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Long Ideas
The Top Stocks To Buy On A Crash
Limelight Alpha Management Partners ... Top Stocks For Tomorrow ... Dividend and growth stock picks, plus sector and industry rankings weekly (5,402 followers) Summary
My caution stemmed from a surge in our overbought indicator, which gauges optimism and fear by calculating the percentage of institutional-quality stocks in our universe trading 5% or more above the 200-day moving average (DMA). In January, 55% of our universe was 5% or more above its 200 DMA, prompting us to warn of weakness, and then, a 2% reading in March alerted us to risk/reward significantly favoring buyers. In discussing this indicator on May 22, I wrote, 'If we get above 30%, I'll begin recommending selling broken businesses, and if we get above 40%, then I'll start recommending selling rallies to reduce margin exposure.' That's what's happened. Last week's reading near 30% was the first neutral risk/reward reading since March, and earlier this week, we told members a reading near 40% meant it was time to play defense. < Source: Top Stocks for Tomorrow. To be clear, readings can linger above 40%, but that doesn't mean we should be pressing bets by maxing out margin or buying stocks with impaired business models. Instead, upgrading portfolios with high-quality companies on down days makes the most sense. And there should be plenty of volatility to allow you to proactively plan entries and exits. There's plenty of cash on the sidelines, supporting the notion investors will buy the best stocks on sale, but there's also plenty of question marks, suggesting caution is warranted. COVID-19 cases are climbing, global gross domestic product estimates are likely to be cut when the IMF meets on June 24, and permanent job loss tied to the pandemic shutdown could still cause a spike in credit delinquencies and defaults. It also shouldn't be ignored that there's a seasonality headwind associated with the fast-approaching end of the second quarter. Following big gains, programmatic investors have little incentive to step up and take on risk in the final two weeks of June. All of those risks could be offset by fiscal and monetary stimulus, though. The Federal Reserve appears to have no problem with leaving the credit spigot wide open, saying Wednesday it doesn't anticipate any rate increases until 2022. Similarly, the Treasury Department and members of Congress continue to float the idea of additional stimulus. It also shouldn't be ignored that historically, odds favor the S&P 500 Index ETF (SPY) being higher thirty trading days following a down 3% day. Since 1999, the SPY has had 80 down 3% plus days. It's been higher 30 trading days later 62.5% of the time, returning an average and median 1.78% and 2.34%, respectively. Source: Top Stocks For Tomorrow. Overall, competing forces - easy credit versus dismal economic data - makes it important to focus on buying great businesses in the best sectors. The top sectors to buy Our system ranks major market sectors and industries weekly by market cap by aggregating individual stock scores for our members. This scoring system is explained more here, but to put it simply, our ranking incorporates forward earnings growth expectations, historical trends in reporting earnings that beat Wall Street estimates, insider buying, short-term, and long-term institutional money flow, forward valuation relative to historical valuation, contra-trend short interest analysis, and quarterly seasonality over the past decade. Grading stocks in this manner and then, scrutinizing scores by basket, allows us to see what market 'ponds' are best for fishing. Currently, the best large-cap sectors are healthcare, technology, and services. Consumer goods, services, and technology are top rated in mid-cap, while financials, technology, and healthcare offer upside in small-cap. Energy remains notably weak across all market caps and except for small cap, financials are also worrisome. There will be a time when the risk reward associated with oil stocks and banks, including credit issuers, will improve, but until then, the groups are likely to expose you to nail-biting volatility. Given oil production and credit default uncertainty, it makes sense to focus on other stocks. However, if you need exposure to those sectors, then consider industries that are high-scoring within them. For example, the industry ranking we shared with members this week suggests financial data and natural gas plays offer upside within those groups. Source: Top Stocks for Tomorrow The top stocks to buy Stocks follow earnings over time, insiders only buy for one reason; money flow reflects institutional optimism or pessimism, and seasonal patterns often rhyme, so high scoring stocks in our research offer investors a great source for new investment ideas. This week, we shared over 100 stocks with members, including the following top-rated stocks within these select sectors. Best Scoring 6/11/2020 4 WEEK MA Company Name Symbol Sector INDUSTRY SCORE SCORE Basics FMC Corporation (FMC) BASIC MATERIALS AGRICULTURAL INPUTS 100 87.5 Eastman Chemical Company (EMN) BASIC MATERIALS CHEMICALS 85 63.75 Albemarle Corporation (ALB) BASIC MATERIALS SPECIALTY CHEMICALS 85 75 Ashland Global Holdings Inc. (ASH) BASIC MATERIALS CHEMICALS- MAJOR DIVERSIFIED 85 61.25 The Sherwin-Williams Company (SHW) BASIC MATERIALS SPECIALTY CHEMICALS 85 88.75 Ecolab Inc. (ECL) BASIC MATERIALS SPECIALTY CHEMICALS 85 86.25 Consumer Goods Polaris Inc. (PII) CONSUMER GOODS RECREATIONAL VEHICLES 105 96.25 The Hain Celestial Group, Inc. (HAIN) CONSUMER GOODS PACKAGED FOODS 105 106.25 Brown-Forman Corporation (BF.B) CONSUMER GOODS BEVERAGES 95 81.25 Lear Corporation (LEA) CONSUMER GOODS AUTO PARTS 95 73.75 Planet Fitness, Inc. (PLNT) CONSUMER GOODS LEISURE 95 73.75 McCormick & Company, Incorporated (MKC) CONSUMER GOODS PACKAGED FOODS 90 92.5 NIKE, Inc. (NKE) CONSUMER GOODS FOOTWEAR & ACCESSORIES 90 81.25 Pool Corporation (POOL) CONSUMER GOODS LEISURE 90 93.75 Herbalife Nutrition Ltd. (HLF) CONSUMER GOODS PACKAGED FOODS 90 87.5 Energy Cabot Oil & Gas Corporation (COG) ENERGY OIL & GAS E&P 105 103.75 Delek Logistics Partners, LP (DKL) ENERGY OIL & GAS MIDSTREAM 90 68.75 Cheniere Energy Partners, L.P. (CQP) ENERGY OIL & GAS MIDSTREAM 85 63.75 EQT Corporation (EQT) ENERGY OIL & GAS E&P 80 81.25 Financials KKR & Co. Inc. (KKR) FINANCIALS ASSET MANAGEMENT 100 75 Marsh & McLennan Companies, Inc. (MMC) FINANCIALS INSURANCE BROKERS 100 80 Brown & Brown, Inc. (BRO) FINANCIALS INSURANCE BROKERS 100 83.75 Visa Inc. (V) FINANCIALS CREDIT SERVICES 100 87.5 PRA Group, Inc. (PRAA) FINANCIALS CREDIT SERVICES 100 86.25 Lakeland Financial Corporation (LKFN) FINANCIALS BANKS-REGIONAL 95 73.75 First Financial Bankshares, Inc. (FFIN) FINANCIALS BANKS-REGIONAL 95 71.25 Intercontinental Exchange, Inc. (ICE) FINANCIALS FINANCIAL DATA & STOCK EXCHANGES 95 85 Moody's Corporation (MCO) FINANCIALS FINANCIAL DATA & STOCK EXCHANGES 95 93.75 Mastercard Incorporated (MA) FINANCIALS CREDIT SERVICES 95 77.5 Healthcare Acadia Healthcare Company, Inc. (ACHC) HEALTHCARE SPECIALIZED HEALTH SERVICES 115 92.5 Medpace Holdings, Inc. (MEDP) HEALTHCARE DIAGNOSTICS & RESEARCH 110 108.75 DaVita Inc. (DVA) HEALTHCARE SPECIALIZED HEALTH SERVICES 105 88.75 Triple-S Management Corporation (GTS) HEALTHCARE HEALTHCARE PLANS 105 91.25 Penumbra, Inc. (PEN) HEALTHCARE MEDICAL DEVICES 105 83.75 AbbVie Inc. (ABBV) HEALTHCARE DRUG MANUFACTURERS 100 100 Patterson Companies, Inc. (PDCO) HEALTHCARE MEDICAL DISTRIBUTION 100 80 UnitedHealth Group Incorporated (UNH) HEALTHCARE HEALTHCARE PLANS 100 92.5 McKesson Corporation (MCK) HEALTHCARE MEDICAL DISTRIBUTION 100 87.5 The Ensign Group, Inc. (ENSG) HEALTHCARE LONG-TERM CARE FACILITIES 100 80 Industrials Exponent Inc. (EXPO) INDUSTRIALS CONSULTING SERVICES 105 92.5 Old Dominion Freight Line, Inc. (ODFL) INDUSTRIALS TRUCKING 105 103.75 Kratos Defense & Security Solutions, Inc. (KTOS) INDUSTRIALS AEROSPACE & DEFENSE 105 90 Kadant Inc. (KAI) INDUSTRIALS PAPER & PAPER PRODUCTS 100 87.5 Marten Transport, Ltd. (MRTN) INDUSTRIALS TRUCKING 100 98.75 Dover Corporation (DOV) INDUSTRIALS DIVERSIFIED MACHINERY 95 72.5 Waste Connections, Inc. (WCN) INDUSTRIALS WASTE MANAGEMENT 95 75 SiteOne Landscape Supply (SITE) INDUSTRIALS INDUSTRIAL DISTRIBUTION 95 93.75 Energizer Holdings, Inc. (ENR) INDUSTRIALS ELECTRICAL EQUIPMENT & PARTS 90 70 CSX Corporation (CSX) INDUSTRIALS RAILROADS 90 71.25 REITs Safehold Inc. (SAFE) REITS REIT-DIVERSIFIED 100 97.5 MGM Growth Properties LLC (MGP) REITS REIT-DIVERSIFIED 95 72.5 American Tower Corporation (REIT) (AMT) REITS REITS-SPECIALTY 95 87.5 CoStar Group, Inc. (CSGP) REITS REAL ESTATE SERVICES 95 86.25 CyrusOne Inc. (CONE) REITS REIT-SPECIALTY 90 92.5 Services Churchill Downs (CHDN) SERVICES GAMBLING 110 97.5 Medifast, Inc. (MED) SERVICES PERSONAL SERVICES 105 91.25 Equifax Inc. (EFX) SERVICES CONSULTING SERVICES 105 96.25 Strategic Education, Inc. (STRA) SERVICES EDUCATION & TRAINING SERVICES 100 98.75 Stitch Fix Inc. (SFIX) SERVICES SPECIALTY RETAIL 100 93.75 Ulta Beauty, Inc. (ULTA) SERVICES SPECIALTY RETAIL 100 71.25 Dollar General Corporation (DG) SERVICES DISCOUNT STORES 95 96.25 Casey's General Stores, Inc. (CASY) SERVICES GROCERY STORES 95 76.25 TransUnion (TRU) SERVICES CONSULTING SERVICES 95 83.75 Chegg, Inc. (CHGG) SERVICES EDUCATION & TRAINING SERVICES 95 100 Technology Alarm.com Holdings, Inc. (ALRM) TECHNOLOGY SOFTWARE-APPLICATION 105 103.75 Zillow Group, Inc. (Z) TECHNOLOGY INTERNET CONTENT & INFORMATION 105 103.75 Broadcom Inc. (AVGO) TECHNOLOGY SEMICONDUCTOR- INTEGRATED CIRCUITS 100 81.25 CoreLogic, Inc. (CLGX) TECHNOLOGY INFORMATION TECHNOLOGY SERVICES 100 100 Adobe Inc. (ADBE) TECHNOLOGY SOFTWARE-INFRASTRUCTURE 100 100 Coupa Software Incorporated (COUP) TECHNOLOGY SOFTWARE-APPLICATION 100 103.75 EverQuote (EVER) TECHNOLOGY INTERNET CONTENT & INFORMATION 100 98.75 Guidewire Software, Inc. (GWRE) TECHNOLOGY SOFTWARE-APPLICATION 100 78.75 New Relic, Inc. (NEWR) TECHNOLOGY SOFTWARE-INFRASTRUCTURE 100 100 ServiceNow, Inc. (NOW) TECHNOLOGY SOFTWARE-APPLICATION 100 97.5 Utilities Dominion Energy, Inc. (D) UTILITIES UTILITIES-DIVERSIFIED 105 96.25 Terraform Power (TERP) UTILITIES UTILITIES-INDEPENDENT POWER PRODUCERS 105 96.25 NextEra Energy, Inc. (NEE) UTILITIES UTILITIES-REGULATED ELECTRIC 95 83.75 NRG Energy, Inc. (NRG) UTILITIES UTILITIES-INDEPENDENT POWER PRODUCERS 85 66.25 Never miss a money-making idea. Weekly large cap, mid cap, small cap and ADR rankings. Know what sectors, industries, and stocks to buy and when to buy them. Over 400 bps of excess return in the following 52 weeks since 2017. Free trial, special introductory pricing, and you can cancel anytime. Join the conversation. Sign up for Top Stocks For Tomorrow. Disclosure: I am/we are long NOW, MA, NKE. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Limelight Alpha Management Partners
| June 14th 2020 The text being discussed is available at | https://seekingalpha.com/article/4353578-top-stocks-to-buy-on-crash and |