Today’s Market Wrap Up and a Glimpse Into Wednesday

Stocks turned lower on Tuesday, putting an end to a five-day winning streak for the Dow Jones Industrial Average and S&P 500 indices. The Dow lost close to 300 points, or less than 1%. The S&P 500 and tech-leaden Nasdaq were similarly down fractionally.

Retail sales for the month of July fell 1.1% vs. June’s results, which is an indication that consumers are playing it cautious due to the spread of the delta variant. Shares of Home Depot weighed on the Dow on the heels of weaker than expected same-store sales.

In addition, the heightened geopolitical unrest as civilians and allies attempt to escape Kabul has added to the uncertain environment.

Stock index futures extended their declines on Tuesday evening in after-hours trading. The Dow, S&P and Nasdaq futures were all down modestly.

Stocks to Watch

  • AMC Entertainment gained 4% on the day. Retail investors are watching as the stock inches closer to the USD 40 level once again, which it last touched on in late July.
  • Shares of Tencent Music Entertainment Group, which is the streaming business of China-based tech company Tencent, plummeted 12% on Tuesday. The company reported better-than-expected profits but failed to meet revenue estimates. China is in the midst of a regulatory crackdown on technology stocks.
  • Walmart’s stock was up fractionally on the day after the U.S. retailer’s Q2 results beat Wall Street estimates. The retailer has been selling more grocery items and is also seeing more consumers return for back-to-school shopping.
  • Popular video game platform Roblox saw its shares tumble, but the stock ended off of its worst levels of the session. Roblox’s Q2 bookings, which are an indication of sales, were not as strong as Wall Street analysts were looking for. Now that the lockdowns are over, kids are not spending as many hours playing video games as a year ago.
  • Shares of cannabis stock Tilray are rising in after-hours trading. The Canada-based company revealed it has struck a deal with U.S.-based MedMen to acquire a majority stake in the cannabis retailer’s senior secured convertible notes. Tilray stands to benefit more if marijuana is legalized by the U.S. government.

Look Ahead

The retail earnings parade will continue on Wednesday, with companies such as Lowe’s, Target and TJX on tap to report their quarterly results. If Home Depot’s performance was any indication, Lowe’s stock could be in for a bumpy ride.

Best Stocks for August 2021

Outlier stocks are the ones that account for a lion’s share of the gains of the stock market. One thing they have in common is the same ones keep appearing. These 5 were on that list.

Great quality stocks have a few things in common. I focus on the following key fundamentals:

  • 1 Year Sales Growth
  • 3 Year Sales Growth
  • 1 Year Earnings Growth
  • 3 Year Earnings Growth
  • Profit Margin
  • Debt/Equity

Big Money Outliers meet strict criteria. All of these 5 stocks have great growing sales, earnings, and profits.

The real test is if Big Money is buying the stocks. By finding the ones most frequently on the Top 20 report, we get a quick filter for the best of the best. In order to even get on one instance of a MAP Top 20 report, the stock needs to have superior fundamentals and get some Big Money Buy Signals. The Top 20 stocks are the best 20 out of over 6,000 every week.

So, when they appear frequently over just six months, it means it has great potential.

So, let’s dive into the best potential outlier stocks to buy for August 2021. On this list we have one established outlier and 4 maturing stocks. The ones maturing are where we find potential undervalued future outliers. In summer volatile months, it can be a good time to size up stocks under a little pressure.

Up first is D.R. Horton, Inc. (DHI) which boasts great fundamentals (source FactSet) and big money buying:

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Celsius Holdings, Inc. (CELH) is a young up-and-comer. Fundamentals (source FactSet) are quickly strengthening and big money seems to love the stock:

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Up next is the ailing Tencent Music Entertainment Group (TME). The stock has been punished starting in February from the Archegos blow-up. Recent Chinese IPO and regulation fears have amped up selling. It’s pushed this strong grower down to incredibly cheap levels. The Chinese population will not stop streaming music because of a few scary headlines. Check out these numbers (source FactSet):

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Calix, Inc. (CALX) is a newer name on our radar. It boasts strong fundamentals (source FactSet) and a lot of big money interest.

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To round out the list this month, we have Brooks Automation, Inc. (BRKS). It’s got solid growth and low debt (Source FactSet). With lots of big money interest, it’s quickly maturing into a potential outlier stock:

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And there we have it. A great quality-stuffed list of the best potential outliers for August of 2021.

The way I found these stocks was fairly simple. I used MAPsignals.com to make the quantitative analysis of mounds of daily stock data fast and simple. Looking back at 30 years of outliers shows me 2 clear things:

  1. Outliers keep appearing time and time again.
  2. When they do, those can be winners for years to come.

When Big Money is buying the best quality stocks, we should always take notice. But when they become outliers, that’s where the big potential winners are.

The Bottom Line

DHI, CELH, TME, CALX, & BRKS represent the best stocks for August 2021. Based on strong fundamentals and Big Money buy signals year after year, these are worth further investigation.

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

Disclosure: the author holds no positions in DHI, CELH, TME, CALX, & BRKS at the time of publication.

Investment Research Disclaimer

Tencent Music Says facing Increased China Scrutiny, is Committed to Laws

This is the first time the Tencent group has publicly commented on the matter.

Reuters reported last month that Tencent Holdings, which controls music streaming company Tencent Music, was told by Chinese anti-trust regulators to pay a fine, give up exclusive music rights and sell some of its music assets. Tencent did not comment then.

The action against Tencent came amid a sweeping anti-trust clampdown by China on its internet giants.

“In recent months, we have received increased regulatory scrutiny from relevant authorities, and have been actively co-operating and communicating with the relevant regulators,” Tony Yip, chief strategy officer of Tencent Music, told an earnings conference call.

Yip declined to comment further or predict the outcome of the talks with the regulators, but said “we are committed to comply with all relevant laws and regulations, including those related to anti-trust.”

On Monday, Sony Music Entertainment announced digital distribution agreements with both Tencent Music and NetEase Cloud Music, ending an exclusive arrangement with Tencent Music.News of the regulatory scrutiny has pressured Tencent group shares over the past month, with Tencent Music down more than 14%.

(Graphic: Tencent Music shares: https://fingfx.thomsonreuters.com/gfx/mkt/gjnpwnklwvw/image-1621308296927.png)

Tencent Music beat quarterly profit and revenue estimates on Monday, driven by strong growth in subscription and advertising revenue from its music streaming platform. But its monthly active users numbers fell.

The company, known as China’s Spotify, has been expanding its music library through new partnerships and multi-year licensing deals. That, coupled with efforts to diversify its content base through long-form shows and live talk shows have helped lure more paying users as well as advertisers.

Although paying users for its music platform jumped, monthly active users (MAUs) for both music and social entertainment platforms declined by 6.4% and 14.2%, respectively.

“Users have stopped growing in general; last year was a high base due to the COVID,” said Tian Hou, analyst at T.H. Capital Research.

Profit attributable to equity holders of Tencent Music rose to 926 million yuan ($143.94 million) in the quarter from 887 million yuan a year earlier.

Excluding items, the company earned 69 yuan per American Depository Share (ADS), above estimates of 55 yuan per ADS.

Revenue rose 24% to 7.82 billion yuan, while analysts were expecting 7.73 billion yuan, according to IBES data from Refinitiv.

($1 = 6.4333 Chinese yuan renminbi)

(Reporting by Tiyashi Datta and Eva Mathews in Bengaluru, and Pei Li in Hong Kong; Editing by Shinjini Ganguli and Muralikumar Anantharaman)