Stocks On My Screen For Week Starting March 1st, 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: -3.3%
  • Longs: -9.4%
  • Shorts:  6.1%

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
1SYFSynchrony Financial
2WKHSWorkhorse Group Inc.
3FUBOfuboTV Inc.
4ARCARC Document Solutions Inc.
5FRXForest Road Acquisition Corp.
6CVSCVS Health Corporation
7FRHCFreedom Holding Corp.
8WTMWhite Mountains Insurance Group Ltd.
9TRVThe Travelers Companies Inc.
10NMRKNewmark Group Inc.
11AEOAmerican Eagle Outfitters Inc.
12SIGSignet Jewelers Limited
13AVYAvery Dennison Corporation
14HRIHerc Holdings Inc.
15ENVAEnova International Inc.
16BWMXBetterware de Mexico, S.A.B, de C.V.
17APAmpco-Pittsburgh Corporation
18AIMCAltra Industrial Motion Corp.
19ATROAstronics Corporation
20COTYCoty Inc.
This is not investment recommendation or advice

Negative

No.SymbolName
1ZMZoom Video Communications Inc.
2PTONPeloton Interactive Inc.
3SNOWSnowflake Inc.
4TTDThe Trade Desk Inc.
5COSTCostco Wholesale Corporation
6SPLKSplunk Inc.
7QLYSQualys Inc.
8AZREAzure Power Global Limited
9SSYSStratasys Ltd.
10GCPGCP Applied Technologies Inc.
11MTLSMaterialise NV
12HYFMHydrofarm Holdings Group Inc.
13FTSFortis Inc.
14ACBAurora Cannabis Inc.
15ENREnergizer Holdings Inc.
16CPBCampbell Soup Company
17WOOFPetco Health and Wellness Company Inc.
18LESLLeslie’s Inc.
19CLVTClarivate Plc
20WENThe Wendy’s Company
This is not investment recommendation or advice

Trends visible in stocks for next week list

For the past few weeks I was talking about rising yields and how the fear was quite apparent in the market as well and this past week, retail investors seem to have taken note of the same as well. Yes, earnings reports were partly to blame. Looking at the commodity prices and bonds on Friday, I won’t be surprised to see to some amount of consolidation around current levels; enough to allow investors catch a breath and reassess their portfolios.

Looking at the results, it seems businesses that saw increased demand during lockdown are coming against difficult comps while businesses that suffered the most due to the lockdown have yet to see any major improvement in business; at least not enough to explain the current valuations. All in all, Covid-19 trade is over, but recovery trade has not shaped up enough yet.

Risk off sentiment of the past week may have caused the rally in Chinese ADRs and emerging markets to pause but fundamentals continue to be strong for a lot of these names. GARP names continue to look relatively better given growth is still scarce.  

Positives

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.

Consumer is holding up well, which combined with another round of stimulus check is making sub-prime lenders look good. A lot of those companies made provisions for loan losses liberally, while fearful investors threw the names across the board. Now the stocks are relatively cheap and results are surprising positively in most cases.

Once again, mortgage and home building related names are looking good. When yields started to rise, homebuilders and mortgage industry stocks took a hit. Fundamentally the businesses continue to do well and industry demand equation looks sound. The mismatch between stock prices and fundamentals is making the space relatively attractive.

Negatives

Last few days have been tough for most high beta names, including online gaming and betting. Given how few organic growth stories are available in current environment, it won’t be surprising to see investors jump back into online gaming and betting names. I will be cautious though. Earnings may become an issue for a lot of these stories, especially 2nd and 3rd tier names. Operating expenses, especially sales and marketing, may remain at elevated levels, putting pressure on earnings.

Market continues to adjust to rising interest rate environment. No surprise, utilities, REITs and consumer staples are showing up weak on my screens. Besides the high levels of debt and its impact on the earnings of these companies, trading multiples may also come under pressure. Consumer staples companies may also experience margin pressures with the recent rise in price of agriculture commodities and demand normalizing after the lockdown.

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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