Quant Ratings Updated on 206 Stocks Dear Louis, After a “Manic Monday,” all of the major indices rallied today. While recession fears were the primary culprit behind the three-day plunge in the markets, there’s another phenomenon that was also in play. I’m talking about carry trades. If you’re unfamiliar with carry trades, it refers to an investor borrowing in a currency with low interest rates and then reinvesting in assets with higher yields. The best example of this is Japan, which placed a lot of money in the U.S. for dollar appreciation and high interest rates. Last week’s recession fears, though, caused this carry trade to start to unwind – and that’s why Treasury yields plunged. Treasury yields have also firmed up a bit today, but the recent volatility in the Treasury market is a sign of uncertainty. Also helping the broader market today is the ISM non-Manufacturing Service Index report. Services PMI came in at 51.4% in July, up from 48.8% in June. This marks the 47th month the sector has expanded in 50 months. I should also add that business activity rose 4.9% to 54.5%, up from 49.6% in June. New orders increased 5.1% to 52.4%, up from 47.3% in June. Employment also expanded, registering 51.1% in July, a 5% rise from 46.1% in June. Backlog orders clocked in at 50.6%, up 6.6% from 44% in June. This was much better than what economists were anticipating and shows that the U.S. economy isn’t dead yet. Although stocks are bouncing back today, I do expect the market gyrations to continue until selling pressure is completely exhausted. This could take another week or two given that Wall Street is on vacation this month. The reality is the European investment professionals are gone, which means that the “B team” is in charge. The silver lining is that earnings are still working, which is why it’s important to continue to invest in fundamentally superior stocks. The simple reality is good stocks bounce like fresh tennis balls, while bad stocks bounce like rocks – and there were plenty of stocks bouncing like tennis balls today. This Week’s Ratings Changes So, I went ahead and took a fresh look at the latest institutional buying pressure and each company’s financial health. I decided to revise my Portfolio Grader recommendation for 206 big blue chips. Of these 206 stocks… - Twenty-six stocks were upgraded from a Buy (B-rating) to a Strong Buy (A-rating).
- Sixty-five stocks were upgraded from a Hold (C-rating) to a Buy (B-rating).
- Fifty-seven stocks were upgraded from a Sell (D-rating) to a Hold.
- Twenty-nine stocks were downgraded from a Buy to a Hold.
- Twenty-three stocks were downgraded from a Hold to a Sell.
- And six stocks were downgraded from a Sell to a Strong Sell (F-rating).
I’ve listed the first 10 stocks rated as Strong Buys below, but you can find a more comprehensive list – including all 206 stocks’ Fundamental and Quantitative Grades – here. Chances are that you have at least one of these stocks in your portfolio, so you may want to give this list a skim and adjust accordingly. | ABBV | AbbVie, Inc. | A | | AEM | Agnico Eagle Mines Limited | A | | CINF | Cincinnati Financial Corporation | A | | CLH | Clean Harbors, Inc. | A | | CMS | CMS Energy Corporation | A | | COR | Cencora, Inc. | A | | DUK | Duke Energy Corporation | A | | KO | Coca-Cola Company | A | | LMT | Lockheed Martin Corporation | A | | LOGI | Logitech International S.A. | A | Although August seasonality will continue to cause stocks to gyrate, there’s another factor that could impact the stock market. It’s so big that I consider it a financial tsunami. And when this tidal wave makes landfall, its impact will be more violent and more severe than any financial crisis we’ve ever seen. The financial tsunami that’s set to wreck our economy is due to artificial intelligence. So, how can you survive? Some might think the best way to survive this tsunami is by moving off the grid or buying gold. But the reality is the way to protect yourself is by investing. Owning stock in world-class companies has always been – and will continue to be – an essential stronghold in times of technological change. The stock market is the only place I know that allows you to align yourself with innovators, entrepreneurs and wealthy corporations gaining a critical early foothold in these new technologies. In other words, it’s time to go stock picking – and I have found nine world-class AI- and quantum computing-related stocks that are great buys now. Click here to learn how you can access this exclusive portfolio of stocks. (Already a Growth Investor subscriber? Click here to log in to the members-only website.) Sincerely, | .png)
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