EB Weekly Portfolio Report - Sunday, June 27, 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, June 28: None
Tuesday, June 29: None
Wednesday, June 30: None
Thursday, July 1: None
Friday, Jul7 2: 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, May 19th; members may choose to try to time better entries, but EB.com "purchased" 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 70 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.
- Large drawdowns last quarter were due to the rapid rotation from growth stocks to value stocks; each quarter, our portfolios are based on themes and there is never a guarantee that our analysis and beliefs will be proven correct
- 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 bounce-back week for both the S&P 500 and our portfolios as the pre-earnings advances seemed to get underway a bit early.
Weekly Summary
Benchmark S&P 500:
The S&P 500 had a strong week as all 11 sectors advanced. We finished in all-time high territory. Perhaps the best news, however, was that the NASDAQ broke out of a very bullish ascending triangle continuation pattern:
Measurement of ascending triangles are calculated from the original top down to the initial low. That would be roughly 1800 points. The breakout level (14200) plus the measurement (1800) equals the initial target, or 16000. That's an exciting development as earnings season approaches. History tells us that the next 3-4 weeks are bullish and we now have technical confirmation of a bullish move ahead as well.
Model Portfolio:
The Model Portfolio added 3.76% last week, outperforming 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:
Last week, I indicated that I expected YETI and WSM to rebound after disappointing weeks and that's exactly what they did, helping to lead the Model Portfolio to outperformance. It was good to see all 10 component stocks gain ground.
Aggressive Portfolio:
The Aggressive Portfolio surged 6.41%, easily beating 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:
Like the Model Portfolio, all 10 Aggressive Portfolio stocks advanced last week. The big winner, however, was easily SBH, which climbed back above its key moving averages on increasing volume:
Income Portfolio:
The Income Portfolio gained 3.61%, gaining ground vs. the S&P 500. Here's the updated inception-to-date chart of the portfolio:
Here are how the Income portfolio component stocks performed last week:
Again, all 10 component stocks advanced as the Income Portfolio had a very solid, consistent week. PNC was the best performer, benefiting from the resurgence in financial stocks last week. PNC not only turned higher on an absolute basis, but it also turned up relative to its banking peers.
Strong AD Portfolio:
The Strong AD Portfolio climbed 6.73%, distancing itself from the benchmark 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:
The 10 stocks in Strong AD Portfolio also all gained ground last week, making it a perfect 40 for 40 in our 4 portfolios. I don't recall seeing that before, so it underscored our solid week. WFC did even better than PNC among banking stocks. It not only outperformed its banking peers, but it broke to a new 52-week relative high.
Summary
Typically, we see the S&P 500 perform well as June comes to a close. Last week got us off to an early bullish start. I expect that we're going to see most companies beat revenue and EPS expectations. Combine that with the 10-year treasury yield ($TNX) remaining extremely low from a historical perspective, and that's a recipe for higher equity prices. As we move closer to earnings season, pay close attention to the companies that not only beat forecasts, but also the raising guidance.
Model ETF Portfolio
Our Model ETF Portfolio jumped 3.65% as all of our ETFs also ended the week higher, keeping our perfect performance week intact.
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."