71%. The primary reason for last week's weakness was the Renaissance IPO ETF (IPO). Its largest holdings, UBER and PTON, represent 20% of the ETF and both had a rough week. Still, our Model ETF Portfolio continues to perform very well overall and easily outpaces the benchmark S&P 500 this quarter (1/19-4/19) and since inception (10/19/20).
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:
Happy trading!
Tom Bowley, Chief Market Strategist
EarningsBeats.com
"Better timing. Better trades."