Stock Pick Update: Jan. 13 – Jan. 19, 2021

In the last five trading days (January 6 – January 12) the broad stock market has extended its record-breaking run-up. The S&P 500 index has reached new record high of 3,826.69 on Friday following new stimulus package hopes.

The S&P 500 has gained 2.40% between January 6 open and January 12 close. In the same period of time our five long and five short stock picks have gained 1.59%. Stock picks were relatively weaker than the broad stock market’s performance last week. However, our long stock picks have gained 3.35% outperforming the index . Short stock picks have resulted in a loss of 0.17%.

There are risks that couldn’t be avoided in trading. Hence the need for proper money management and a relatively diversified stock portfolio. This is especially important if trading on a time basis – without using stop-loss/ profit target levels. We are just buying or selling stocks at open on Wednesday and selling or buying them back at close on the next Tuesday.

If stocks were in a prolonged downtrend, being able to profit anyway, would be extremely valuable. Of course, it’s not the point of our Stock Pick Updates to forecast where the general stock market is likely to move, but rather to provide you with stocks that are likely to generate profits regardless of what the S&P does.

Our last week’s portfolio result:

Long Picks (January 6 open – January 12 close % change): ECL (+1.65%), CE (+3.80%), KMI (+7.87%), VLO (+1.45%), NVDA (+1.98%)
Short Picks (January 6 open – January 12 close % change): PLD (-1.43%), SPG (+1.70%), DUK (-1.13%), PEG (+1.97%), HON (-0.27%)

Average long result: +3.35%, average short result: -0.17%
Total profit (average): +1.59%

Stock Pick Update performance chart since Nov 18, 2020:

Let’s check which stocks could magnify S&P’s gains in case it rallies, and which stocks would be likely to decline the most if S&P plunges. Here are our stock picks for the Wednesday, January 13 – Tuesday, January 19 period.

We will assume the following: the stocks will be bought or sold short on the opening of today’s trading session (January 13) and sold or bought back on the closing of the next Tuesday’s trading session (January 19).

We will provide stock trading ideas based on our in-depth technical and fundamental analysis, but since the main point of this publication is to provide the top 5 long and top 5 short candidates (our opinion, not an investment advice) for this week, we will focus solely on the technicals. The latter are simply more useful in case of short-term trades.

First, we will take a look at the recent performance by sector. It may show us which sector is likely to perform best in the near future and which sector is likely to lag. Then, we will select our buy and sell stock picks.

There are eleven stock market sectors: Energy, Materials, Industrials, Consumer Discretionary, Consumer Staples, Health Care, Financials, Technology, Communications Services, Utilities and Real Estate. They are further divided into industries, but we will just stick with these main sectors of the stock market.

We will analyze them and their relative performance by looking at the Select Sector SPDR ETF’s .

Based on the above, we decided to choose our stock picks for the next week. We will choose our 5 long and 5 short candidates using trend-following approach:

  • buys: 2 x Financials, 2 x Materials, 1 x Consumer Discretionary
  • sells: 2 x Real Estate, 2 x Communication Services, 1 x Consumer Staples

Buy Candidates

AXP American Express Co. – Financials

  • Stock remains above its medium- and short-term upward trend lines
  • Possible breakout above the previous high
  • The resistance level is at $124 and support level is at $113

SPGI S&P Global Inc. – Financials

  • Possible upward reversal from the support level of $212-213
  • The resistance level is at $325 – short-term upside profit target level

SHW Sherwin Williams Co. – Materials

  • Stock broke above the short-term downward trend line – uptrend continuation play
  • The support level is at $710 and resistance level is at $740-750

Summing up , the above trend-following long stock picks are just a part of our whole Stock Pick Update . The Financials and Materials sectors were relatively the strongest in the last 30 days. So that part of our ten long and short stock picks is meant to outperform in the coming days if the broad stock market acts similarly as it did before.

We hope you enjoyed reading the above free analysis, and we encourage you to read today’s Stock Pick Update – this analysis’ full version. There, we include the stock market sector analysis for the past month and remaining long and short stock picks for the next week. There’s no risk in subscribing right away, because there’s a 30-day money back guarantee for all our products, so we encourage you to subscribe today .

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

Thank you.

Paul Rejczak
Stock Trading Strategist
Sunshine Profits – Effective Investments through Diligence and Care

* * * * *

Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

Stock Pick Update: November 25 – December 1, 2020

In the last five trading days (November 18 – November 24) the broad stock market has been fluctuating along 3,600 level. Yesterday it broke above short-term consolidation, as it got close to November 9 record high of 3,645.99 again. Is this a medium-term topping pattern or just some month-long consolidation before breaking to new record highs? The market is very hot right now .

The S&P 500 index has gained 0.65% between November 18 and November 24. In the same period of time our five long and five short stock picks have gained 6.57%. Stock picks were relatively much stronger than the broad stock market . Our long stock picks have gained a stunning 10.97% as they’ve outpaced the S&P 500 index on the long side. And short stock picks have resulted in a gain of 2.17%.

There are risks that couldn’t be avoided in trading. Hence the need for proper money management and a relatively diversified stock portfolio. This is especially important if trading on a time basis – without using stop-loss/ profit target levels. We are just buying or selling stocks at open on Wednesday and selling or buying them back at close on the next Tuesday.

If stocks were in a prolonged downtrend, being able to profit anyway, would be extremely valuable. Of course, it’s not the point of our Stock Pick Updates to forecast where the general stock market is likely to move, but rather to provide you with stocks that are likely to generate profits regardless of what the S&P does.

Last week, we modified our stock-picking strategy . Its year-long performance record shows that non-contrarian stock picks were outperforming contrarian stock picks by a large margin. Non-contrarian stock picks have gained 8.8% since Nov 19, 2019, and contrarian stock picks have lost 10.6% in the same period of time. Take a look at our Stock Pick Update performance chart. We included non-contrarian along with contrarian stock picks and the S&P 500 index performance (Tuesday’s open – Wednesday’s close):

Therefore we stopped picking stocks on a contrarian basis. Our 5 long and 5 short stocks portfolio is based solely on the trend-following approach.

Our last week’s Stock Pick portfolio result:

November 24, 2020

Long Picks (November 18 open – November 24 close % change): WMB (+5.02%), PXD (+15.29%), WFC (+16.63%), C (+11.69%), ROK (+6.22%)
Short Picks (November 18 open – November 24 close % change): TXN (+2.32%), QCOM (-2.22%), DG (+1.94%), BBY (-4.67%), HRL (-8.24%)

Average long result: +10.97%, average short result: +2.17%
Total profit (average): +6.57%

The new Stock Pick Update performance chart:

Let’s check which stocks could magnify S&P’s gains in case it rallies, and which stocks would be likely to decline the most if S&P plunges. Here are our stock picks for the Wednesday, November 25 – Tuesday, December 1 period.

We will assume the following: the stocks will be bought or sold short on the opening of today’s trading session (November 25) and sold or bought back on the closing of the next Tuesday’s trading session (December 1).

We will provide stock trading ideas based on our in-depth technical and fundamental analysis, but since the main point of this publication is to provide the top 5 long and top 5 short candidates (our opinion, not an investment advice) for this week, we will focus solely on the technicals. The latter are simply more useful in case of short-term trades.

First, we will take a look at the recent performance by sector. It may show us which sector is likely to perform best in the near future and which sector is likely to lag. Then, we will select our buy and sell stock picks.

There are eleven stock market sectors: Energy, Materials, Industrials, Consumer Discretionary, Consumer Staples, Health Care, Financials, Technology, Communications Services, Utilities and Real Estate. They are further divided into industries, but we will just stick with these main sectors of the stock market.

We will analyze them and their relative performance by looking at the Select Sector SPDR ETF’s .

Based on the above, we decided to choose our stock picks for the next week. We will choose our 5 long and 5 short candidates using trend-following approach:

  • buys: 2 x Energy, 2 x Financials, 1 x Industrials
  • sells: 2 x Utilities, 2 x Health Care, 1 x Consumer Staples

Buy Candidates

PXD Pioneer Natural Resources Co. – Energy

  • Stock accelerated its uptrend after breaking above the resistance level of $98
  • Uptrend continuation play
  • The next resistance level is at $116
  • Risk of a downward reversal

WMB Williams Cos., Inc. – Energy

  • Uptrend continuation play
  • The support level is at $21.50
  • Risk of a downward reversal

AXP American Express Co. – Financials

  • Bullish flag pattern breakout play
  • The support level is at $110

Summing up , the above trend-following long stock picks are just a part of our whole Stock Pick Update . The Energy and Financials sectors were relatively the strongest in the last 30 days. So that part of our ten long and short stock picks is meant to outperform in the coming days if the broad stock market acts similarly as it did before.

We hope you enjoyed reading the above free analysis, and we encourage you to read today’s Stock Pick Update – this analysis’ full version. There, we include the stock market sector analysis for the past month and remaining long and short stock picks for the next week. There’s no risk in subscribing right away, because there’s a 30-day money back guarantee for all our products, so we encourage you to subscribe today .

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

Thank you.

Paul Rejczak
Stock Trading Strategist
Sunshine Profits – Effective Investments through Diligence and Care

* * * * *

Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

American Express Posts Lower-Than-Expected Earnings For Q3 as COVID-19 Slowdown Bites

American Express, an American multinational financial services corporation, reported a lower-than-expected profit in the third quarter as people cut on their spending given the income and job uncertainty due to the COVID-19 led economic recession, sending its shares down about 3% on Friday.

American Express Company reported third-quarter net income of $1.1 billion, or $1.30 per share, compared with net income of $1.8 billion, or $2.08 per share, a year ago. That was lower than the market consensus of $1.35 per share. Total revenue, excluding interest expense, plunged 20% to $8.8 billion.

Global consumer services group reported third-quarter net income of $855 million, compared with $991 million a year ago.

“Overall, 3Q had some puts and takes, as AXP missed on PPNR (given 8% higher expenses), although beat on EPS due to better revs/provision. NCOs were ahead of forecast, while DQs came in better. The billed business was in-line in the qtr, and improving from trough levels seen earlier this year, although at a slower rate vs. peers (-20% YoY on an FXN basis),” said John Hecht, equity analyst at Jefferies.

“We look to the call for further outlook on N-T billed business growth, updates on credit performance, as well as commentary on expenses for the balance of the year.”

American Express shares plunged about 3% to $101.75 in the pre-market trading on Friday; the stock is down nearly 15% so far this year.

Executive comments

“While our business continues to be significantly affected by the impacts of the pandemic, our third-quarter results have increased our confidence that our strategy for managing through the current environment is the right one,” said Stephen J. Squeri, Chairman and Chief Executive Officer.

“Since the lows of mid-April, we have seen a steady recovery in our overall spending volumes. In fact, we had positive year-over-year growth in non-T&E spending, which has long accounted for the large majority of our overall volumes. While credit remains strong, with delinquencies and net write-offs at the lowest levels we have seen in a few years, we remain cautious about the direction of the pandemic and its impacts on the economy, which is reflected in our reserve levels.”

American Express Stock Price Forecast

Thirteen equity analysts forecast the average price in 12 months at $105.46 with a high forecast of $127.00 and a low forecast of $88.00. The average price target represents a 0.64% increase from the last price of $104.79. From those 13 equity analysts, three rated “Buy”, six rated “Hold” and four rated “Sell”, according to Tipranks.

Morgan Stanley gave a base target price of $115 with a high of $157 under a bull scenario and $55 under the worst-case scenario. The firm currently has an “overweight” rating on the payment services company’s stock. Oppenheimer raised their stock price forecast of American Express to $115 from $100 and Stephens upped their target price to $106 from $101.

Several other analysts have also recently commented on the stock. Bank of America lowered shares of American Express from a “neutral” rating to an “underperform” rating and cut their price target to $95 from $106 in Sept. In July, Deutsche Bank lowered their price objective to $106 from $108 and set a “buy” rating. Daiwa Capital Markets restated a “neutral” rating and set a $100.00 price objective.

Analyst Comments

“Revenue growth takes a near-term hit, down 16% in FY20 driven by a sharp slowdown in T&E spend. We see T&E declining 60% y/y in 2020, driving a 19% y/y decline in total card spend in FY20. While T&E will likely take at least a few years to recover, the key to the American Express (AXP) story is a bottoming of trends which we expect happens in 2H20; return to work sets the stage for a near 20% rebound in card spend in ’21, driving revenue growth of 11% in ’21,” said Betsy Graseck, equity analyst at Morgan Stanley.

“Credit quality best among card issuers on super-prime focus, though AXP exposure to small business (~25% of loans + charge card receivables) is a risk in the near-term,” Graseck added.

Check out FX Empire’s earnings calendar

American Express Could Sell Off To March Low

Dow component American Express Co. (AXP) reported mixed Q2 2020 results last week, with $0.29 per-share (EPS) beating profit estimates, while revenue of $7.67 billion fell well short of $8.25 billion expectations. Revenue contracted a staggering 29.2% year-over-year, undermined by the ongoing impact of the COVID-19 pandemic. The release triggered a modest sell-the-news reaction, dropping the stock 1.4% to a 2-week low.

American Express Heavily Exposed To Business Travel

The travel services giant has been pummeled by the pandemic, losing significant income since corporations worldwide stopped business travel in the first quarter and sent employees home to work through virtual meeting spaces. Many industry experts now believe that many of Amex’s blue chip customers will remain sidelined well after the infection runs its course, addicted to the lower costs of conducting business digitally, rather than in person.

Executives summed up the tough quarter, noting “while our second quarter results reflect the challenges of the current environment, we remain confident that our strategy for navigating this period of uncertainty is the right one. Our customers continue to be engaged with our products and services; we have a productive and dedicated workforce; our capital and liquidity levels remain strong; and we continue to focus on those areas most critical to our long-term growth.”

Wall Street And Technical Outlook

Wall Street consensus has grown increasing cautious on American Express in the last two months, unlike Mastercard Inc. (MA) and Visa Inc. (V), who have continued to book significant income through high volumes of digital transactions. It’s currently rated as a ‘Hold’, based upon 6 ‘Buy’ and 9 ‘Hold’ recommendations. Three analysts are now telling shareholders it makes sense to sell positions and move to the sidelines. Price targets range from a low of $85 to a street high $119 while the stock is trading about $6 below the median $101 target.

Technically-speaking, there’s little to love about American Express, which looks like a better short sale opportunity than long-term investment through the second half of 2020. It posted an all-time high in January, fell more than 50% into March, and reversed at the 200-day moving average in June, settling in the lower half of the 6-month range. Ominously, accumulation readings have dropped to depressed March levels, predicting that price may soon follow.