Stocks On My Screen For Week Starting March 15th, 2021

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 my proprietary database of detailed earnings model on more than 1375 U.S. listed companies. The historical data for these earnings models is sourced from SEC filings.

Performance of last week’s model portfolio for the week was,

  • Net: -1.5%
  • Longs: 8.9%
  • Shorts:  -10.4%

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,

Positive

No.SymbolName
1UBERUber Technologies Inc.
2WKHSWorkhorse Group Inc.
3FUBOfuboTV Inc.
4ARCARC Document Solutions Inc.
5YALAYalla Group Limited
6GSKYGreenSky Inc.
7UALUnited Airlines Holdings Inc.
8SYFSynchrony Financial
9WBAWalgreens Boots Alliance Inc.
10QFIN360 DigiTech Inc.
11RRRRed Rock Resorts Inc.
12NMRKNewmark Group Inc.
13URIUnited Rentals Inc.
14HRIHerc Holdings Inc.
15ENVAEnova International Inc.
16ASTEAstec Industries Inc.
17CWHCamping World Holdings Inc.
18AAAlcoa Corporation
19VIOTViomi Technology Co. Ltd.
20ACELAccel Entertainment Inc.
This is NOT an investment recommendation or advice

Negative

No.SymbolName
1ZMZoom Video Communications Inc.
2EDUNew Oriental Education & Tech. Group
3TSMTaiwan Semiconductor Mfg. Co. Ltd.
4ADBEAdobe Inc.
5PTONPeloton Interactive Inc.
6TDOCTeladoc Health Inc.
7OKTAOkta Inc.
8RNGRingCentral Inc.
9DDOGDatadog Inc.
10PINGPing Identity Holding Corp.
11ARCEArco Platform Limited
12RAASCloopen Group Holding Limited
13PUBMPubmatic Inc.
14ACBAurora Cannabis Inc.
15ENREnergizer Holdings Inc.
16CPBCampbell Soup Co.
17CLVTClarivate Plc.
18WENThe Wendy’s Co.
19PZZAPapa John’s International Inc.
20CRMSalesforce.com Inc.
This is NOT an investment recommendation or advice

Trends visible in stocks for next week list

Like previous week, move to value continued and there is little to suggest that the trend will reverse any time soon given the broader market is barely down 10-12% from all time high. Tax season is not helping either since much of the damage over the past few days seem more of a case of profit booking.

Investors, including retail, have definitely woken up to the risk of sudden drops; add to that rising interest rates and even a recovering economy will not be enough to make bulls throw caution to the wind. Once again, the market seems to have made a full-fledged shift towards ‘post vaccine’ trade, at least looking at the commodity markets, interest rates and forward guidance from a lot of the companies.

Important shift from all these changes is that all the high flyers of the past few months, be it high growth technology companies, high beta stocks or financial engineering plays, including SPACs, will have to be answerable and show numbers to support the story; not an easy task for most.

Positives

Once again, travel related names, including airlines, are looking good. There is hope that travel restrictions will be easing by summer and valuation, at least for companies with higher quality balance sheets, is relatively attractive. As the market starts to focus on next year’s numbers, a lot of these names will stand out, delivering high growth, improving profitability and trading at a discount to historical valuations.

Financials are showing up high on my screens. Not difficult to understand given interest rates are moving higher, companies have provisioned aggressively, cost structure has been aligned and economy is expected to recover fast.

Somewhat related, leasing names, be it construction equipment leasing companies, aircraft leasing or auto leasing companies, are showing up high on my screens. Economic recovery will improve demand, underinvestment of the past few quarters may create shortage and pricing improvement, while stocks are trading at reasonable valuations.

Yet again, retail, both online and offline, has been one of the sectors that stood well during the past few days when almost everything was getting destroyed. Fundamentally, online players, including Wayfair and Amazon, have consolidated over the past few weeks, while offline players are benefiting from holiday season and pent-up demand after the lockdown eased up.

Negatives

Restaurants are showing up weak on my screens. A lot of businesses performed well during the lockdown, costs were down, commodity markets were weak and demand held up relatively better. Result was that the markets rewarded them with rich multiple. Now the situation seems to be reversing, labor market will tighten with improving economy, minimum wage rate is increasing, commodity prices are going up and the valuations are rich in most cases.

Housing related stocks are suffering due to investor fears about rising interest rates and their impact on the demand. Fundamentals continue to be strong, but quantitative data is extremely unsupportive.

Most cannabis stocks are looking weak. Fundamentals were never great but investors, especially retail, for a while were excited about favorable legislations and ended up bidding the stocks to sky high valuations. Now that things are cooling off, it might be a while before the names bottom.

Once again, my screens continue to warn me against catching the falling knife, i.e. EVs, SPACs and high growth tech names trading at exorbitant valuations. Yes, there are a lot of quality names that got punished, but relatively most names look rich and results are forcing Street to adjust trading multiples assigned to the space.

Have a great weekend and happy hunting!

DISCLAIMER: These are NOT investment recommendations. Please do your research and consult your financial advisor before making any investment decision.

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