Best ETFs For October 2021

Checking in on Big Money activity however, we see a tale of two markets.

Going to MAPsignals.com we can scan Big Money ETF Buys and Sells. We see ETF buying and selling activity is partly driving volatility. You’ll notice in 2020, there were clear patterns. Big selling (red bars) led markets lower followed by huge buying (blue bars) lifting markets. But this year is a washing-machine:

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Source: www.mapsignals.com

Long-term investors should look for ETFs (and their stocks), with great setups for the months ahead.

Remember: ETFs are just baskets of stocks so we need to look at them. MAPsignals specializes in scoring more than 6,000 stocks daily. If I know which stocks compose the ETFs, I can apply stock scores to the ETFs. Then I can rank them all strongest to weakest.

Let’s get to the 5 best ETF opportunities for October.

#1 SPDR S&P Regional Banking ETF (KRE)

Financials are hot. We see Big Money has been buying KRE earlier this year. We saw fresh buy signals recently too as possible interest rate hikes could benefit lenders:

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KRE holds solid stocks; one example is First Bancorp (FBP). Here are Big Money signals for FBP:

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#2 iShares Russell 1000 Growth ETF (IWF)

I’m looking for growth with a twist: Recently punished large-cap growth stocks should bounce at some point. IWF displayed lots of green signals this year. And when we see red selling on great ETFs (and their stocks) it can be a great opportunity.

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One great stock that IWF holds is Intuitive Surgical, Inc. (ISRG). It’s a long-time outlier with awesome fundamentals, recently announcing a 3-for-1 split. The multi-year chart below shows when red appears on great stocks, it’s usually an opportunity:

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#3 Invesco QQQ Trust (QQQ)

We all know QQQ – the NASDAQ 100 Index tracker. It’s like the Dow Jones of the 1920s. After some solid green, it’s pulled back substantially and should eventually bounce.

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One big winner inside of QQQ is Microsoft Corporation (MSFT). It’s an outlier stock:

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#4 Materials Select Sector SPDR Fund (XLB)

The first three ETFs were from the strong part of my ranked list. Now we look for bargains by identifying weaker ETFs holding stocks with strong fundamentals. The Materials sector faced pressure recently. Many companies face supply-chain headwinds. These are temporary. Long-term investors should see opportunity in temporary dislocations.

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It holds great stocks. One such winner is Sherwin-Williams Company (SHW). Big Money loves it. The multi-year chart says don’t bet against it:

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#5 iShares NASDAQ Biotechnology ETF (IBB)

Biotech pulled back substantially. News of Merck’s pill reducing hospitalizations and deaths by 50% hit the sector. I think it will recover nicely. The pullback offers a nice entry for a long-term investment:

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Great stocks in IBB are seeing reaction selling to the Merck news. One is Moderna, Inc. (MRNA). Vaccines will still get manufactured and sold. I believe stocks like these will recover and thrive:

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Here’s a Bog Money recap:

  • When Big Money buying pours in, stocks tend to go up
  • Red selling on great quality can be a great opportunity
  • Repeated buying usually means outsized gains

Let’s summarize here:

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KRE, IWF, and QQQ rank high. XLB and IBB however, rank lower on our list, due to weaker technicals. That’s why I think these weaker ETFs represent great potential bargains.

The Bottom Line

KRE, IWF, QQQ, XLB and IBB are my top ETFs for October 2021. Market volatility is hitting all stocks. They will eventually recover and thrive.

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

Disclosure: the author holds no positions in KRE, FBP, ISRG, QQQ, MSFT, XLB, SHW, IBB or MRNA but holds long positions in IWF in managed accounts at the time of publication.

Investment Research Disclaimer

Sherwin-Williams Uptrend May Be Over

Sherwin-Williams Co. (SHW) hit a 6-week low in early trading on Thursday after a Q3 profit warning and JPMorgan downgrade. The paint and coating giant has been one of the year’s top SP-500 performers, benefiting from a booming housing market as corporations adopt rules that allow many employees to work remotely. The phenomenon has dovetailed with nearly ideal demographics, with the Millennial generation rapidly entering their nestbuilding years.

Persistent Shortages Undermining Demand

Demand for coating materials remains highly robust across architectural, industrial, and residential building markets but raw material shortages are continuing to impact rollouts schedules and home availability. Analysts and industry insiders expected those shortages to ease as the year progressed, but the Delta variant has thrown an unexpected curve ball, with constraints now expected to persist well into 2022.

Chairman, President and CEO John G. Morikis lowered Q3 sales guidance on Wednesday, noting that “raw material availability negatively impacted consolidated sales by approximately 3.5% in our second quarter, and we previously communicated that we anticipated less of an impact in the third quarter. We are now expecting raw material availability, including the unfavorable impact of Hurricane Ida, to negatively impact our third quarter consolidated sales by a high-single digit percentage.”

Wall Street and Technical Outlook

Wall Street consensus yields an ‘Overweight’ rating based upon 14 ‘Buy’, 2 ‘Overweight’, 11 ‘Hold’, and 1 ‘Sell’ recommendation. The stock has gained more than 34% in the last six months, forcing many analysts to readjust their ratings. Price targets currently range from a low of $278 to a Street-high $345 while Sherwin-Williams opened the session about $26 below the median $320 target. Current pricing looks fairly valued, given these targets and this week’s warning.

Sherwin-Williams topped out near 200 in November 2019 and fell to a three-year low during March 2020’s pandemic decline. The subsequent uptick reached the prior peak in June, ahead of a July cup and handle breakout that attracted intense buying interest. The graceful uptrend since that time posted an all-time high at 310.43 last week, ahead of a pullback that’s now testing the 50-day moving average and August breakout above the May high at 293.05. Weekly Stochastic has rolled into a sell cycle at the same time, favoring a breakdown and decline toward 260.

For a look at all this week’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication.

Best ETFs For August 2021

Hendrik Bessembinder proved it with his research in his paper “Do Stocks Outperform Treasury Bills?”

That’s why I spend my time crafting portfolios chock full of outlier stocks. If you choose right, you’ll have enormous gains on your hands in the years to come.

Now, I pick my ETFs perhaps a bit differently than other people. I can find outlier ETFs by tracking the Big Money. But that alone isn’t enough: when I catalog the components and find outlier stocks underneath… that’s the winning recipe.

That’s how I found the best big money ETFs for August.

First, I looked at all ETFs making Big Money signals by going to MAPsignals.com and scanning the Big Money ETF Buys and Sells chart. I looked for recent days with heavy buying (the bright blue spikes):

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Source: www.mapsignals.com

Once I knew which ETFs Big Money was buying, then I wanted the best opportunities. Remember: ETFs are just baskets of stocks. MAPsignals specializes in scoring more than 6,000 stocks daily. Therefore, if I know which stocks make up the ETFs, I can apply the stock scores to the ETFs. Then I can rank them all strongest to weakest.

So let’s get to the 5 best ETF opportunities for August. Given that usual seasonal summer volatility is here, and the stock market is a constant washing machine of sector rotations, we are taking a barbell approach this month. We went for 3 of the strongest ETFs and 2 weaker ones while still having strong fundamental qualities

#1 Technology Select Sector SPDR Fund (XLK)

First off, tech is king again. We can see that Big Money has been plowing money into this ETF over the last year. We saw a few fresh buy signals recently too:

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XLK holds some awesome stocks and one great example is Fortinet, Inc. (FTNT). Below we see the Big Money signals for FTNT:

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#2 iShares U.S. Home Construction ETF (ITB)

Anyone trying to buy a home right now may find it’s tougher than usual, especially here where I live in South Florida. Building supplies and home inventory is scarcer than usual due to the pandemic. But with rates remaining low for the near future and construction booming, the setup is nice to take advantage of an ITB pullback from highs (don’t let the red sells confuse you- if there is selling on quality ETFs holding great stocks, it’s often an opportunity):

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One great stock that ITB holds is Sherwin Williams Co. (SHW). The paint maker has their product deployed in many new homes being built as well as older ones being remodeled. It has awesome fundamentals and some recent big money buying:

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#3 iShares Russell 1000 Growth ETF (IWF)

Growth has seen its ups and downs this year. But IWF holds some phenomenal stocks. It’s also collecting lots of green:

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As I said, IWF holds a plethora of great growth stocks. One big winner that caught my eye is Veeva Systems, Inc. (VEEV). It was a huge winner last year and is suddenly seeing a resurgence:

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#4 ARK Next Generation Internet ETF (ARKW)

Cathie Woods, the star of Wall Street last year has hit some head winds. Her ETFs have suffered a bit after a monster performance last year. The ARKW saw huge buying through February then hit a wall. But the pullback, I believe, is an opportunity because it holds some terrific companies:

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It holds one of my all-time favorite stocks, Nvidia Corp. (NVDA). This stock is quite possibly the biggest outlier of all. They make chips and graphics cards for computers and are the best at it. Big Money loves this stock:

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#5 Invesco Solar ETF (TAN)

Solar is a boom-bust type of sector. It’s fallen significantly off its highs. Big Money loved TAN leading up through February as well. Then it got crushed:

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But TAN holds some great solar stocks that make money. One industrials company in their portfolio is Fastenal Co. (FAST), which saw Big Money buying earlier in the year, and has rallied to 1-year highs:

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Here’s a reminder for what to look for in the charts above:

  • When Big Money buying pours in, stocks tend to go up
  • Repeated buying usually means outsized gains

Let’s summarize here: the top 3 ETFs (XLK, ITB, and IWF) for August score well in terms of MAPsignals’ scores. That means Big Money has been pouring into them:

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ARKW and TAN however, rank lower on our list, mainly due to weaker technicals. That’s why I think these weaker ETFs represent great potential bargains.

The Bottom Line

XLK, ITB, IWF, ARKW, and TAN are my top ETFs for August 2021. Tech, homebuilders, and growth stocks have performed well lately. My bet is they continue.

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

Disclosure: the author holds no positions in XLK, ITB, IWF, ARKW, TAN, FTNT, SHW, VEEV, NVDA, or FAST at the time of publication.

Investment Research Disclaimer

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Best Dividend Stocks August 2021

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 MA, SHW, WSM, EBAY, & ORCL.

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 Mastercard Inc. (MA), which is a large credit card company. They’ve been raising their dividend for years.

Let’s first start with the technical picture.

When deciding on a strong candidate for long-term dividend growth, I look for stocks leading in price:

  • 1-month performance (+7.08%)
  • Historical Big Money buy signals

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

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Source: MAPsignals.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, Mastercard has a strong dividend history:

  • 3-year dividend growth rate (+45.7%)
  • Current dividend per share = .44
  • Forward yield = .45%
  • 3-year earnings growth rate (+25.12%)

Next up is Sherwin-Williams Co. (SHW), which is a leading seller of paint materials. They’ve also been a dividend grower for years.

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 the recent performance:

  • 1-month performance (+4.95%)
  • Historical big money signals

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

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Source: MAPsignals.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, Sherwin-Williams has a nice dividend history. Their earnings growth has been stellar as well:

  • 3-year dividend growth rate (+16%)
  • Current dividend per share = .55
  • Forward yield = .77%
  • 3-year earnings growth rate (+11.87%)

Next, I’m looking at Williams-Sonoma, Inc. (WSM), which is a leading home retailer company. They have a solid dividend history.

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

  • 1-month performance (-1.15%)
  • Historical Big Money signals

Below are the big money signals that Williams-Sonoma has made since 2015. It’s recently showed a Big Money buy signal:

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Source: MAPsignals.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, WSM has a strong dividend history:

  • 3-year dividend growth rate (+9%)
  • Current dividend per share = .59
  • Forward yield = 1.5%
  • 3-year earnings growth rate (+46.58%)

Next, I’m looking at eBay, Inc. (EBAY), which is a leading online auction marketplace. They recently added a dividend.

When deciding on a strong candidate for long-term dividend growth, recent outperformance is great:

  • 1-month performance (+6.86%)
  • Recent Big Money signals

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

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On top of technicals, when deciding on the best dividend stock, let’s check up on the fundamentals. As you can see, eBay has recently started paying a dividend.

  • 1-2 year dividend growth rate (+14%)
  • Current dividend per share = .18
  • Forward yield = .98%
  • 3-year earnings growth rate (+130.48%)

Lastly, I’m looking at Oracle Corp. (ORCL), which is a leading enterprise technology company. They’ve been growing their dividend for years.

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

  • 1-month performance (+12.11%)
  • Recent Big Money signals

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

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Source: MAPsignals.com

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

  • 3-year dividend growth rate (+11%)
  • Current dividend per share = .32
  • Forward yield = 1.46%
  • 3-year earnings growth rate (+93.1%)

The Bottom Line

MA, SHW, WSM, EBAY, & ORCL 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 no positions in MA, SHW, WSM, EBAY, & ORCL at the time of filming.

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

Disclaimer