We all want the lights to go on when we flip the switch... We all want to be cool when we turn on the air conditioner in the summer...
How I Deep Dive Into a 'Very Bullish' ETF
By Marc Gerstein, director of research, Chaikin Analytics
We all want the lights to go on when we flip the switch...
We all want to be cool when we turn on the air conditioner in the summer...
And we all want to be warm when we turn on the heat in the winter.
Put simply, we all want electrical products to work as they should. Otherwise, our daily lives would be much harder.
For that, we all need a reliable power grid.
On August 15, I highlighted an attractive opportunity in the Global X U.S. Infrastructure Development Fund (PAVE). The exchange-traded fund ("ETF") still earns a "very bullish" rating from the Power Gauge.
But today, let's take our analysis a step further. We'll do a "deep dive" into one of PAVE's holdings...
This holding only makes up about 0.3% of the ETF. But just like every single stock within PAVE, it also receives an individual rating from the Power Gauge.
And right now, it earns a "very bullish" rating...
It began with a mysterious phone call from a billionaire hedge fund manager... desperate for access to Joel Litman's stock market rating system before the next opening bell. What happened next would unlock a stock market phenomenon that spits out 10, 20, and even 30-baggers a few rare times per year. And right now, it's happening again. Just make sure you see this incredible story before today's opening bell.
Amid today's market turmoil, THIS is one of the biggest and most bullish opportunities today: A red-hot sector with almost unlimited pricing power and a history of outperforming in recessions. It's also the sector where our good friend Dr. David Eifrig spent half his professional life. In other words he's extremely qualified to spot world-class opportunities today. Take a look at the evidence here.
MYR Group (MYRG) is a small-cap play in the electric-infrastructure space.
The company operates two business units, but transmission and distribution (T&D) is its bread and butter. This segment contributes about 70% of MYR Group's operating profit.
In that segment, MYR Group works with utilities as a primary contractor. About half of its revenue comes from multiyear agreements. That's important... It tells us that the company will have "sticky" business for years to come.
Bidding activity in this segment is brisk. In fact, the future looks bright due to a huge growth opportunity in the years ahead...
I'm talking about the shift to "renewables." No matter your personal beliefs, you can't deny that our country is trending toward relying on more renewable energy moving forward.
And MYR Group is perfectly positioned to take advantage of this shift...
You see, the Midcontinent Independent System Operator ("MISO," for short) released plans to invest $10.4 billion for wind, solar, and battery storage. This independent, not-for-profit, member-based organization focuses on major T&D projects – MYR Group's bread and butter.
Much of MISO's work will go to incumbent utilities. That's a plus for MYR Group. It already counts many of those utilities as customers.
Bidding opportunities also abound for MYR Group's commercial and industrial segment...
This segment includes traffic-light networks, as well as lights for bridges, roadways, and tunnels. Airports, hospitals, data centers, hotels, stadiums, and more all fit into this category as well.
Frankly, it's a lot to take in. And no matter how optimistic the outlook, it can be challenging for investors to sort out the narrative from a stock's potential performance going forward.
That's why I love having the Power Gauge at my side...
The system is every investor's best friend. It breaks down every company using 20 individual factors. And then, it combines everything into an actionable overall rating.
So with that in mind, let's see what the Power Gauge shows us about MYR Group today...
You might recall from our previous analysis that the Chaikin Money Flow indicator showed an influx of "smart money" for PAVE in recent weeks. The same thing is true for MYR Group.
Plus, as you can see, the company's stock is outperforming the broad market over the past few months. And after a long stretch of "neutral"... it recently turned "very bullish."
We can dig even deeper by looking into the rankings of individual factors...
Many companies with attractive business prospects have already been discovered by the market. Therefore, they have lackluster rankings for valuation-related factors.
However, MYR Group ranks "bullish" for price-to-sales (P/S) ratio. The company's P/S ratio is about 0.6 today. In comparison, the S&P 500 Index's median P/S ratio is 3.9.
The company also rates "bullish" for return on equity. That tells us profitability isn't a promise for the distant future. It's already here.
Finally, the "bullish" grade for long-term debt to equity indicates that the company is keeping a lid on business risk. That's what we want to see with an investment.
These are just a few of the 20 individual factors the Power Gauge tracks. But as you see, we already have a wealth of actionable information available to us...
We know that the smart money favors this company. It's outperforming the broad market. And it's rated "very bullish" overall, based on the proprietary weighting of its 20 factors.
That's the beauty of the Power Gauge.
Good investing,
Marc Gerstein
Market View
Major Indexes and Notable Sectors
# Hld: Bullish Neutral Bearish
Dow 30
-1.85%
8
18
4
S&P 500
-2.05%
138
260
99
Nasdaq
-2.63%
30
46
24
Small Caps
-2.06%
478
941
430
Bonds
-0.34%
— According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks are somewhat Bullish. Major indexes are mixed.
* * * *
Top Movers
Gainers
MOS
+3.44%
CF
+2.07%
APA
+1.77%
KR
+1.25%
STZ
+1.24%
Losers
WBD
-7.43%
APTV
-7.37%
KMX
-6.66%
NFLX
-6.06%
BWA
-5.75%
* * * *
Earnings Report
Reporting Today
Rating
Before Open
After Close
SJM
INTU
MDT
AAP
No earnings reporting today.
Earnings Surprises
ZM Zoom Video Communications, Inc.
Q2
$1.05
Beat by $0.12
PANW Palo Alto Networks, Inc.
Q4
$1.79
Beat by $0.11
NDSN Nordson Corporation
Q3
$2.43
Beat by $0.14
* * * *
Sector Tracker
Sector movement over the last 5 days
Energy
+3.08%
Staples
-0.17%
Utilities
-0.93%
Health Care
-2.32%
Industrials
-3.12%
Financial
-3.83%
Materials
-3.90%
Real Estate
-4.35%
Discretionary
-4.74%
Information Technology
-5.00%
Communication
-6.24%
* * * *
Industry Focus
Health Care Equipment Services
5
39
34
Over the past 6 months, the Health Care Equipment subsector (XHE) has underperformed the S&P 500 by -1.44%. Its Power Bar ratio, which measures future potential, is Very Weak, with more Bearish than Bullish stocks. It is currently ranked #21 of 21 subsectors.
Indicative Stocks
CNMD
CONMED Corporation
TNDM
Tandem Diabetes Care
MLAB
Mesa Laboratories, I
* * * *
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Chaikin Analytics forbids its writers from having a financial interest in any security they recommend to our subscribers. All employees of Chaikin Analytics, LLC (and affiliated companies) must wait 24 hours after an investment recommendation is published online – or 72 hours after a direct mail publication is sent – before acting on that recommendation.
This work is based on SEC filings, current events, interviews, corporate press releases, and what we've learned as financial journalists. It may contain errors, and you shouldn't make any investment decision based solely on what you read here. It's your money and your responsibility.
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