EB Weekly Portfolio Report - Sunday, April 25, 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, April 26: TSLA, AMKR
Tuesday, April 27: PINS, CROX
Wednesday, April 28: SHOP, ALGN
Thursday, April 29: GNRC, TPR, COWN
Friday, April 30: 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 his/her 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 Friday, February 19th; members may choose to try to time better entries, but EB.com "purchased" as of February 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:
We saw a bit of relative strength in three of our four portfolios last week, but the Model Portfolio was unable to overcome weakness by a number of component stocks - more on that below. We do have a number of portfolio companies reporting earnings in the upcoming week, including three in our Model Portfolio. That will likely dictate whether we'll see our portfolios make up some ground on the benchmark S&P 500.
Weekly Summary
Benchmark S&P 500:
The S&P 500 saw back and forth action last week, but the uptrend remains firmly in place. President Biden threw the stock market a curve ball mid-day on Thursday when he suggested that he'd essentially double the capital gains tax on wealthy Americans. Of course, any proposal would have to work its way through a Senate where Democrats have the slimmest of majorities. Even still, an increased tax at the individual level has far less ramifications for equity prices than an increased tax at the corporate level.
Model Portfolio:
The Model Portfolio dropped another 3.65% last week, as our flagship portfolio continues to struggle relative to 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:
ALGN had a solid week, but is now up against key resistance with earnings due out this week:
PTON took another tumble and is right back at critical price support:
After the recent positive divergence, the blue arrows mark the PPO centerline reset and the 50 day SMA test. From there, PTON is free to move wherever. There is a topping head & shoulders pattern in play, so a breakdown beneath 98 should be respected on a closing basis, especially if it's on heavy volume and attempts to close back above 98 fail.
Aggressive Portfolio:
The Aggressive Portfolio rose 0.32% last week, eking out a small relative gain vs. the S&P 500. Here's the updated inception-to-date chart of the portfolio:
Here are how the Aggressive portfolio component stocks performed last week:
The two top performing stocks in the Aggressive Portfolio, HUBS and ATKR, both broke out on Friday. HUBS was perhaps a bit more impressive as volume accelerated to confirm:
Income Portfolio:
The Income Portfolio climbed 0.73%, pulling closer to the S&P 500's return since the inception of this portfolio. Here's the updated inception-to-date chart of the portfolio:
Here are how the Income portfolio component stocks performed last week:
EWBC reported better-than-expected quarterly earnings results last week and promptly closed at a one-month high:
Strong AD Portfolio:
The Strong AD Portfolio gained 0.65%, regaining close to a percentage point vs. the benchmark S&P 500 for the week. Here's the updated inception-to-date chart of the portfolio:
Here are how the Strong AD portfolio component stocks performed last week:
CROX was perhaps the most surprising gainer of the week. Footwear ($DJUSFT) lost 2.25% last week, yet CROX was able to gain more than 6%. Short-term traders should be prepared to exit on a failed breakout attempt, however, given the weakening conditions in footwear:
Summary
Though we mostly consolidated last week, U.S. equities remain solidly in an uptrend and are poised for higher prices. Sure, pullbacks or periods of consolidation can occur at any time, but I'm seeing no signs of an impending top to last months or years. In fact, nearly every signal that I follow to assess the sustainability of the current market advance tells me to keep following the blue skies that lie directly in front of us.
The secular bull market marches on.
Model ETF Portfolio
Our Model ETF Portfolio lost 0.79% last week, trailing the S&P 500's lesser loss of 0.13%. We did have our quarterly draft on Monday after the close and our latest portfolio of ETFs managed to outperform the S&P 500, +0.73% vs. +0.41% over the past four trading days.
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:
The latest portfolio revolves around a few themes, namely (1) a rebound in large tech names, (2) the recent breakout in mid-cap stocks that we're banking on continuing, and (3) a strong retail group, among others.
Happy trading!
Tom Bowley, Chief Market Strategist
EarningsBeats.com
"Better timing. Better trades."