Stocks On My Screen For Week Starting September 21st, 2020

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 1225 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: 2.0%
  • Longs: 3.2%
  • Shorts:  -1.2%

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
1SNAPSnap Inc.
2WKHSWorkhorse Group Inc.
3GMEGameStop Corp.
4TMETencent Music Entertainment Group
5AXPAmerican Express Company
6CHTRCharter Communications Inc.
7MOSThe Mosaic Company
8SYFSynchrony Financial
9IIPRInnovative Industrial Properties Inc.
10TXTernium S.A.
11BIDUBaidu Inc.
12HMIHuami Corporation
13ALLYAlly Financial Inc.
14DFSDiscover Financial Services
15SHLLTortoise Acquisition Corp.
16SPTSprout Social Inc.
17MAXRMaxar Technologies Inc.
18DGIIDigi International Inc.
19PACBPacific Biosciences of California Inc.
20CYDChina Yuchai international Limited
These are NOT investment recommendations

Negative

No.SymbolName
1CNNECannae Holdings Inc.
2EGHT8×8 Inc.
3FTSFortis Inc.
4CITCIT Group Inc.
5ENREnergizer Holdings Inc.
6SJMThe J.M. Smucker Company
7ADTADT Inc.
8KMBKimberly-Clark Corporation
9IRMIron Mountain Incorporated
10PEAKHealthpeak Properties Inc.
11WENThe Wendy’s Company
12PZZAPapa John’s International Inc.
13CPTCamden Property Trust
14KDPKeurig Dr Pepper Inc.
15ORAOrmat Technologies Inc.
16ESEEsco Technologies Inc.
17MTSIMACOM Technology Solutions Holdings Inc.
18BESTBEST Inc.
19WWWW International Inc.
20GCPGCP Applied Technologies Inc.
These are NOT investment recommendations

Trends visible in stocks for next week list

Once again, our favorite ideas worked perfectly this past week. Growth is not working anymore and looking weak on our screens, but it’s the stocks that lack growth that seem extremely vulnerable unless they are backed by real value and comeback is visible for investors to see. Better to keep avoiding the growth names, even though the first leg of downdraft may be over for now.

Last week, we talked about how the economy continues to open up, the back-to-school season is expected to be weak but long this year and investors may continue to book profit and reposition. The trend continues for now.

Another interesting trend visible to us is the divergence in precious metal and basic metal stocks. Gold miners may be in for some profit taking while basic metal miners seem to be making a comeback. Now whether its normal rotation out of stocks that have worked well and into beaten-down names or the market recognizing that inflation will affect all commodities is still up for debate and numbers.

Positives  

GameStop Corp. is the newest core entrant after Workhorse Group. Regular readers of the weekly list, now into hundreds, would recognize how Workhorse Group has been a regular feature in the Positive List for a while now. Rarely does a name props up that shows extremely high on both fundamentals and quantitative data along with a huge gap between our take on the core value of the business and the Street’s expectation of the same. Workhorse Group was one such name that we picked a few months ago and GameStop looks the same now.

Yes, we’ll be writing a detailed note on the name soon, though briefly, the business has undergone years of restructuring and consolidation, with new growth catalysts developing, the stock looks extremely undervalued compared to both current fundamentals as well as prospects.

Once again, financials are prominent in this week’s list too, even though industry analysts continue to warn about rising inflation and the resulting impact on interest rates. Our take is the same, the risk-reward trade-off seems to be favoring the space and negative chatter may subside with signs of stability in the bond market.

Negatives

Last week, we talked about how the gap between earnings potential and Street expectations is becoming glaringly evident, which combined with weakness in quantitative data looks troubling times for some technology names. The theme continues for this week as well.  

Some restaurant names and selective REITs are also showing up weak on our screens. Maybe inter-related, but the numbers for these two sectors are not improving like some of the other retail niches that are experiencing strength in their digital sales channels.   

Airlines are also hanging by a thread, without a package from the government; a second leg of correction in the stocks may follow soon.

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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