Every week, our model comes up with 40 stocks, 20 positive and 20 negatives, to watch for next week’s trading. The model is based on a mix of fundamental and quantitative factors, built on our proprietary database of detailed earnings model on more than 1200 U.S. listed companies. The historical data for these earnings models is sourced from SEC filings.
Performance of last week’s model portfolio was,
- Net: 2.6%
- Longs: 4.6%
- Shorts: -2.0%
Assuming 5% is dedicated to each position, resulting in 0% net exposure and no change in position size during the week.
Here are the names that came up for next week,
|2||DOYU||DouYu International Holdings|
|3||SCHW||The Charles Schwab Corporation|
|4||QFIN||360 Finance, Inc.|
|5||WKHS||Workhorse Group Inc|
|7||BKNG||Booking Holdings Inc.|
|9||ZM||Zoom Video Communications Inc.|
|13||PTON||Peloton Interactive Inc.|
|16||IBKR||Interactive Brokers Group Inc.|
|18||PRPL||Purple Innovation Inc.|
|19||TME||Tencent Music Entertainment Group|
|5||SHAK||Shake Shak Inc.|
|10||CLI||Mack-Cali Realty Corporation|
|13||PRMW||Primo Water Corporation|
|15||ESE||ESCO Technologies Inc.|
|16||ORA||Ormat Technologies Inc.|
|17||PEAK||Healthpeak Properties Inc.|
|18||AAL||American Airlines Group Inc.|
|20||SBGI||Sinclair Broadcast Group Inc.|
Trends visible in stocks for next week list
The big theme for next week seems to be portfolio rotation. The names that have done well seem to be taking a pause, even though the fundamentals of those companies tell us that there is more juice left. Our models are suggesting rather than looking for new names, let some of the old names rest as investors book profit and buy into them again, e.g. Tesla (Nasdaq: TSLA), NIO Inc. (NYSE: NIO), and Niu Technologies (NYSE: NIU) are not in this week’s list. At the same time, several stocks are finally ready for a breakout, e.g DouYu International (Nasdaq: DOYU) and 360 Finance (Nasdaq: QFIN).
After weeks in the positive list, electric vehicles stocks are out, except Workhorse Group, which continues to show up very high on the fundamentals even though quantitative factors suggest a pause. Last week, we mentioned how these stocks are changing ownership, moving from day traders and headline traders to institutional investors, Workhorse maybe halfway there given the float and recent trading volumes. Please read our detailed note on the Workhorse Group.
Usual of the second wave, quality Chinese ADRs are getting separated from the broader sector and selective stocks in the space seem ready for a breakout, i.e. names like Douyu, Qutoutiao (Nasdaq: QTT), 360 Finance, and Youdao Inc. (NYSE: DAO).
On a somewhat similar note, large payment and transaction-related names, e.g. Mastercard, Visa and Bottomline Technologies continue to show up weak on our screens, even though these names are not in this week’s negative list, brokers like Charles Schwab and Interactive Brokers are starting to show up on our positive list. Relative to other large-cap names, these names look quite strong.
Out of more than 1220 stocks in our database, very few belong to the healthcare sector, but this a lot of those are showing up weak on our screens. Yes, not many are in this week’s negative list yet, but something to watch out for.
As mentioned earlier, Chinese ADRs are entering the second phase of rally, where the performance of different players diverges. Three Chinese stocks are on this week’s negative list, Pinduoduo, iQIYI, and JOYY. Fundamentals for these three are strong, but relatively, they aren’t performing as per the expectations.
Somewhat new, but we are noticing some of the water and environment-related names are starting to show up on our negative screens, which is quite different from the strength seen in renewable energy names lately. AeroVironment Inc. and Primo Water are on this week’s negative list, but some others from the space also showed up high.
Once again, REITs that are already under pressure, but given how consistently they are showing up on our negative screens, we won’t be surprised to see the downward pressure increasing from here onwards.
Have a great weekend and happy hunting!
DISCLAIMER: These are NOT investment recommendations.