Domino’s Stock: A Big Money Favorite

So, what’s Big Money? That’s when a stock goes up in price alongside chunky volumes. It’s indicative of institutions betting on the shares.

Smart money managers are always looking for the next hot stock. And Domino’s has many fundamental qualities that are attractive.

This sets up well for the stock going forward. But how the stock trades is what points to more upside. As I’ll show you, the Big Money has been consistent in the shares for years.

You see, fund managers are always looking to bet on the next outlier stocks…the best in class. They spend countless hours sizing up companies, reading reports, speaking to analysts…you name it. When they find a company firing on all cylinders, they pounce in a big way.

That’s why I’ve learned how critical it is to gauge Big Money demand for shares. To show you what I mean, have a look at all of the big money signals DPZ has made the last year.

The last few days have seen Big Money activity, too. Each green bar signals big trading volumes as the stock ramped in price. Red signals are showing big selling in the shares:

Source: www.mapsignals.com, End of day data sourced by Tiingo.com

In 2021 it’s been a volatile one based on the chart. But DPZ recently made 4 of these rare green signals. This came after a big selloff earlier this year when growth stocks were under pressure. Generally speaking, recent green bars mean more upside is ahead.

Now, let’s check out a few technicals grabbing my attention:

  • YTD outperformance vs. market (+2.26% vs. SPY)
  • YTD outperformance vs. discretionary ETF (+8.52% vs. XLY)

Outperformance is huge for leading stocks.

Next, it’s a good idea to check under the hood. Meaning, I want to make sure the fundamental story is strong too. As you can see, Domino’s has been growing rapidly. Take a look:

  • 3-year sales growth rate (+14.1%)
  • 3-year earnings growth rate (+28.28%)

Marrying great fundamentals with technically superior stocks is a winning recipe over the long-term.

In fact, Domino’s has been a top-rated stock at my research firm, MAPsignals, multiple times the last few years. That means the stock has buy pressure, strong technicals, and growing fundamentals. We have a ranking process that showcases stocks like this on a weekly basis.

DPZ has been a constant Big Money favorite since 2015. And since its first appearance on this report, it’s up +323%:

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

Let’s tie this all together.

Domino’s continues to fire on all cylinders technically alongside growing sales. With many high-quality growth stocks beginning to breakout with Big Money, I like the long-term story of the stock.

The Bottom Line

The DPZ rally likely has further upside. Big money buying in the shares is signaling to take notice. Shares could be positioned for a bounce soon. Given the historical gains in share price and strong fundamentals, this stock could be worth a spot in a growth-oriented portfolio.

Disclosure: the author holds long positions in DPZ in personal and managed accounts at the time of publication.

Learn more about the MAPsignals process here.

Disclaimer

Ciena Shares Are Ramping With This Signal

So, what’s Big Money? That’s when a stock goes up in price alongside chunky volumes. It’s indicative of institutions betting on the shares.

Smart money managers are always looking for the next hot stock. And Ciena has many fundamental qualities that are attractive.

This sets up well for the stock going forward. But how the stock trades is what points to more upside. As I’ll show you, the Big Money has been consistent in the shares for years.

You see, fund managers are always looking to bet on the next outlier stocks…the best in class. They spend countless hours sizing up companies, reading reports, speaking to analysts…you name it. When they find a company firing on all cylinders, they pounce in a big way.

That’s why I’ve learned how critical it is to gauge Big Money demand for shares. To show you what I mean, have a look at all of the big money signals CIEN has made the last year.

The last few days has seen Big Money activity, too. Each green bar signals big trading volumes as the stock ramped in price:

Source: www.mapsignals.com, End of day data sourced by Tiingo.com

In 2021 alone, CIEN made 3 of these rare signals. This came after a big selloff late last year. Generally speaking, that means more upside is ahead.

Now, let’s check out a few technicals grabbing my attention:

  • YTD outperformance vs. market (+.15% vs. SPY)
  • YTD outperformance vs. technology ETF (+5.57% vs. XLK)

Outperformance is huge for leading stocks.

Marrying great fundamentals with technically superior stocks is a winning recipe over the long-term.

In fact, Ciena Corp. has been a top-rated stock at my research firm, MAPsignals, multiple times the last few years. That means the stock has buy pressure, strong technicals, and growing fundamentals. We have a ranking process that showcases stocks like this on a weekly basis.

CIEN has been a constant Big Money favorite since 2018. And since its first appearance on this report, it’s up +125%:

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

Let’s tie this all together.

Ciena Corp. continues to fire on all cylinders technically alongside growing sales. With many high-quality growth stocks beginning to breakout with Big Money, I like the long-term story of the stock.

The Bottom Line

The CIEN rally likely has further upside. Big money buying in the shares is signaling to take notice. Shares could be positioned for a bounce soon. Given the historical gains in share price and strong fundamentals, this stock could be worth a spot in a growth-oriented portfolio.

Disclosure: the author holds no position in CIEN at the time of publication.

Learn more about the MAPsignals process here.

Disclaimer

Real Estate & Energy Stocks Are Getting Scooped Up

Looking at the market head-on doesn’t give you the full story. That’s why I like to look under the hood for insights.

A great way to do that is to look at the MAPsignals Big Money Index. It measures the rate of Big Money buying and selling in stocks. If the index moves up, expect the market to ramp. If the BMI falls, that means sellers are increasing. That’s usually bearish for stocks.

Unsurprisingly, it’s recent action is very similar to the market’s return… .i.e. it’s been quiet too:

Source: MAPsignals.com

But, under the surface of the Big Money Index are individual stock and sector movements. And 2 sectors are benefiting from outsized buying…which is positive for the groups.

Energy And Real Estate Stocks See Big Buying

Each week at my research firm, MAPsignals, we isolate the prior week’s buying and selling by sector. Anything that’s meaningful, we highlight in yellow. It marks that the sector saw 25%+ of its universe saw outsized buying or selling.

This just points to increasing momentum for the groups. And to show how these sectors have been steadily getting Big Money buy signals, the below sector charts track’s the groups’ momentum.

The Real Estate Big Money Buy Index chart plots a 5-week moving average of buys in the group relative to its sector size. This is a great way to measure the velocity of buying.

If the green line is increasing, buying is ramping:

Source: MAPsignals.com

Now, let’s check out Energy:

Clearly, both groups are attracting capital.

The bottom line is this: The market appears to be range-bound, but taking a deeper dive we can see certain areas booming.

Keep Real Estate and Energy stocks on your radar. Chances are they have more upside in the coming weeks.

Disclosure: the author holds no position in SPY, IYR, XLE or the S&P 500 at the time of publication.

Learn more about the MAPsignals process here: www.mapsignals.com

Disclaimer

360 DigiTech, Inc.: Following the Big Money

So, what’s Big Money? That’s when a stock goes up in price alongside chunky volumes. It’s indicative of institutions betting on the shares.

Smart money managers are always looking for the next hot stock. And 360 DigiTech has many fundamental qualities that are attractive.

This sets up well for the stock going forward. But how the stock trades is what points to more upside. The Big Money has been crazy about the shares this past year.

You see, fund managers are always looking to bet on the next outlier stocks…the best in class. They spend countless hours sizing up companies, reading reports, speaking to analysts…you name it. When they find a company firing on all cylinders, they pounce in a big way.

That’s why I’ve learned how critical it is to gauge Big Money demand for shares. To show you what I mean, have a look at all of the big money signals QFIN has made the last year.

The last few days has seen Big Money activity, too. Each green bar signals big trading volumes as the stock ramped in price:

Source: www.mapsignals.com, End of day data sourced by Tiingo.com

In 2021 alone, QFIN made 22 of these rare signals. Generally speaking, that means more upside is ahead.

Now, let’s check out a few technicals grabbing my attention:

  • 1 year outperformance vs. market (+222% vs. SPY)
  • 1 year outperformance vs. Financials ETF (+197% vs. XLF)

Outperformance is huge for leading stocks.

Next, it’s a good idea to check under the hood. Meaning, I want to make sure the fundamental story is strong too. As you can see, 360 DigiTech has been growing sales at a breakneck pace. Take a look:

  • 3-year revenue growth rate (+504.91%)
  • 3-year earnings growth rate (-761%)

Source: FactSet

Marrying great fundamentals with technically superior stocks is a winning recipe over the long-term.

In fact, 360 DigiTech has been a top-rated stock at my research firm, MAPsignals, multiple times the last year. That means the stock has buy pressure, strong technicals, and growing fundamentals. We have a ranking process that showcases stocks like this on a weekly basis.

QFIN has been a constant Big Money favorite since 2021. And since its first appearance on this report, it’s up +129%:

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

Let’s tie this all together.

360 DigiTech continues to fire on all cylinders technically and fundamentally. With many high-quality growth stocks beginning to breakout with Big Money, I like the long-term story of the stock.

The Bottom Line

The QFIN rally likely has further upside. Big money buying in the shares is signaling to take notice. Shares could be positioned for a bounce soon. Given the historical gains in share price and strong fundamentals, this stock could be worth a spot in a growth-oriented portfolio.

Disclosure: the author holds no position in QFIN at the time of publication.

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

Learn more about the MAPsignals process here.

Disclaimer

https://mapsignals.com/contact/

Celsius Holdings: Big Money Is All Over This Stock

So, what’s Big Money? That’s when a stock goes up in price alongside chunky volumes. It’s indicative of institutions betting on the shares.

Smart money managers are always looking for the next hot stock. And Celsius has many fundamental qualities that are attractive.

This sets up well for the stock going forward. But how the stock trades is what points to more upside. The Big Money has been crazy about the shares this past year.

You see, fund managers are always looking to bet on the next outlier stocks…the best in class. They spend countless hours sizing up companies, reading reports, speaking to analysts…you name it. When they find a company firing on all cylinders, they pounce in a big way.

That’s why I’ve learned how critical it is to gauge Big Money demand for shares. To show you what I mean, have a look at all of the big money signals CELH has made the last year.

Last week there was one too. Each green bar signals big trading volumes as the stock ramped in price:

Source: www.mapsignals.com, End of day data sourced by Tiingo.com

In 2021 alone, CELH made 8 of these rare signals. Generally speaking, that means more upside is ahead.

Now, let’s check out a few technicals grabbing my attention:

  • 1 year outperformance vs. market (+608% vs. SPY)
  • 1 year outperformance vs. Staples ETF (+626% vs. XLP)

Outperformance is huge for leading stocks.

Next, it’s a good idea to check under the hood. Meaning, I want to make sure the fundamental story is strong too. As you can see, Celsius has been growing sales at a breakneck pace. Take a look:

  • 3-year revenue growth rate (+54.09%)
  • 3-year earnings growth rate (-23.06%)

Marrying great fundamentals with technically superior stocks is a winning recipe over the long-term.

In fact, Celsius has been a top-rated stock at my research firm, MAPsignals, multiple times the last year. That means the stock has buy pressure, strong technicals, and growing fundamentals. We have a ranking process that showcases stocks like this on a weekly basis.

CELH has been a constant Big Money favorite since 2020. And since its first appearance on this report, it’s up +369%:

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

Let’s tie this all together.

Celsius Holdings continues to fire on all cylinders technically and fundamentally. With many high-quality growth stocks beginning to breakout with Big Money, I like the long-term story of the stock.

The Bottom Line

The Celsius Holdings rally likely has further upside. Big money buying in the shares is signaling to take notice. Shares could be positioned for a bounce soon. Given the historical gains in share price and strong fundamentals, this stock could be worth a spot in a growth-oriented portfolio.

Disclosure: the author holds no position in CELH at the time of publication.

Learn more about the MAPsignals process here.

Disclaimer

Stocks are Getting Bought Again

Fact

We can’t see most of the light spectrum.

Quote

Be sure to take the lens cap off before photographing. – Elliot Erwitt

Let’s start with an overall view of the market. We can easily see the trend of the S&P 500 for 18 months:

Chart, histogram

Description automatically generated

It went up, down, then up with some bumps along the way. We all know experiencing it was not that simple. But, let’s look at the internals.

Here, we’ll plot the MAPsignals version: the Big Money Index. It tracks all unusual Big Money buying and selling on a 25-day moving average. Notice how the picture changes. Have a look:

Chart, histogram

Description automatically generated

As we can see in this small sample (only 18 months out of 31.5 years of data) when markets get overbought (above the red line), it can lead to a fall. And when markets get oversold (below the green line), it can precede a monster rally. Oversold is rare. Only 1% of the last 10 years it triggered. Recently the BMI has been range bound, frustrating market timers.

Like most things market-related, the BMI is a great tool when it’s trending. When it’s not, it can cause traders to get anxious. So how do we get a better sense of when the Big Money Index will start ramping again?

To answer that question, look at the SPY (S&P 500 ETF) chart with a study I did. I calculated a 20-day moving average of daily buy signals. Then, to separate higher than average periods of buying, I made a simple formula: if that day’s buying was bigger that the 20-day average give it a “1.” If it was less, give it a “0.” So below in green reveals days when buying was more than the 20-day moving average:

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

The picture of the market is coming into focus. Unsurprisingly, when buy signals were larger than average, markets usually rallied.

Now let’s keep going. Let’s do the same type of study for selling. When one day’s selling was higher than the 20-day average, it got a “1.” Otherwise, it got a “0.” Check it out:

Chart, histogramDescription automatically generated
Source: MAPsignals, End of day data sourced from Tiingo.com

When selling picks up, markets tend to fall.

So where are we now and where are we going? Let’s zoom in. What we notice is that buying and selling happened in May. That makes sense with the big rotation out of Technology stocks and into real-economy sectors.

But the storm suddenly passed. And recently things have been calm (no big buying or selling). That is until Thursday May 27th. The buyers showed up:

Chart, histogramDescription automatically generated
Source: MAPsignals

Real Estate, Communications, and Discretionary stocks saw the love. Utilities were largely for sale. Let’s breakdown the buying by sector:

TableDescription automatically generated with low confidence
Source: MAPsignals

Finally, look at the quality of those buy signals. Discretionary stocks had a 3-year earnings growth average of just +1.3%. And 3-year sales growth rate of -347%. Contrast that with Technology stocks seeing an average 3-year earnings growth rate of +44% and 3-year sales growth rate of +22% (source FactSet).

What’s my take on all of this? Quality growth stocks are starting to get bought after a long quiet period. Stocks hurt by COVID-19 are the new growth areas.

It’s simple. Earnings, surging profits, and a reopened economy is very bullish for stocks.

We could be setting up for the next leg higher.

Here’s the bottom line: The data is turning bullish for stocks. Buyers are showing up and based on history, markets could be ready to blast off.

Disclosure: the author holds no position in SPY or the S&P 500 at the time of publication.

Learn more about the MAPsignals process here: www.mapsignals.com

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.

Are Growth Stocks Ready To Blastoff

Fact

You’ll spend 2 years of your life waiting in line.

Quote

Skate to where the puck is going, not to where it’s been. – Wayne Gretzky

Many investors, myself included, are waiting to know when this tech/growth selloff will be over. And we’re also waiting, holding multiple stocks that may be down. This spells peak impatience and anxiety for some investors.

Since the reset that happened around the presidential election, things were humming along just fine. The QQQs (the NASDAQ 100 ETF) rallied +25%. There was stock market cheer.

Then came February 12th and with it some stock market schizophrenia:

  • The QQQs proceeded to drop -10.8% from February 12th until it troughed March 8th.
  • Then the tech-heavy index staged a huge +12.3% rally to new highs.
  • Then it promptly fell another -7.3% to its recent 5/12 trough.
  • Then it surged +3%.
  • The QQQs now sit +9% higher than the March 8th low.
Source: www.mapsignals.com, End of day data sourced from Tiingo.com

The problem is this: Many of the outlier stocks with high growth haven’t participated. Let me correct that statement: many of my stocks haven’t… if you’re like me, you’ve been looking at your portfolio saying: “where’s the beef?”

Stocks, however, suddenly seem to be breathing new life in the past few sessions. So, it’s a fair question: Is the growth pummeling over?

I only know one way to get answers and that’s looking at data.

I tell you all the time how the story is really told in the data that lies under the surface. Well sometimes the story is told in the data under that data- like two layers down.

Last week showed signs for possible optimism. But was it real? I had to dig two layers down to find my answer.

Here’s a prime example of what I mean when I say data 2 layers down:

Last week we saw 261 stock buys and 102 stock sells. 71% buys is a strong reading and nice to see. But I wanted to see what else was happening beneath that. Remember, to get a buy signal in our model, not only do you need higher prices on big volume, but stocks also need to pierce a prior high of roughly 3 months. Many of the outlier stocks are far below that high. So, they are not reflected in this table here:

source: www.mapsignals.com

While this table tells us there was heavy buying in Materials and Energy stocks it only tells part of the story. This table shows us 363 stock signals. Let me remind you, Big Money activity breaks down in two ways: Big Money Signals and (refined from that pool) Big Money Buy or Sell Signals. This table is the latter. Big Money Signals are stocks trading in a big way but not breaking out or breaking down.

Looking at last week’s stocks and ignoring buys and sells, I saw 2,800 stocks that traded in a big way. 560 per day is right around average. With the QQQs finishing the week flat form the week before, what can we understand from these 2800 stocks?

I collected all of them. I then filtered for stocks that score well on my ranking system for strong fundamentals. I looked for stocks with strong 3-year sales and earnings growth. I was left with 686 stocks having high growth. Of those, 349 were positive for the week, gaining an average of +4.6%.

That means 12.5% of all Big Money Signals last week were growth stocks getting bought. They broke down like this:

source: www.mapsignals.com

Let’s look at this in another light by comparing last week’s second level data to the past few months. I mentioned that tech stocks peaked February 12th. So, I went and looked at all buy and sell signals since then and there were 5,109 of them. Of those, 1,302 were sells… or 25%.

Of those 1302 sells, there were 349 high-growth stocks getting bought last week but not yet high enough to make a signal. Put simply, 27% of all the stocks making sell signals since 2/12/21 were trading higher on big volume last week… and they were growth companies.

It’s one thing to look at indexes staging what looks like a relief rally and breathe a sigh of relief. It’s another thing altogether to dig two layers deep and find out that the stock market’s abuse victims since February are visibly getting some much-needed love.

It may be too early to tell if the growth bloodletting is over, but there are data-driven positive signs to get excited about.

Last thing: remember I said in order to make a buy signal stocks need to pierce above a roughly 3-month high. 11 weeks ago today was March 8th. That was the low for the QQQs.

That means it will be easier for resurging growth stocks to make buy signals in upcoming days and weeks.

By studying the market’s history and its patterns, we can start to formulate views on where things are going. Data since February has been ugly for growth stocks. But recent data is showing signs of promise and a potential reprieve. I intend to use this data to try and see where things are going.

Wayne Gretzky is perhaps the greatest athlete of all-time. He said it best: “skate to where the puck is going, not to where it’s been.”

Here’s the bottom line

Growth stocks are doing better recently. We think there could be higher levels in store in the near-term.

Disclosure: the author holds no position in QQQ at the time of publication.

Learn more about the MAPsignals process here: www.mapsignals.com

Disclaimer

Best Growth Stocks June 2021

The hallmark way we go about finding the best stocks…the outliers, is by looking for quiet Big Money trading activity.

Oftentimes, that can be institutional activity. We’ll go over what that looks like in a bit. But, the 5 stocks we see as long-term candidates are SQ, CYBR, TTD, NOW, & FIVE.

For MAPsignals, we believe the true tell on the near-term trajectory of the stock lies in the trading activity of the stock. The bottom line here is that oftentimes the manner in which a stock trades can oftentimes alert you to the forward fundamental picture more so than by simply looking at a company’s financials alone. We want the odds on our side when looking for the highest quality stocks.

Up first is Square, Inc. (SQ), which is a leading point-of-sale company. They help businesses seamlessly transact with their consumers. They also own the popular Cash App.

When we decide on the strongest candidate for long-term growth, we consider many technical areas important. Square has been pulled lower like many Technology stocks:

  • YTD performance (-6.65%)
  • YTD underperformance vs. technology ETF (-9.91% vs. XLK)
  • Historical big money signals

Just to show you what our Big Money signal looks like, have a look at all of the top buy signals SQ has made recently. It’s had a strong chart over the past few years, too. Green bars are showing that Square was likely being bought by a Big Money player according to MAPsignals. It’s clear there’s a lot of green historically with this stock. That’s exactly what you want to see when looking for a great growth name.

Chart, line chart Description automatically generated
Source: MAPsignals, End of day data sourced from Tiingo.com

On top of technicals, you need to look under the hood to see if the fundamental picture supports a long-term investment. As you can see, Square’s numbers have been strong:

  • 3-year sales growth rate (+64.45%)
  • 3-year earnings growth rate (-.66%)

Next up is CyberArk Software, Ltd. (CYBR), which is a leading cyber security company. The stock has been a huge winner over the years.

When we decide on the strongest candidate for long-term growth, we look at technicals. Sometimes a pullback is healthy. Here’s where CYBR stacks up:

  • YTD performance (-25.83%)
  • YTD vs. technology ETF (-29.09% vs. XLK)
  • Historical big money signals

While the stock has underperformed recently, look below. These are the top buy signals CyberArk has made since 2015. Clearly the Big Money has been consistent for years:

Chart, histogram Description automatically generated
Source: MAPsignals, End of day data sourced from Tiingo.com

On top of a great long-term technical picture, one should also look under the hood to see if the fundamental picture supports a long-term investment. As you can see, CyberArk has solid fundamentals:

  • 3-year sales growth rate = +21.53%
  • 3-year earnings growth rate = +34.3%

Another growth name to consider is Trade Desk, Inc. (TTD), which is a online advertising platform. The stock has been in beast-mode for years.

When we decide on the strongest candidate for long-term growth, we want to see a history of big money buying the shares. TTD has that. Also, the shares have pulled back massively in 2021:

  • YTD performance (-36.52% vs. SPY)
  • YTD underperformance vs. software ETF (-32.64% vs. IGV)

Below are the big money signals TTD has made since 2016. That’s a chart of a rocket:

Chart, line chart Description automatically generated
Source: MAPsignals, End of day data sourced from Tiingo.com

On top of a strong technical picture, one should also look under the hood to see if the fundamental picture supports a long-term investment. Trade Desk’s revenue growth rate is impressive. I expect earnings to rebound in the coming years:

  • 3-year sales growth rate = +39.94%
  • 3-year earnings growth rate = +65.72%

Number 4 on the list is ServiceNow, Inc. (NOW), which is a leading enterprise cloud computing solutions company. The shares have been in bull-mode the past couple of years.

When we decide on the strongest candidate for long-term growth, we consider many technical areas. ServiceNow has pulled back like many Tech names:

  • YTD performance (-16.93%)
  • YTD underperformance vs. software ETF (-13.05% vs. IGV)
  • Historical big money signals

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

Chart, line chart Description automatically generated
Source: MAPsignals, End of day data sourced from Tiingo.com

On top of the technical picture, one should also look under the hood to see if the fundamental picture supports a long-term investment. As you can see, NOW has been growing nicely:

  • 3-year sales growth rate = +32.73%
  • 3-year earnings growth rate = +.49%

Our last growth candidate is Five Below, Inc. (FIVE), which is specialty discount retailer. They have been growing rapidly for years.

When we decide on the strongest candidate for long-term growth, we consider many technical areas important to success with a few for FIVE being:

  • YTD performance (+5.56%)
  • YTD outperformance vs. discretionary sector (+.22% vs. XLY)
  • Historical big money signals

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

Chart Description automatically generated
Source: MAPsignals, End of day data sourced from Tiingo.com

On top of the technical picture, one should also look under the hood to see if the fundamental picture supports a long-term investment. Five Below has grown over the past few years:

  • 3-year sales growth rate = +15.55%
  • 3-year earnings growth rate = +10.53%

The Bottom Line

SQ, CYBR, TTD, NOW, & FIVE represent top growth stocks for June 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 a long position in SQ in personal accounts, but no positions in CYBR, TTD, NOW, & FIVE at the time of publication.

Investment Research Disclaimer

The $217 Million Dollar Pizza: Don’t Let These 3 Stocks Get Away Like Bitcoin

Price is what you pay, value is what you get.

The infamous Warren Buffett quote sums up investing vs trading perfectly.

The short-term trade is all about instant gratification. Take a pizza for instance. We all know it’s bad for us, but it tastes so good. Maybe that’s why Americans eat 3 billion pizzas and spend $38 billion on them each year.

Short-term trades feel great when we win, just like pizza feels great going down. But later, that pizza might not feel so great. And long-term, we know it clogs arteries and does all sorts of other damage. So, when we tee-up a quick trade poised to clip a profit, the greed center of our brains is hoping to get to the pleasure center.

Short-term traders are often looking for free money.

Maybe this was what Laszlo Hanyecz was thinking on May 22nd, 2010. He was hungry and bought two pizzas in Jacksonville, Florida. Only he made the first real-world bitcoin transaction paying 10,000 BTC for them. Surely, at the time it felt like free money – or rather – free pizza. Who foresaw bitcoin’s future?

Maybe the pizza seller did. Because now those two pizzas are worth $217 million each.

If ever there was an example of someone who likely regretted the short-term trade and wish they’d held for the long-term, it might be poor Laszlo.

There are two sides to every coin (except perhaps bitcoin). What the short-term trade offers in terms of quick excitement, the long-term trade severely lacks. Buy-and-hold investing has a stuffy stigma. Let’s face it, being patient and waiting years for monster gains is boring. Not many want to do it.

That is until one looks up 5, 10, or 30 years from now at someone else’s successful long-term investments.

Imagine you had sold 2 pizzas for 10,000 bitcoins 11 years ago. And then never did anything with the cryptocurrency. Naturally, you’d have forgone a fast in-and-out trade trying to clip a few percent. You also would need the long-term view on bitcoin’s potential. But had you done nothing, you would have turned roughly $16 bucks into nearly half-a-billion dollars.

That, my friends, is the power of long-term investing.

At MAPsignals, we see the investing-world through the lens of stocks: specifically, outliers.

What’s an outlier?

An outlier stock is a stock that makes insane gains, more than most other stocks. Professor Hendrick Bessembinder proved that for the past nearly 100 years, only 4% of all stocks accounted for 100% the gains above treasuries. That 4% represents the outliers.

If you missed the bitcoin boat, don’t worry- I did too. But I did catch some monster outliers that helped me get closer to my long-term investing goals. And today, you’re in luck, because I’m about to share 3 outlier stocks with close ties to bitcoin and cryptocurrency. These stocks represent a great way to own awesome businesses, and simultaneously get exposure to cryptocurrency.

Nvidia Corporation (NVDA)

NVDA is a Technology stock focused on specialized semiconductors. It has great sales and earnings growth and a juicy 62% gross profit margin. It has reasonable debt levels and a reasonable P/E ratio. Their chips are popular with bitcoin miners.

Now, let’s take a look at the Big Money data. What’s that? We have a process that looks for high-quality stocks seeing buy activity in their shares. Only the best ones show up on our weekly Top 20 reports.

What we want to see is a repeat offender. Look how Nvidia has been a Big Money magnet over the years:

Times on the Top 20 since July 1st, 2014: 54

Outlier status: OUTLIER

First signal: 2000-06-05

Performance since first signal: +5433.85%

Here’s a chart of all of those rare signals:

 

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

Next up is PayPal Holdings, Inc. (PYPL)

PYPL is a Financials stock focused on Consumer Finance Services. It has great sales and earnings growth and a juicy 55% gross profit margin. It has reasonable debt levels and a reasonable P/E ratio. They also own the popular digital payments app, Venmo.

Recently, PayPal has allowed their users (and Venmo users) to transact in bitcoin.

Now, let’s look at the Big Money profile for PYPL.

BIG MONEY DATA:

Times on the Top 20 since July 1st, 2014: 45

Outlier status: OUTLIER

First signal: 2016-09-20

Performance since first signal: +520.53%

 

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

Lastly, there’s Square, Inc. (SQ)

SQ is a Discretionary stock focused on Retail Industry Software. It has great sales and earnings growth and a juicy 28% gross profit margin. It has high debt levels and a high P/E ratio.

They have point-of-sale technology for merchants and the popular Cash App. The latter allows users to transact in bitcoin.

Let’s look at the historical Big Money profile for Square.

BIG MONEY DATA:

Times on the Top 20 since July 1st, 2014: 12

Outlier status: MATURING

First signal: 2017-10-17

Performance since first signal: +535.82%

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

Here’s the bottom line: If you missed out on bitcoin’s massive run, there are stocks that are correlated to the cryptocurrency’s success. If you’re looking for stock exposure that can benefit from the rise in bitcoin, consider Nvidia, PayPal, & Square.

Disclosure: the author holds long positions in PYPL & SQ in personal accounts and PYPL in managed accounts, but no position in NVDA at the time of publication.

Learn more about the MAPsignals process here: www.mapsignals.com

Disclaimer

https://mapsignals.com/contact/

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

Growth Stocks Can Rally Further If Inflation Worries Fade

Fact: The flags on the moon are white.

Quote: Stay committed to your decisions, but stay flexible in your approach. – Tony Robbins

It’s human to want permanence: something to set and forget. I strive for it with data when analyzing stocks. I like things in neat little boxes, but sometimes life has other plans.

Clearly, I’m not alone.

It appears my flags might have turned white too.

When data was disintegrating last week, I naturally was ready with a forecast. Then along came Thursday and Friday.

The growth bounce… toxic since March, growth suddenly caught relief.

Here’s what I think is going on:

Earnings season has been stunning with nearly 90% of companies beating analyst earnings and sales expectations. The average earnings beat was north of 20%. Despite that, growth stocks have been under attack for weeks. It’s agonizing for growth investors like me.

The main culprit was inflation. Fears of vicious inflation intensified selling of anything with a growth multiple. Meaning, the stocks that trade with an earnings premium got hit hard. Investors pay up to get that growth, because when humming full swing, it’s hard to beat.

Biden’s tax plan to penalize high-earners, long-term capital gains, and corporate taxes was a sudden slap for growth. Dividend stocks have been getting scooped on the assumption that increased dividend taxation is one taboo the administration won’t get through. Tough tax-talk only intensified anxieties over peak earnings momentum. Factoring in growth being heavily concentrated in “stay-at-home” and tech stocks is another nail in the coffin. A reopening economy and rapid vaccination fueled demand for value stocks. Those previously beaten down sectors poised to rise in a non-lockdown economy.

Things hit fever-pitch on Wednesday as the CPI showed +.8% vs. expectations of +.2%. That’s what Wall Street feared most. Inflation is here. That sent NASDAQ stocks even further down the drain.

But then, on Thursday the PPI gained .6%, verifying that prices are rising everywhere.

Growth stocks should have kept falling. But on Friday, growth began to bounce. Investors noticed lumber’s price fall starting May 10th continued. Iron Ore and 10-year Treasury yields were dropping too:

Barchart.com

That indicates we might have hit peak inflation fears. Fear is a powerful motivator, but only goes so far. Eventually logic prevails. If inflation scares climaxed, growth stocks are ready to bounce. Friday finally brought relief.

My flags suddenly look bleached out. Data has an awesome but not perfect track record.

The BMI fell hard into Thursday. But selling evaporated on Friday.

Source: www.MAPsignals.com

Zooming in, you can see Friday the BMI actually popped slightly from 68.6% to 69.3%:

Source: www.MAPsignals.com

Living by data means anticipation becomes more difficult than investing with gut feel. Everything is a trade-off. Keep that in mind when asking if lows are in for growth stocks.

The sudden turn-on-a-dime of Big Money data tells me that probably yes- growth lows are in near-term. But I need to see data confirmation to be convinced. Naturally, that means it’s difficult to time tops and bottoms when waiting for data confirmation.

Investors looking for growth discounts might find this a great time to dip toes. The highest-quality growth names have been beaten to a pulp. But as I’ve said many times before: outlier stocks bounce hardest and highest.

I went and bought some great stocks on sale last week, the week before, and the week before. Timing is always tough- I may be underwater near-term. But I know companies that grow their sales and earnings with a long history of doing so, will be just fine in the future. The hard part is waiting to be proven right.

Again, data is on my side.

I looked at MAPsignals daily stock data on Saturday morning as of Friday’s close. 559 stocks and ETFs saw unusually large trading volumes: Big Money trading. Out of those, 107 were ETFs leaving 452 stocks. I removed 64 stock buys and 11 stock sells (duplicates).

The remaining stocks is where it gets interesting. Of the 377 stocks remaining, I wanted to see what was getting bought in big money style but not yet high enough in price for a buy signal. I removed stocks not positive on the day- which was roughly 10%, or 37 stocks.

From there, I filtered out stocks with zero or negative sales and earnings growth over the past 3 years. I was left with 93 stocks. This means 25% of the stocks getting bought “under-the-surface” had excellent sales and earnings growth. In other words, the big bounce on Friday was well concentrated in growth stocks.

Interestingly, this is how it broke down by sector:

That screams short covering and bargain hunting in beaten down growth. One day does not a market make, but it certainly feels better knowing there are data points for a growth bounce.

One final thought: the tax deadline was delayed until May 17th. It’s human nature to procrastinate and leave things until the last minute. Especially when your stocks are suddenly falling. It is entirely possible some of this growth selling has been intensified to raise cash for tax bills. In an up-trending market like a majority of the last 12 months, it makes sense to leave the asset be and only sell the best near tax-time. When assets fall, it’s human nature to wait for a comeback. But the clock was still ticking, and now tax-day is here.

Data indicated more deterioration. That is until Friday. I’m committed to data even when it changes suddenly… especially when it changes suddenly. Ripe for the times, I remember when Tony Robbins said: “stay committed to your decisions, but stay flexible in your approach.”

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

Disclosure: the author holds no positions in SPY or NASDAQ at the time of publication.

Investment Research Disclaimer

Peloton (PTON): Fear or Cheer?

Since its January peak at just over $167, it’s down nearly 50% to roughly $86 as of this writing. Below you can see that Peloton saw buying in the shares in late 2020 and January.

Recently, it’s fallen far:

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

Recent news broke that Peloton is recalling its Tread and Tread+ treadmills. This is due to 70+ safety incidents and a child’s tragic death.

Investors who bought into the growth story might be wondering if it was a colossal mistake.

To answer that, let’s first let’s revisit why Peloton looked like a great setup in the first place:

Peloton boasts:

  • 1-year sales growth of 100%
  • 3-year sales growth of 103%
  • 1-year earnings growth of 62%
  • Gross profit margin of 45%

It’s also owned by the big boys and girls with 78% institutional ownership. Peloton was also collecting lots of Big Money buy signals according to MAPsignals data: logging 12 Big Money buys since July 1st, 2014.

That just means that the shares were increasing in price as volumes increased.

Things looked great for Peloton to continue its massive bull run. But suddenly in mid-February, growth stocks met headwinds. Since then, high-growth stocks fell from grace in favor of value and dividend stocks.

PTON was already falling 30-40% when tragedy struck for some pets and children and their new product is now in recall for repair or refund. They’ve sold roughly 125,000 tread units as high as $4200 each. The company said this will impact Q4 sales by -$165 million.

This is definitely not great for the short-term at least. It’s got a lot of investors spooked and running for the hills.

The question remains though: Is it time to grab it or bag it?

Let’s first look at their most recent earnings report.

Peloton just reported a 3-cent EPS loss, beating the 12-cent loss expectations for their fiscal third quarter. They posted $1.26 billion in sales, beating estimates of $1.1 billion. Revenue grew a shocking 141% from a year ago.

PTON showed $239.4 million in subscription revenue, up 144%. This is a key point. The company looks like it sells exercise equipment, but they sell content. Their classes and content costs are a subscription fee paid monthly.

In a shareholder letter, Peloton explained they have over 4.4 million members (as of December 31, 2020). Total members grew 22.2% since the prior quarter, up from 3.6 million. At $39 a month, that’s $2 billion a year. And it’s growing.

Even with the recall impact, Peloton is still guiding $915 million in revenue for Q4, 2021.

First, the exodus from growth stocks dragged down the stock. Then terrible headlines hit further amplifying the stock’s pullback.

This reminds me of a current titan that was once a volatile young growth story: Tesla, Inc. (TSLA).

In 2013 news broke of a battery fire in the Model S after a driver ran over a large metal object. On October 3rd, 2013 a Reuters article read:

  • Two days after a video of a burning Tesla electric car went viral, the “green car” maker grappled with ways to contain the damage as investors shaved $2.4 billion off the company’s market value.
  • Tesla shares fell 4.2 percent to close at $173.31 on the Nasdaq. That came on top of a 6.2 percent drop on Wednesday.

I remember the media said Tesla stock was done. The story was ruined, and no one would buy their cars. The stock got smoked. Remember: it was trading at $173.

Now look at this chart:

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

The battery and subsequent engine fires from crashes, look tiny in the rearview mirror now. TSLA peaked at around $883 in January and then pulled back to $635 as of this writing. From the bad 2013 headlines the stock is up 267% after peaking up 410%.

Very few companies change the game like Tesla did for cars, or Peloton for exercise.

Remember, there tends to be gloomy headlines from time to time for nearly all stocks. Years later, investors will likely forget them. When you have a great growth story on your hands, it doesn’t always mean a smooth ride.

In the case of Peloton, it’s hit a snag. But times like these could represent potential opportunity for the long-term investor. Only time will tell.

Disclosure: the author holds a long position in TSLA in personal accounts at the time of publication, but no position in PTON.

Learn more about the MAPsignals process here.

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

Why Your Portfolio Drops While Indexes Soar

That’s the narrative I’ll share with you today…we’ll observe what’s really going on with stocks. And to do that we’ll take a look under the hood of the market.

Growth stocks are getting sold, while value stocks are gaining steam.

But, on the surface, market indices like the S&P 500 (SPY ETF) are practically at all-time highs. In fact, the Big Money Index, which tracks the Big Money buys and sells in stocks is hovering right near overbought levels:

Source: www.MAPsignals.com

To see the full story, let’s tear apart the Big Money Index and breakdown last week’s activity by sector. What you can observe is clear: Growth stocks are getting pummeled and reopen stocks are getting bought.

Below is a chart showing stock buys and sells by sector. Off to the right, in yellow is what’s important. If a sector saw 25% or more of its universe bought or sold, it’s highlighted.

Look how nearly every group traded on big volumes:

And that’s the sector rotation that’s going on. Groups like Materials (XLB), Energy (XLE), Industrials (XLI), Financials (XLF), & Discretionary (XLY) are seeing Big Money buys.

Groups seeing Big Money sells are: Technology (XLK), Utilities (XLU), & Healthcare (XLV).

It’s as clear as day what’s going on when looking at data. Growth is being abandoned, while cyclicals gather capital. But, let’s keep going.

What about ETFs?

We can see this pattern emerging as well. Below is our ETF Buys and Sells Chart. It tracks the daily Big Money Buys and Sells for ETFs. Last week you can see there were a few sells (red bars) and a lot of buys (blue bars):

Source: www.mapsignals.com

Friday had a big ramp in buying. Last week in total had 141 ETF buys and 12 sells. Here’s where the rotation is:

Buys:

  • Commodities
  • Value
  • Dividends
  • Industrials
  • Miners
  • Homebuilders

Sells:

  • Growth
  • Solar
  • Clean Energy
  • Biotech
  • Short-Term Bonds

There’s a lot of pain in growth-heavy ETFs. But 2 of them stuck out:

  • ARKG ARK Genomic Revolution
  • ARKK ARK Innovation

These are Cathie Wood’s ETFs that are full of monster growth stocks. Clearly investors are fearful of a lot of things right now…higher interest rates being the main culprit.

So, what’s an investor to do? Long-term, stay the course is what I say. Rotations are part of the game and when the crowd gets fearful…do some shopping.

The bottom line is this: There’s a lot going on with stocks even as indices are at all-time highs. Don’t get spooked out of your good stocks. Right now I’m taking some wisdom from the great Yogi Berra. He said, “You can observe a lot by just watching.”

There’s a lot of good stocks getting sold with abandon. If you pay attention to data, you might observe some good deals out there.

Disclosure: the author holds no positions in SPY, XLB, XLE, XLI, XLF, XLY, XLK, XLU, XLV, ARKG, & ARKK at the time of publication.

Learn more about the MAPsignals process here.

PayPal Stock Sees Big Money Buying

This comes just months after they gave PayPal users crypto trading privileges. Talk about moving into a very hot space. Whether you like it or not, bitcoin and other cryptocurrencies are here to stay.

And I think it’s a great move by PayPal. They are quickly becoming a big player in that landscape.

This sets up well for the stock going forward. But there’s another story going on that points to more upside. The Big Money has been crazy about the shares…for years.

You see, smart money managers are always looking to bet on the next outlier stocks…the best in class. They spend countless hours sizing up companies, reading reports, speaking to analysts…you name it. When they find a company firing on all cylinders, they pounce in a big way.

That’s why I’ve learned how critical it is to gauge Big Money demand for shares. To show you what I mean, have a look at all of the big money signals PYPL has made the last year.

Up until February, each green bar signals big trading volumes as the stock ramped in price:

Source: www.mapsignals.com, End of day data sourced by Tiingo.com

In 2021 alone, PYPL made 8 of these rare signals. Generally speaking, that means more upside is ahead.

Now, let’s check out a few technicals grabbing my attention:

  • 1 year outperformance vs. market (+67.26% vs. SPY)
  • 1 year outperformance vs. Financials ETF (+50.63% vs. XLF)

Outperformance is huge for leading stocks.

Next, it’s a good idea to check under the hood. Meaning, I want to make sure the fundamental story is strong too. As you can see, PayPal has been growing sales and earnings at a breakneck pace. Take a look:

  • 3-year revenue growth rate (+17.96%)
  • 3-year earnings growth rate (+36.06%)

Source: FactSet

Those are killer growth rates. Marrying great fundamentals with technically superior stocks is a winning recipe over the long-term.

In fact, PayPal has been a top-rated stock at my research firm, MAPsignals, for years. That means the stock has buy pressure, strong technicals, and awesome fundamentals. We have a ranking process that showcases stocks like this on a weekly basis.

Since 2016, PYPL has been a constant Big Money favorite. And since its first appearance on this report, it’s up +560%!

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

Let’s tie this all together.

PayPal continues to fire on all cylinders technically and fundamentally. The latest news of allowing Venmo users to transact in crypto is encouraging to their growth story. I like the long-term story of the stock.

The Bottom Line

The PayPal rally likely has further upside. Big money buying in the shares is signaling to take notice. Shares could be positioned for a bounce soon. Given the historical gains in share price and strong fundamentals, this stock could be worth a spot in a growth-oriented portfolio.

Disclosure: the author holds a long position in PYPL in personal and managed accounts at the time of publication.

Learn more about the MAPsignals process here.

Why I’m Not Worried About Higher Capital Gains Taxes

Fact: Einstein didn’t fail math.

Quote: We don’t pay taxes. Only the little people pay taxes. – Leona Helmsley

But wait- there’s more:

  • George Washington never had wooden teeth. His dentures were made of gold and ivory which browned, appearing like wood.
  • According to physicists, a penny dropped form the Empire State Building is too flat or small to reach enough momentum to kill anyone.
  • Napoleon wasn’t short- he was 5’5” which was average height at the time. British cartoonist James Gillray drew caricatures depicting him as small. It stuck.

I could go on and on… “truth” is often myth because once crowd-think gets going, it’s hard to stop it, even if untrue.

I’m telling you this because there are market bears out there. This is inherently good because without bears, bulls couldn’t make money. And when everyone’s a bull, then it’s probably time to be a bear. But most of the time bears just add a grumpy downward resistance on stock prices for bulls to fight against. So generally, there’s no shortage of fearmongering in the stock market.

The latest scare for stocks is two-fold:

  1. President Biden will jack up taxes and kill the economy.
  2. The sky-high P/E ratio of the S&P 500 virtually ensures an imminent melt-down.

I’ll dig into these and tell you why I’m not scared. I prefer to see cute little teddy bears, not rabid snarling claws-out beasts.

Let’s get to it.

TAXES

No one is dying for higher taxes, certainly not me. But let’s assume the unlikely worst: Biden’s tax proposal passes without obstacle. The first instinct is to think it’s cataclysmic for stocks. But would it be?

Looking back since the 1950s, tax hikes may not actually pose significant hurdles to investors after all.

When we hear higher taxes, we think sinking stocks. But that’s like a short Napoleon. Fact is, for 70+ years, stocks showed better than average returns when tax increases hit. Naturally, other economic factors helped influence market action, but stocks went up when taxes rose.

There are corporate, personal, and capital gains taxes. Only 10% of the last 70 years were their significant increases: all three going up in 1993. Both personal and capital gains taxes went up in 2013.

In 2018, markets cheered as the Trump administration slashed top corporate taxes to 21% and top personal taxes to 37%. The long-term capital gains rate is now 20%. If Congress does nothing, these tax rates will end in 2026 and rates would return to the top rates of:

  • 35% for corporate taxes
  • 39.6% for personal taxes
  • still 20% for long-term capital gains.

Biden is essentially proposing the changes take effect sooner. They are really aimed at those who earn more than $400k a year. The reality is this mainly affects the wealthy and for most people, it doesn’t even matter. But if you’re reading this, there’s a fair chance it would affect you. For instance, if you live in Manhattan, your top rate could go to 58%: 39.6 cap rate + 3.8 health care + 3.8 NYC tax + 11 state = 58%.

Yuck.

But let’s just say these taxes do go into effect. It turns out stocks actually reacted opposite to how you might think. Since 1950, taxes went up 13 times. During that time, the S&P 500 posted above-average returns according to research done by Fidelity sector strategist, Denise Chisholm. She pointed out that the year before and during a tax increase, all but one time, stocks rose. They went up 100% of the time corporate taxes were raised:

Source: Haver/FMR

This also extended down to individual sectors. She said that the Discretionary sector counterintuitively did better during tax increase periods. Her research also showed bonds also did the opposite of what was expected. Instead of attracting capital, bonds actually floundered during the same periods.

Here’s the likely reality: President Biden needs to come to the table with more than he expects getting done: negotiation 101. In the words of Louis Navellier: “Democrats need to win the mid-term elections next year. They can’t do that if Biden wrecks the economy. He needs to push a lot and walk away with some compromise.”

Essentially: this is all optics. The truth is, it is entirely unclear if Biden’s campaign tax talk will ever make it into law.

HIGH P/E

P/Es are really high. The S&P 500’s P/E ratio is 42.57:

Source: Multipl.com

For those preoccupied with it, that’s worrisome.

But here’s the deal: earnings are rising- fast. With price divided by earnings, a larger denominator means a shrinking P/E. Earnings are rising to meet price, not prices falling to meet earnings. According to FactSet, 60% of the S&P 500 reported Q1 results so far. Of those, 86% beat EPS estimates. If trends continue, that will be the highest since FactSet started tracking in 2008. In aggregate, earnings are 22.8% above estimates.

Source: FactSet

BIG MONEY

Despite a choppy market last week, Big Money data is on the rise. The Big Money Index just ripped to 77.4%:

Source: Mapsignals.com

And buying was focused in Real Estate, Materials, Industrials, Financials, and Discretionary:

Source: MAPsignals

This is not bearish people:

  • A rising Big Money Index
  • Buying in infrastructure and reopen sectors
  • Virtually no selling to speak of

Before we get carried away by talk of taxes taking us off a cliff, it pays to know the facts. Most of us don’t want taxes, but most of us don’t know that historically it’s not a big deal. And the hard truth is, if the wealthy will get taxed, they are the ones who can pay to minimize the effect. Loopholes and tax strategies are rarely employed by the middle and lower class. That’s because good accounting is expensive. And that’s the rub: taxes aimed at levelling the playing field likely won’t: “We don’t pay taxes. Only the little people pay taxes.” – Leona Helmsley

To learn more about MAPsignals’ Big Money Index please visit.

Disclosure: the author holds no positions in SPY at the time of publication.

Investment Research Disclaimer

Worried About A Market Crash? Consult The Big Money Index

And Consider These Stocks When It Does

They get cranky, roll over, fall out of bed, and hit their heads on the floor. It’s part of life, and most people don’t like when it happens.

But what if I told you there’s a tool that can alert you before markets roll-over?

It may sound too good to be true. But here I’ll introduce you to my favorite indicator that can do exactly that. I’ll show you how it works, what it’s saying now, and I’ll even show you examples of outlier stocks that weather the inevitable storms particularly well over the long-run.

The Big Money Index (BMI) is a great market timing indicator. It was developed by MAPsignals, a research firm dedicated to tracking Big Money investors in real-time. The idea is this: JPMorgan did a study estimating that 10% of all daily stock trading volume is due to fundamental discretionary traders. The lion’s share of trading is institutional.

If we can identify when huge investors are moving in and out of stocks in an unusual way, we can try and be ahead of the crowd. This way we can have a possible advantage and ride their coattails. We used our Wall Street experience of handling big stock orders to help us create this indicator. It’s our best guess of where the Big Money is heading on a daily basis.

When we add up all the daily buy and sell signals and smooth them out over a 25-day moving average, we get the Big Money Index.

Right now, it’s indicating higher prices for stocks. When it rises, like now, usually the market follows:

It looks like this:

MAPsignals.com

We’ve back-tested this indicator going back over 30 years. When overbought, (80% or more) markets crest shortly thereafter often preceding a market correction. These are rare occurrences: The BMI was overbought just 20% of the last 3 decades.

Rarer still is an oversold BMI: only 4% occurred the last 30 years. When the Big Money Index goes deeply oversold, that’s when history says stocks are bound to rise. Markets usually rocket higher weeks and months later.

Here are some recent examples of the Big Money Index accurately foreshadowing market peaks and troughs:

  • January 2018 peak
  • December 2018 trough
  • February 2020 peak
  • March 2020 trough
  • September 2020 peak
  • October 2020 Election volatility
  • November 2020 rally

If a deeply oversold Big Money Index is great for identifying buy opportunities, then how do we know when to side-step a market drop?

Below is the same BMI chart. Only we’ve added periods where the 10- day average was below 65%. That just basically means, the BMI was weakening. Here’s what we saw over the last three years:

When red comes, it generally lasts a while. This also corresponds to a falling then recovering index. When red starts, indexes usually fall. Red can only stop when Big Money buying lifts the average above 65%.

To summarize, when the BMI is falling, the S&P 500 is mostly flat:

From 2012, we see similar:

To avoid being left holding the bag when the next market drop comes, watch for a falling Big Money Index. Remember, Big Money means we’re trying to track institutional investors. They usually have an edge over everyone else. They tend to have the best market information out there. So, it’s best to watch them!

Now you know about the BMI. You know you can use it to potentially manage your risk. You know you should watch out for a falling BMI to alert you of danger ahead.

They say the best defense is a good offense. I told you I’d let you know which stocks to hold when that inevitable cranky stock market comes. To find them, I went back over the following periods of market turmoil:

Each of these drops was preceded by a falling Big Money Index. And each time the market troughed, I went and looked at which stocks came out with flying colors.

Market volatility is inevitable. But when it comes, we’ve found the best defense is owning outlier stocks. These stocks are the best of the best. They have growing sales, earnings, and profits. And they are also getting scooped up by Big Money investors.

Hidden in MAPsignals buy and sell signals are high-quality stocks that can offer opportunity when things get bumpy.

You’ll notice in the 6-year charts below, the green bars indicate Big Money buying when stocks have superior fundamentals. These are mother-outliers. All that green, we call the stairway to heaven. But even through periods of wicked volatility, these stocks do incredibly well over the long run.

Facebook Inc. (FB) rose 293% since 2015:

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

Mastercard Inc. (MA) rose 378% over the same period:

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

Nvidia Corp. (NVDA) rose an astounding 3,067% since 2015:

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

Compare those stocks with the SPY SPDR S&P 500 ETF which gained 129%.

These outlier stocks are ones I would want to own when the next market rough patch comes.

So, there you have it: a detailed playbook on how to forecast, avoid, and even defend against the next market crash. We all know it’s coming eventually, but now you can be armed with tools to help you through.

The next time markets get cranky, you just might already be out of sight avoiding it until happier days.

The Bottom Line

Trying to understand what the Big Money is doing is important. Currently the Big Money Index is pointing higher, which is near-term bullish. When it heads lower, I’ll be paying attention. I believe in looking for quality companies in times of turmoil.

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

Disclosure: the author holds no positions FB, MA, NVDA, & SPY at the time of publication.

Investment Research Disclaimer

https://mapsignals.com/contact/

Best Dividend Stocks May 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 AAPL, BLK, LOW, AVGO, & GRMN.

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 Apple, Inc. (AAPL), which happens to be the largest company on planet earth. They are a technology firm with popular products like iPhones, iPads, & iTunes.

Let’s first start with the technical picture.

When deciding on a strong candidate for long-term dividend growth, I like to look for stocks seeing upward momentum:

  • 1 month performance (+10.98%)
  • Historical Big Money buy signals

Below are the Big Money signals Apple has made since 2017. Green bars are showing that AAPL was likely being bought by an institution according to MAPsignals. Typically, the more Big Money signals, the stronger the stock:

Chart, line chart Description automatically generated

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, AAPL has a strong dividend history:

  • 3-year dividend growth rate (+9.8%)
  • Current dividend per share = .205
  • Forward yield = .61%
  • 3-year earnings growth rate (+13.26%)

Next up is BlackRock, Inc. (BLK), which is a leading asset manager company. They have a long dividend history and shares have been in an uptrend recently.

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 (+7.98%)
  • Historical big money signals

Below are the big money signals that BlackRock has made since 2017. It’s clear the stock has seen green recently.

Chart, line chart Description automatically generated

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, BlackRock has a nice dividend history. Their earnings growth has been stellar as well:

  • 3-year dividend growth rate (+13.2%)
  • Current dividend per share = 4.13
  • Forward yield = 2.03%
  • 3-year earnings growth rate (+2.14%)

Next, I’m looking at Lowes Companies Inc. (LOW), which is a leading home improvements chain. 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 (+5.92%)
  • Recent Big Money signals

Below are the big money signals that Lowe’s has made since 2017. It’s clear the stock has been in a nice uptrend:

Chart, line chart Description automatically generated

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, LOW has a strong dividend history:

  • 3-year dividend growth rate (+13.3%)
  • Current dividend per share = .60
  • Forward yield = 1.19%
  • 3-year earnings growth rate (+34.66%)

Next, I’m looking at Broadcom, Inc. (AVGO), which is a leading semiconductor company. The shares have been on a tear this year.

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

  • 1 month performance (-.16%)
  • Recent Big Money signals

Below are the Big Money signals that Broadcom has made since 2017.

Chart Description automatically generated

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, Broadcom has a strong dividend history.

  • 3-year dividend growth rate (+47.2%)
  • Current dividend per share = 3.60
  • Forward yield = 3.09%
  • 3-year earnings growth rate (+174.18%)

Lastly, I’m looking at Garmin Ltd. (GRMN), which is a leading navigational company.

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

  • 1 month performance (+8.99%)
  • Historical Big Money signals

Below are the Big Money signals that Garmin has made since 2017.

Chart, histogram Description automatically generated

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. Garmin has been a steady grower:

  • 3-year dividend growth rate (+5.6%)
  • Current dividend per share = .67
  • Forward yield = 1.9%
  • 3-year earnings growth rate (+13.09%)

The Bottom Line

AAPL, BLK, LOW, AVGO, & GRMN 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 GRMN. He doesn’t hold positions in AAPL, BLK, LOW, & AVGO at the time of publication.

To learn more about the MAPsignals process, click here.

Disclaimer

 

Best Growth Stocks May 2021

The hallmark way we go about finding the best stocks…the outliers, is by looking for quiet Big Money trading activity.

Oftentimes, that can be institutional activity. We’ll go over what that looks like in a bit. But, the 5 stocks we see as long-term candidates are ACN, ADBE, CROX, RH, & RGEN.

For MAPsignals, we believe the true tell on the near-term trajectory of the stock lies in the trading activity of the stock. The bottom line here is that oftentimes the manner in which a stock trades can oftentimes alert you to the forward fundamental picture more so than by simply looking at a company’s financials alone. We want the odds on our side when looking for the highest-quality stocks.

Up first is Accenture Plc (ACN), which is a leading professional services firm. They have been cruising higher for years.

When we decide on the strongest candidate for long-term growth, we consider many technical areas important to success with a few for ACN being:

  • YTD performance (+11.56%)
  • YTD outperformance vs. technology ETF (+.95% vs. XLK)
  • Recent big money signals

Just to show you what our Big Money signal looks like, have a look at all of the top buy signals ACN has made recently. It’s had a strong chart over the past few years, too. Green bars are showing that Accenture was likely being bought by a Big Money player according to MAPsignals. It’s clear there’s a lot of green historically with this stock. That’s exactly what you want to see when looking for a great growth name.

Chart, line chart Description automatically generated

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

On top of technicals, you need to look under the hood to see if the fundamental picture supports a long-term investment. As you can see, Accenture’s numbers have been strong:

  • 3-year sales growth rate (+6.53%)
  • 3-year earnings growth rate (+13.1%)

Next up is Adobe, Inc. (ADBE), which is a leading software company. The company has been a huge winner over the years as they are extremely profitable.

When we decide on the strongest candidate for long-term growth, we consider many technical areas important to success with a few for ADBE being:

  • YTD performance (+3.12%)
  • YTD vs. software ETF (-2.13% vs. IGV)
  • Recent big money signals

While the stocks has underperformed recently, look below. These are the top buy signals Adobe has made since 2017. Clearly the Big Money has been consistent for years:

Chart, histogram Description automatically generated

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

On top of a great long-term technical picture, one should also look under the hood to see if the fundamental picture supports a long-term investment. As you can see, Adobe has solid fundamentals:

  • 3-year sales growth rate = +21%
  • 3-year earnings growth rate = +49.7%

Another growth name to consider is Crocs, Inc. (CROX), which is a leading footwear and apparel company.

When we decide on the strongest candidate for long-term growth, we want to see a history of big money buying the shares. A few technical areas we like for Crocs are:

  • YTD outperformance vs. market (+23.34% vs. SPY)
  • YTD outperformance vs. discretionary ETF (+24.14% vs. XLY)

Below are the big money signals CROX has made since 2017. After the pandemic lows, it’s been moon-bound:

Chart, line chart Description automatically generated

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

On top of a strong technical picture, one should also look under the hood to see if the fundamental picture supports a long-term investment. Croc’s revenue growth rate is impressive. I expect earnings to rebound in the coming years:

  • 3-year sales growth rate = +10.67%
  • 3-year earnings growth rate = -585%

Number 4 on the list is RH (RH), which is a leading high-end retailer for the home. The shares have been in bull-mode the past couple of years.

When we decide on the strongest candidate for long-term growth, we consider many technical areas important to success with a few for RH being:

  • YTD outperformance vs. market (+41.79% vs. SPY)
  • YTD outperformance vs. discretionary ETF (+42.59% vs. XLY)
  • Recent big money signals

Below are the big money signals that RH has made since 2017:

Chart, line chart Description automatically generated

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

On top of the technical picture, one should also look under the hood to see if the fundamental picture supports a long-term investment. As you can see, RH has been growing nicely:

  • 3-year sales growth rate = +5.31%
  • 3-year earnings growth rate = +2899.12%

Our last growth candidate is Repligen, Corp. (RGEN), which is a leading medical instruments and supplies company. They have been growing rapidly for years.

When we decide on the strongest candidate for long-term growth, we consider many technical areas important to success with a few for RGEN being:

  • YTD outperformance vs. market (+2.77% vs. SPY)
  • YTD outperformance vs. healthcare sector (+5.8% vs. XLV)
  • Historical big money signals

Below are the big money signals Repligen has made since 2017. You can see how powerful the performance has been:

Chart, line chart Description automatically generated

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

On top of the technical picture, one should also look under the hood to see if the fundamental picture supports a long-term investment. As you can see, Repligen has grown over the past few years:

  • 3-year sales growth rate = +37.39%
  • 3-year earnings growth rate = +41.8%

The Bottom Line

ACN, ADBE, CROX, RH, & RGEN represent top growth stocks for May 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 no positions in any of the securities mentioned at the time of publication.

Investment Research Disclaimer