EB Weekly Portfolio Report - Sunday, May 2, 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, May 3: IRBT, MOS, SEDG
Tuesday, May 4: UPWK, ZBRA, RRR
Wednesday, May 5: PYPL, HUBS
Thursday, May 6: PTON, ROKU, TPR, SHAK, MGA, NWSA, VIAC, EXPE, SQ
Friday, May 7: 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:
Our portfolios were quite volatile with the Strong AD Portfolio performing very well on a relative basis, while the Aggressive Portfolio struggled.
Weekly Summary
Benchmark S&P 500:
The S&P 500 had another flat week as we've seen little selling across our major indices. Areas within the benchmark S&P 500 have struggled, but rotation has kept the overall indices afloat. That's the sign of a secular bull market. But we are likely moving closer and closer to a more significant period of selling/consolidation. More on that below.
Model Portfolio:
The Model Portfolio fell 1.11% last week, and has been unable to break to a new high since February. Here's the updated inception-to-date chart of the portfolio:
Here are how the Model portfolio component stocks performed last week:
SHOP posted solid results last week, but is now mired in a period of consolidation as volatility was quite high after its quarterly report:
Aggressive Portfolio:
The Aggressive Portfolio tumbled 3.99% last week, and lost further ground to 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:
This was clearly our most frustrating portfolio last week. We saw fairly decent earnings reports, but very poor reactions. Technology has seen a lot of selling this quarter after earnings have been released and AMKR was no exception, despite being part of the strong semiconductor industry:
The top of gap support was lost on Friday, and it's now in the middle of the top and bottom of gap support. The big picture still looks solid, but the short-term picture has weakened considerably and the inability of semiconductors to break to new highs is not helping.
Income Portfolio:
The Income Portfolio rose 0.71%, adding to its relative outperformance this quarter. Here's the updated inception-to-date chart of the portfolio:
Here are how the Income portfolio component stocks performed last week:
RRR posted a solid week, gaining 7.51% ahead of its quarterly earnings report this week:
Wall Street is showing much favoritism to RRR, despite the gambling industry pulling back on a relative basis. I'd expect solid results this week, but is all the good news already built into its price? That's the question.
Strong AD Portfolio:
The Strong AD Portfolio rebounded 1.64%, led by a strong quarterly report by CROX. Here's the updated inception-to-date chart of the portfolio:
Here are how the Strong AD portfolio component stocks performed last week:
CROX accounted for much of the portfolio's strength last week after reporting blowout quarterly results:
Last week, I pointed out the relative weakness in footwear and to be careful if CROX printed a false breakout. Instead, CROX moved to new highs on excellent volume and it remains one of the best footwear stocks.
Summary
The short-term market outlook has changed in my opinion. While we're still in a historical period that favors higher prices, warning signs are increasing, which I wrote about in the DMR last Thursday and again in my Trading Places blog on Saturday morning. Rather than discuss these warning signs here, I'd simply encourage you to read my article, "Is This A Sell On News Top? Five Warning Signs".
Also, 17 of our 40 portfolio stocks will be reporting earnings this week. While the overwhelming majority of those portfolio stocks that have reported thus far have beaten Wall Street consensus estimates, as I would expect, the reactions to these reports have not been particularly good. In order for us to make up ground on the S&P 500 between now and our next "draft" on May 19th, we'll need to see much better market reactions.
Model ETF Portfolio
Our Model ETF Portfolio lost 0.34% last week, slightly trailing the benchmark S&P 500.
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."