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

Best ETFs For June 2021

A portfolio of outlier stocks can become chock full of monster gains for years to come, if chosen wisely.

But wouldn’t it be great if there was already a collection of outliers we could buy without even having to think about it?

Well maybe there is a way to do just that… through outlier ETFs.

So, here I’m going to give you the best ETFs that big money is getting involved in this month.

First thing’s first: to find them, I looked at all the ETFs making Big Money signals. I did that by heading over to MAPsignals.com and then looked at the Big Money ETF Buys and Sells chart. I looked at days with the biggest buying, circled here:

Once I had all the ETFs, I wanted to know which were the best potential opportunities. ETFs are baskets of stocks. And because MAPsignals scores over 6,000 stocks every day, as long as I know which stocks make up the ETFs, I can rank them all.

Here are the 5 best ETFs with scores: The Composite score, Technical score, and Fundamental score. These were computed by accounting for each components stock’s score and its associated weighting in the ETF. (keep in mind that weightings will change from time to time)

Below we see each ETF, their recent Big Money activity, and their scores. XLF, ITB, and XLC are top ranked ETFs. That makes sense because financials, home builders, and communications stocks have been leading the market much of this year so far.

IGV and ARKG, however, rank low on our list of ETFs. But there is opportunity here because the low scores are due to weak technicals. Big Money has been selling these ETFs, largely because they are heavily concentrated in growth stocks. But these stocks have excellent fundamentals: growing sales and earnings and big profits. These weak ETFs represent great potential bargains.

Let’s quickly look at the year-to-date performance of these 5 ETFs:

  • XLF +29.3%
  • ITB +29.2%
  • XLC +13.5%
  • IGV -4.0%
  • ARKG -18.1%

Now let’s quickly look at Big Money buying in the ETFs. Each chart below has many green bars which represents unusually large buying. The few red bars represent unusually large selling. What jumps out is the huge buying in all the ETFs.

Only with IGV and ARKG, there was recent selling too. But again, selling on ETFs and stocks with great fundamentals represents a value opportunity.

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

Here’s why I like these ETFs: they are highly concentrated with fundamentally superior stocks. Below we see a table of three stocks in each ETF. They are some of the highest weightings in each.

Notice their fundamental scores are very strong on a scale from 0-100. This means strong growing sales, earnings, and profits over one and three years. This is how MAPsignals boils down all its fundamental research into one elegant score.

Now with XLF, ITB, and XLC – we see the stocks also have strong technical scores. That means Big Money has been pouring into them, lifting them to new highs. They are buoyant with Big Money support. But in IGV and AKG, we see weak technical scores. This means Big Money has been exiting the stocks.

But before you get spooked, let’s keep the recent environment in mind: Growth has fallen out of favor while value and reopen stocks have become all the rage. But it’s essential to remember these growth companies create phenomenal products and services enhancing our lives. I don’t foresee that stopping in the future. The recent selling is temporary and thematic.

What really drives this home is looking at how long-term Big Money buying can lead to monstrous gains. Below are charts showing all the instances these stocks were Top stocks in our research since 2015: our weekly report of outliers. We don’t need to go into details on each chart.

I’d like you to notice a few things:

  • When Big Money buying pours in, stocks go up
  • Repeated outliers, especially for years often means outsized gains

Owning outlier stocks is the way I try to beat markets. Easy exposure to many stocks can be achieved by buying ETFs. But just like anything, you must be in the 1% if you want to be in the 1%.

We can find outlier ETFs by tracking the Big Money. But that alone isn’t enough: when we catalog the components and find outlier stocks underneath… that’s the winning recipe.

So, there you have it: the 5 best ETFs that Big Money has been trafficking in recently. Outlier ETFs hold outlier stocks. Finding them is the key to finding potentially outlier gains.

Now let’s look at what those look like:

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

The Bottom Line

XLF, ITB, XLC, IGV, & ARKG represent top ETFs for June 2021. Financials, homebuilders, & Communications stocks have performed well lately, which should continue. Software and Genomics companies have reached interesting levels, too. Paying attention to the fundamental quality of ETF constituents is paramount.

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

Disclosure: the author holds long positions GOOGL, CRM, & REGN in managed accounts, but no positions in XLF, ITB, XLC, IGV, ARKG, BLK, SCHW, SPGI, DHI, LEN, LOW, FB, ATVI, ADBE, MSFT, TDOC, & VRTX at the time of publication.

Investment Research Disclaimer

Homebuilder D.R. Horton Tops Q2 Earnings Estimates; Target Price $108 in Best Case

D.R. Horton, the largest homebuilder by volume in the United States, reported better-than-expected earnings and revenue in the fiscal second quarter and upgraded its guidance for full-year, sending its shares up about 2% in pre-market trading on Thursday.

The homebuilder said its net income attributable to D.R. Horton increased 93% to $929.5 million in the quarter ended March 31, or $2.53 per share, beating Wall Street consensus estimates of $2.18 per share. The company’s consolidated revenues increased 43% to $6.4 billion, above analysts’ expectations of $6.11 billion.

Homebuilder forecasts consolidated revenues in the range of $26.8 billion to $27.5 billion and homes closed between 82,500 homes and 84,500 homes in fiscal 2021.

Following the upbeat results, D.R. Horton shares rose about 2% to $94.85 in pre-market trading on Thursday.

D.R. Horton Stock Price Forecast

Eleven analysts who offered stock ratings for D.R. Horton in the last three months forecast the average price in 12 months of $98.00 with a high forecast of $108.00 and a low forecast of $85.00.

The average price target represents a 5.04% increase from the last price of $93.30. Of those 11 analysts, ten rated “Buy”, one rated “Hold” while none rated “Sell”, according to Tipranks.

Several other analysts have also updated their stock outlook. Citigroup raised the price target to $109 from $92. D.R. Horton had its price objective boosted by stock analysts at KeyCorp to $98 from $90. The brokerage currently has an “overweight” rating. Barclays raised their price target to $95 from $81 and gave the company an “overweight” rating. BTIG Research raised their price target to $108 from $98 and gave the company a “buy” rating.

Moreover, Wolfe Research issued a $94.00 price target on the stock. JPMorgan Chase & Co. upgraded D.R. Horton from a “neutral” rating to an “overweight” rating.

Analyst Comments

“Residential construction has been a bright spot of the U.S. housing market during the pandemic, and we expect continued housing market strength over the next decade with annual housing starts reaching 1.6 million units by 2024. While affluent urban dwellers migrating to the suburbs was a key source of demand in 2020, we expect first-time buyers to be the main contributor to future housing demand,” noted Brian Bernard, equity analyst at Morningstar.

D.R. Horton’s balance sheet is the strongest it has been in years, and we expect the company will use its improved financial flexibility to invest in attractive growth opportunities, such as its recent Forestar endeavor. We believe that improving new-home demand, successful inventory management initiatives, and improved financial flexibility support future growth and improving ROICs.”

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Homebuilder D.R. Horton Earnings Top Estimates; COVID-19 Pandemic Still a Big Risk

D.R. Horton, the largest homebuilder by volume in the United States, reported a better-than-expected profit in the September quarter and forecasts home sales and revenue to increase in the next fiscal year on low-interest rate, sending its shares up over 3% in pre-market trading on Tuesday.

America’s Builder said its net income surged 66% to $2.24 per diluted share in the quarter ended September 30, 2020 compared to $1.35 per diluted share in the same quarter of fiscal 2019. That was also higher than the market expectations of $1.75 per share.

Net income attributable in the fourth quarter of fiscal 2020 climbed 64% to $829.0 million compared to $505.3 million in the same quarter of fiscal 2019. Homebuilding revenue for the fourth quarter of fiscal 2020 increased 27% to $6.2 billion from $4.8 billion in the same quarter of fiscal 2019, the company said on the statement.

Homebuilder forecasts home sales in the fiscal year 2021 to be between 77,000 and 80,000 units, better than the Wall Street’s mean estimate of 75,981.

“The Company remains cautious as to the ongoing impact COVID-19 and other external factors may have on the economy and its operations. There is significant uncertainty regarding the extent to which and how long COVID-19 and its related effects will impact the U.S. economy and level of employment, capital markets, secondary mortgage markets, consumer confidence, demand for the Company’s homes and availability of mortgage loans to homebuyers,” D.R. Horton noted in the statement.

“The extent to which this impacts the Company’s operational and financial performance will depend on future developments, including the duration and spread of COVID-19 and the impact on D.R. Horton’s customers, trade partners and employees, all of which are highly uncertain and cannot be predicted.”

D.R. Horton shares rose over 3% to $66.95 in pre-market trading on Tuesday; the stock is up over 20% so far this year.

Executive comments

“Our strong balance sheet, liquidity and low leverage provide us with the flexibility to operate effectively through changing economic conditions, and we plan to maintain our disciplined approach to investing capital to enhance the long-term value of our company,” said Donald R. Horton, Chairman of the Board.

“With 38,000 homes in inventory, an ample supply of lots and continued strong sales trends in October, we are well-positioned for another great year in fiscal 2021.”

D.R. Horton Stock Price Forecast

Nine equity analysts forecast the average price in 12 months at $83.50 with a high forecast of $92.00 and a low forecast of $71.00. The average price target represents a 28.56% increase from the last price of $64.95. From those nine analysts, five rated “Buy”, four rated “Hold” and none rated “Sell”, according to Tipranks.

D.R. Horton had its price target hoisted by Barclays to $81 from $73. The brokerage presently has an “overweight” rating on the construction company’s stock. Credit Suisse raised their stock price forecast to $84 from $77 and gave the stock an outperform rating. BTIG raised the stock price forecast to $92 from $85 and Evercore ISI upped their stock price target to $98 from $89.

Several other analysts have also recently commented on the stock. Seaport Global Securities lifted their price objective on D. R. Horton to $66 from $64 and gave the stock a “buy” rating in July. Susquehanna Bancshares downgraded to a “neutral” rating from a “positive” and lifted their price objective to $62 from $55 in July. At last, KeyCorp boosted their target price to $75 from $58 and gave the company an “overweight” rating.

Analyst Comments

“D.R. Horton’s shares have outperformed its industry so far this year. The price-performance was backed by the company’s robust earnings surprise history, having surpassed the Zacks Consensus Estimate in eight of the trailing 11 quarters. The uptick is expected to continue, courtesy of its impressive performance, its industry-leading market share, solid acquisition strategy, a well-stocked supply of land, lots and homes, along with affordable product offerings across multiple brands,” said equity analysts at Zacks Research.

“Improving housing market fundamentals backed by low interest/mortgage rates are encouraging. However, uncertainties in the U.S. economy arising from the COVID-19 outbreak have raised a concern. Estimates for the current year have remained unchanged over the past 60 days, limiting upside potential for the stock.”

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