Sector Themes In Play In The Markets For 2022

Years like 2021 saw a solid broad-based performance in many stock market sectors. Relatively simple approaches such as Indexing and Sector Rotation did well. But with macro changes in play and many uncertainties for 2022, we may very well see broad indexes underperforming while individual sectors dominated by a few stocks really shine.

Dips will continue to be bought unless something significant changes. But let’s not forget that we’re long overdue for a substantial correction. Significant risk catalysts are:

  • Fed actions.
  • International conflicts (i.e., Russia and China).
  • Pandemic developments that are not currently known.

There’s always the risk of the unknown – the literal definition of a “Black Swan” event. We shouldn’t get too complacent, knowing that we may need to get defensive to protect capital suddenly. When it’s time to be defensive, let’s not forget that CASH IS A POSITION!

Sector theme DRIVERS FOR 2022

Many uncertainties about Covid and the lingering effects on the economy remain. Inflation has roared back to 30-year highs. Strong employment numbers and consumer spending are fueling significant growth in corporate earnings. We also have a shift in bias at the Fed on interest rates and quantitative easing. These are the “knowns” and are theoretically priced in.

For these reasons and more, we should expect more of a “Stockpicker’s Market” in 2022. Certain sectors will do well and weather corrections better than the broader markets.

Even short-term traders can gain an edge by paying attention to what sectors are strongest. Traders tend to benefit most from playing the strongest stocks in the strongest sectors for bullish trades and choosing the weakest stocks in weaker sectors for bearish trades. That “tailwind” can make a significant difference in results.

Let’s look at some sector themes and individual names to keep an eye on in 2022.

ECONOMIC NORMALIZATION

A long-anticipated return to a “normal” economy will continue to be a theme — we just don’t know if that will be Post-Covid or Co-Covid. Or when. Air travel, theme parks, hotels, cruise lines, etc., have all suffered in the persistent Pandemic. What does seem to be changing is the idea of a “new normal” where virus variants may be with us for years to come. We will adjust socially and economically to that for the foreseeable future. DAL, UAL, LUV, AAL are airlines to watch, and the JETS ETF may be a good way to play a general recovery in this sector.

5G INTERNET

The much-hyped rollout of 5G network technology had its share of setbacks and technology disappointments. But 2022 should see the 5G deployment start to take off as technical issues are worked out, and the promise of widespread coverage with transformational performance becomes real. In the background supplying the 5G infrastructure are AMD, QCOM, ADI, MRVL, AMT, XLNX, and KEYS. Along with infrastructure and testing companies, shares of major carriers T, TMUS, and VZ languished for much of the second half of 2021 and looked poised for recovery in the coming year.

ARTIFICIAL INTELLIGENCE

In all its various forms (including autonomous vehicles), AI will remain a developing trend. Big players in the space to watch include MSFT, AMAT, GOOGL, NVDA, AAPL, and QCOM.

EVs and AUTONOMOUS VEHICLES

Electric Vehicles (EVs) are nearing an inflection point where widespread adoption is poised to take off. Technology and cost competitiveness has improved where some EVs will reach price parity with their traditional internal combustion counterparts.

While there are many smaller players in the EV space, automotive stalwarts F, GM, and TM are investing very heavily. TSLA has been grabbing the headlines, but many others want to stake out their territory in the space, including whole tiers of manufacturers and infrastructure enablers like WKHS, XPEV, NKLA, and CHPT.

MATERIALS and MINING

Gold, silver, and related miners underperformed for much of 2021 and now look poised for a recovery year as inflation, and monetary concerns grow. GLD, SLV, GDX, GDXJ, SIL, SILJ look good as both longer and mid-term plays. Metals and miners may get hit initially with a significant downturn in stocks but could ultimately demonstrate their safe-haven potential.

Specific to the growth in EVs, battery technology, etc., copper, lithium, and related basic materials should see stronger demand ahead. FCX looks particularly interesting as a dual play on gold and copper. LIT may be a good ETF play on lithium battery technology.

SEMICONDUCTORS

The market for chips is primed for exponential growth. EV’s have about ten times the number of specialty semiconductors as conventional vehicles. AI, crypto, 5G, mobile devices, and ubiquitous computing should drive growth in the semiconductor sector for some time to come.

REAL ESTATE

Real Estate and Homebuilders should continue to do well while employment numbers remain strong and if interest rates don’t rise too quickly. The inventory shortage in most real estate markets will likely persist well into the new year.

Storage REITs like PSA, LSI, and CUBE have been big winners in the Covid economy and still have room to run.

SUMMARY

Many sectors still look bullish after gains in 2021. But there are “storm clouds” on the horizon, and we must not take future performance for granted.

Lastly, one of the simplest ways to assess how sectors are measuring up is to watch the charts for the S&P SPDR series sector ETFs and a few others. Here are some notable ones to watch:

https://www.thetechnicaltraders.com/wp-content/uploads/2021/12/Dec-31-article.png

These can give us a good starting place to look for leading stocks in winning sectors as the year unfolds.

Let’s remain vigilant for possible market corrections and may the wind be at our backs!

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Best Cheap Stocks to Buy Now December 2021

Oftentimes, big money buying is institutional activity. We’ll go over what that looks like in a bit. But, the 5 stocks we see as undervalued candidates are SIMO, AKAM, AMAT, QCOM, & ADI.

At my research firm MAPsignals, we believe that big money trading can alert you to the forward fundamental picture of a stock. We want the odds on our side when looking for the highest quality stocks.

Up first is Silicon Motion, Inc. (SIMO), which is a leading developer of integrated circuits for NAND flash storage devices like the microSD cards used in smartphones.

The best candidates tend to have strong performance. Check out SIMO:

  • YTD performance (+88.0%)
  • Historical big money signals

Just to show you what our big money signal looks like, have a look at the top buy signals Silicon Motion has made the past few years.

Blue bars are showing that SIMO was likely being bought by a big money player according to MAPsignals.

When you see a lot of them, I call it the stairway to heaven:

Source: www.MAPsignals.com

But, what about fundamentals? As you can see, Silicon Motion looks strong under the hood:

  • Forward P/E = 15.1
  • 1-year sales growth rate (+45.9%)

Next up is content delivery network company Akamai Inc. (AKAM), which delivers online content (like videos) efficiently and securely.

Check out these technicals for AKAM:

  • YTD performance (+6.7%)
  • Historical big money signals

Let’s look long-term. These are the top buy signals Akamai has made since 2015. Clearly the big money has been liking it for years:

Source: www.MAPsignals.com

Let’s look under the hood. As you can see, Akamai has grown earnings massively:

  • Forward P/E = 19.4
  • 3-year earnings growth rate (+29.6%)

Another name to consider is Applied Materials, Inc. (AMAT), which is a semiconductor supplier whose technologies are used to build complex memory chips and displays.

Strong candidates for growth usually have big money buying the shares. Applied Materials has that. Also, the stock has been a rocket:

  • YTD performance (+82.3%)
  • Recent big money signals

Below are the big money signals AMAT has made since 2015:

Source: www.MAPsignals.com

Now let’s look under the hood. Applied Materials’ earnings growth is impressive. I expect more growth in the coming years:

  • Forward P/E = 19.4
  • 3-year earnings growth rate (+29.6%)

Number four on the list is wireless chipmaker Qualcomm Holdings, Inc. (QCOM).

Here are the technicals jumping out at me:

  • 1-month performance (+10.1%)
  • Historical big money signals

Below are the big money signals for QCOM since 2005. While there isn’t much recent activity, it’s a big money favorite over time:

Source: www.MAPsignals.com

Let’s look under the hood. QCOM has been growing earnings nicely:

  • Forward P/E = 16.9
  • 3-year earnings growth rate (+50.5%)

Our last cheap candidate is Analog Devices, Inc. (ADI), which designs, makes, and sells signal processing circuits found in all kinds of electronic equipment.

Check out these technicals:

  • YTD performance (+26.1%)
  • Historical big money signals

Analog Devices has shown up with top big money signals a lot since 2015:

Source: www.MAPsignals.com

Now look at these juicy growth numbers:

  • Forward P/E = 24.7
  • 1-year sales growth rate (+30.6%)

The Bottom Line

SIMO, AKAM, AMAT, QCOM, & ADI represent top cheap stocks for December 2021. Strong fundamentals and big money buy signals make these stocks worthy of extra attention.

To learn more about MAPsignals’ big money process please visit: www.mapsignals.com

Disclosure: the author holds long positions in AKAM, QCOM, and ADI in managed accounts, long positions in SIMO and QCOM in personal accounts, and no positions in AMAT at the time of publication.

Investment Research Disclaimer

https://mapsignals.com/contact/

 

Best Stocks to Buy Now October 2021

The hard part is finding them.

At MAPsignals, that’s where we focus.

And this month we look at my best stocks to buy now for October 2021. Keep in mind, I like to use a lot of data in my process and this isn’t personalized advice.

For MAPsignals, we focus on Big Money buying the best stocks. We find that oftentimes how a stock trades can alert you to the forward fundamental picture more than just looking at a company’s financials. I like the odds in my favor when looking for the highest quality stocks.

Up first is Analog Devices, Inc. (ADI), which is a leading semiconductor company. They have been trucking higher for years.

When we decide on the strongest candidate for long-term growth, we consider many fundamental and technical considerations.

Here we see good 3-year sales and earnings growth. Just for fun, juice is good, so-so is ok, and not ideal is underwhelming:

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Source: MAPsignals, FactSet

To see if Big Money is plowing in, we can look at the times when ADI was a top ranked stock. Below are all the top buy signals ADI has made the past few years. Blue bars are showing that Analog Devices was likely being bought by a Big Money player according to MAPsignals.

When we see a lot of blue signals, we call it the stairway to heaven:

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Source: MAPsignals.com

Next up is Celsius Holdings, Inc. (CELH), which is a leading energy drink maker.

Let’s take a peek under the hood:

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Source: MAPsignals, FactSet

The stock has been a rocket. These are the top buy signals CELH has made since 2020. Clearly the Big Money has been into it:

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Source: MAPsignals.com

Another growth name to consider is Lululemon Athletica, Inc. (LULU). They are a leader in athletic wear.

Looking at the fundamental picture we see a strong sales and 3-year earnings growth and a chunky profit margin:

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Source: MAPsignals, FactSet

Below are the big money signals Lululemon has made since 2015. This stock has been a magnet for Big Money. Recently they had an awesome earnings report:

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Source: MAPsignals.com

Number 4 on the list is IHS Markit Ltd. (INFO), which is a leading analytics firm.

Check out the fundamental picture. For HIS Markit we see lots of earnings growth:

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Source: MAPsignals, FactSet

Below are the big money signals that INFO has made since 2015. That’s a beauty!

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Source: MAPsignals.com

Our last growth powerhouse is Crocs, Inc (CROX), which makes iconic clogs.

This company boasts double-digit 1 and 3-year sales growth. A gross profit margin of 53% is awesome.

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Source: MAPsignals, FactSet

Below are the big money signals Crocs has made since 2015. You can see how powerful the performance has been:

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Source: MAPsignals.com

The Bottom Line

ADI, CELH, LULU, INFO, & CROX represent my best stocks to buy now for October 2021. Given the strong historical revenue & earnings growth, and multiple big money buy signals, these stocks could be worth extra attention.

To learn more about MAPsignals’ Big Money process please visit: www.mapsignals.com

Disclosure: the author holds long positions in ADI & LULU in managed accounts. He holds no positions in CELH, INFO, or CROX at the time of publication.

Investment Research Disclaimer

Best Dividend Stocks June 2021

In my experience, great dividend stocks have a few characteristics: strong fundamentals, increasing dividend distributions over time, and bullish trading activity in the shares.

The hallmark way I go about finding the best dividend stocks…the outliers, is by looking for quiet Big Money trading activity. Oftentimes, that can be institutional activity. I’ll go over why following the Big Money is so important in a bit. But, the 5 stocks I see as long-term dividend growth candidates are ABT, COST, ADI, MCD, & NKE.

Over decades, I’ve learned that the true tell on great stocks is that big money consistently finds its way into the best companies out there… especially dividend paying stocks. Some of the biggest returns ever have come from holding stocks for many years and reinvesting dividends.

I want the odds on my side when looking for the highest quality dividend stocks…and I own many of them.

So, let’s get into it.

Up first is Abbott Laboratories, Inc. (ABT), which is a seller of health care products globally. Their product lines include pharmaceuticals, nutrition, diagnostics, and medical devices.

Let’s first start with the technical picture.

When deciding on a strong candidate for long-term dividend growth, I look for stocks seeing a pullback:

  • 1 month performance (-3.41%)
  • Historical Big Money buy signals

Below are the Big Money signals Abbott Labs has made since 2015. Green bars are showing that ABT was seeing big buy activity according to MAPsignals. Typically, the more Big Money signals, the stronger the stock:

Source: MAPsignals, End of day data sourced from Tiingo.com

On top of technicals, when deciding on the best dividend stock, you should look under the hood to see if the fundamental picture supports a long-term investment. As you can see, ABT has a strong dividend history:

  • 3-year dividend growth rate (+10.8%)
  • Current dividend per share = .45
  • Forward yield = 1.54%
  • 3-year earnings growth rate (+158.04%)

Next up is Costco Wholesale Corp. (COST), which operates membership warehouses in many countries. They offer branded and off-brand retail products.

When deciding on a strong candidate for long-term dividend growth, it’s a good idea to look for many years of dividend increases.

Now let’s look at recent performance:

  • 1 month performance (+4.80%)
  • Historical big money signals

Below are the big money signals that Costco has made since 2015. I expect more buy signals in the years to come.

Source: MAPsignals, End of day data sourced from Tiingo.com

On top of technicals, when deciding on the best dividend stock, you should look under the hood to see if the fundamental picture supports a long-term investment. As you can see, Costco has a nice dividend history. Their earnings growth has been stellar as well:

  • 3-year dividend growth rate (+12.4%)
  • Current dividend per share = .79
  • Forward yield = .82%
  • 3-year earnings growth rate (+14.04%)

Next, I’m looking at Analog Devices, Inc. (ADI), which is a leading semiconductor company. They have a solid dividend history.

When deciding on a strong candidate for long-term dividend growth, recent performance in the shares is important:

  • 1 month performance (+1.92%)
  • Recent Big Money signals

Below are the big money signals that Analog Devices has made since 2015. It’s clear the stock has been in a nice uptrend:

Source: MAPsignals, End of day data sourced from Tiingo.com

On top of technicals, when deciding on the best dividend stock, you should look under the hood to see if the fundamental picture supports a long-term investment. As you can see, ADI has a strong dividend history:

  • 3-year dividend growth rate (+10.7%)
  • Current dividend per share = .69
  • Forward yield = 1.69%
  • 3-year earnings growth rate (+24.62%)

Next, I’m looking at McDonald’s Corp. (MCD), which is a global fast-food franchise company. They operate over 39,000 restaurants globally.

When deciding on a strong candidate for long-term dividend growth, recent muted performance is not a bad thing:

  • 1 month performance (-.07%)
  • Recent Big Money signals

Below are the Big Money signals that McDonald’s has made since 2015.

Source: MAPsignals, End of day data sourced from Tiingo.com

On top of technicals, when deciding on the best dividend stock, let’s check up on the fundamentals. As you can see, McDonald’s has a strong dividend history.

  • 3-year dividend growth rate (+9.6%)
  • Current dividend per share = 1.29
  • Forward yield = 2.2%
  • 3-year earnings growth rate (+.9%)

Lastly, I’m looking at NIKE, Inc. (NKE), which is a leading athletic footwear and apparel company.

When deciding on a strong candidate for long-term dividend growth, I like to look for recent leaders:

  • 1 month performance (+2.07%)
  • Historical Big Money signals

Below are the Big Money signals that NIKE has made since 2015.

Source: MAPsignals, End of day data sourced from Tiingo.com

On top of technicals, when deciding on the best dividend stock, you gotta see if the fundamental picture supports a long-term investment. NIKE has been a steady grower:

  • 3-year dividend growth rate (+10.9%)
  • Current dividend per share = .275
  • Forward yield = .81%
  • 3-year earnings growth rate (+8.22%)

The Bottom Line

ABT, COST, ADI, MCD, & NKE represent solid dividend choices. Given the strong historical dividend growth and Big Money signals, these stocks could be worth an extra look for a dividend investor.

Disclosure: the author holds long positions in personal and managed accounts in COST and long positions in managed accounts in ADI & NKE. He holds no positions in ABT & MCD at the time of publication.

To learn more about the MAPsignals process, click here: www.mapsignals.com

Disclaimer

https://mapsignals.com/contact/

For a look at all of today’s economic events, check out our economic calendar.

3 Semiconductor Stocks Testing Their All-Time High

Semiconductor stocks have outpaced the S&P 500 by around 25% so far this year as investors bet on insatiable demand, driven by 5G smartphones, artificial intelligence (AI) devices, and a rebound in auto and industrial end markets. Evercore ISI analyst C.J. Muse recently told clients he sees the group growing for the next six to eight quarters, with revenues jumping 14% in 2021 to $500 billion.

Below, we take a look at three leading chip stocks trading near their all-time high (ATH) and point out crucial technical levels worth watching.

Advanced Micro Devices, Inc.

Advanced Micro Devices, Inc. (AMD) designs and manufactures microprocessors for the computer and consumer electronics industries. The Santa Clara company entered its foray into supercomputing in May 2019, announcing that its chips would power Frontier – an exascale system designed to innovate in areas such as AI, machine learning, and data analytics. Analysts expect the chipmaker to post 40% sales growth for fiscal 2021, followed by another 26% in fiscal 2022.

Chart watchers should look for a breakout above a five-month trading range that has established clear resistance around the ATH at $96.37. Look for the bullish momentum to continue on a move through this level.

Analog Devices, Inc.

Massachusetts-based Analog Devices, Inc. (ADI) produces analog, mixed-signal, and digital signal processing chips. The company, which generates about 70% of sales from industrial and automotive end markets, forecasts first-quarter fiscal EPS to come in at $1.30 on revenues of $1.5 billion. This indicates respective top- and bottom-line line growth of 15% and 26% from a year earlier.

Chart wise, the shares broke out from an inverse head and shoulders pattern in early November, suggesting further upside. More recently, the price has remained above the 20-day SMA after reaching its ATH at $146.31 on Dec. 8.

Xilinx, Inc.

Xilinx, Inc. (XLNX) processes and designs integrated circuits for use in communications, data processing, industrial, consumer, and automotive industries. The computer chipmaker has made inroads into the data center market by designing programmable processors that speed up compressing videos and providing digital encryption. In October, Advanced Micro Devices announced that it has agreed to purchase Xilinx in a $35 billion all-stock deal.

After climbing to a new ATH at $151.54 earlier this month, the shares retraced to the April 2019 high, where previous resistance now acts as support. A push higher from this level in recent trading sessions indicates further momentum-based buying.

For a look at today’s earnings schedule, check out our earnings calendar.

Analog Devices in Advance Talks to Acquire Maxim Integrated; Analysts Optimistic on Outlook

Analog Devices Inc, an American multinational semiconductor company, said it is in advance talks to buy Maxim Integrated for over $17 billion, reported the Wall Street Journal, citing people familiar with the matter.

This deal is said to be the largest acquisition of Analog after it bought Linear Technology in a cash-and-stock deal valued at $14.8 billion four years ago. If this deal is finalized, Maxim shareholders will be paid in Analog Devices stock rather than in cash, allowing the company to enjoy the upside of the combined company’s shares.

Analog, founded in 1965 and headquartered in Massachusetts, counts Apple as one of its biggest customers. If the ongoing negotiations end successfully, a deal could be reached as early as this week.

Shares of both the companies rebounded over 50% since March trough amid the coronavirus-induced market rout. Analog closed 0.20% higher at $124.5 on Friday.

Analog Devices stock forecast

Seventeen analysts forecast the average price in 12 months at $127.00 with a high forecast of $145.00 and a low forecast of $100.00. The average price target represents a 2.01% increase from the last price of $124.50. From those 17, 12 analysts rated ‘Buy’, five rated ‘Hold’ and none rated ‘Sell’, according to Tipranks.

Morgan Stanley target price is $117 with a high of $143 under a bull scenario and $81 under the worst-case scenario. Analog Devices had its price target reduced by Robert W. Baird from $135.00 to $130.00. The firm currently has an “outperform” rating on the semiconductor company’s stock.

Evercore ISI raised the target price to $135 from $115 and Keybanc raised price target to $145 from $135. We expect it is good to buy as 50-day Moving Average and 100-200-day MACD Oscillator signals a strong buying opportunity.

Analyst view

“We are Equal-weight Analog Devices. We view Analog Devices as a core holding in the group long term, due to exposure to the right end markets and superior margins and FCF generation. However, the near term we see a number of headwinds to its business that keeps us equal weight,” Craig Hettenbach, equity analyst at Morgan Stanley noted.

“Notably, the company’s auto business was underperforming even before significant cuts to vehicle production and we expect continued pressure on factory automation and parts of instrumentation. On a positive note, the company has done a solid job of aligning opex to weaker revenue, thus mitigating some of the pressure on earnings,” he added.