Weekly Upgrades and Downgrades

During these busy times, it pays to stay on top of the latest profit opportunities. And today’s blog post should be a great place to start. After taking a close look at the latest data on institutional buying pressure and each company’s fundamental health, I decided to revise my Portfolio Grader recommendations for 84 big blue chips. 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 act accordingly.

This Week’s Ratings Changes:

Upgraded: From Hold to Buy
Symbol Company Name Quantitative
Grade
Fundamental
Grade
Total
Grade
ABB ABB Ltd. Sponsored ADR B C B
APTV Aptiv PLC B B B
BBL BHP Group Plc Sponsored ADR B C B
FFIV F5 Networks, Inc. B C B
FRC First Republic Bank B C B
GRMN Garmin Ltd. B B B
MGA Magna International Inc. B C B
MOS Mosaic Company B C B
NDAQ Nasdaq, Inc. B C B
ON ON Semiconductor Corporation B B B
Upgraded: From Sell to Hold
Symbol Company Name Quantitative
Grade
Fundamental
Grade
Total
Grade
BCH Banco de Chile Sponsored ADR C C C
CE Celanese Corporation C C C
CNQ Canadian Natural Resources Limited C C C
CRH CRH Plc Sponsored ADR C C C
DISCA Discovery, Inc. Class A D C C
GE General Electric Company D C C
GPC Genuine Parts Company D C C
HBAN Huntington Bancshares Incorporated C C C
KEY KeyCorp D C C
NUE Nucor Corporation C C C
Downgraded: From Buy to Hold
Symbol Company Name Quantitative
Grade
Fundamental
Grade
Total
Grade
ACN Accenture Plc Class A C C C
AJG Arthur J. Gallagher & Co. C B C
AKAM Akamai Technologies, Inc. C C C
CAG Conagra Brands, Inc. C B C
CCK Crown Holdings, Inc. C B C
CHKP Check Point Software Technologies C C C
CHTR Charter Communications, Inc. Class A C C C
CPRT Copart, Inc. C C C
CRM salesforce.com, inc. C B C
CTAS Cintas Corporation C C C
EFX Equifax Inc. C B C
EL Estee Lauder Companies Inc. Class A C C C
EXAS Exact Sciences Corporation B D C
EXPD Expeditors International of Washington C C C
FB Facebook, Inc. Class A C B C
FICO Fair Isaac Corporation C B C
ISRG Intuitive Surgical, Inc. C C C
LEN Lennar Corporation Class A C B C
LEN.B Lennar Corporation Class B C B C
LH Laboratory Corporation of America C A C
LLY Eli Lilly and Company B C C
NVO Novo Nordisk A/S Sponsored ADR C C C
PG Procter & Gamble Company C C C
PLAN Anaplan, Inc. C C C
TAL TAL Education Group Sponsored B C C
UBER Uber Technologies, Inc. B D C
WDAY Workday, Inc. Class A C C C
ZTS Zoetis, Inc. Class A C C C
Downgraded: From Hold to Sell
Symbol Company Name Quantitative
Grade
Fundamental
Grade
Total
Grade
ADP Automatic Data Processing, Inc. D C D
ANTM Anthem, Inc. D C D
ARE Alexandria Real Estate Equities, Inc. D C D
BEN Franklin Resources, Inc. D C D
BMY Bristol-Myers Squibb Company D C D
CG Carlyle Group Inc D B D
COO Cooper Companies, Inc. D D D
DRE Duke Realty Corporation D C D
EQH Equitable Holdings, Inc. D D D
EXR Extra Space Storage Inc. D C D
HMC Honda Motor Co., Ltd. D B D
INVH Invitation Homes, Inc. D B D
LDOS Leidos Holdings, Inc. D C D
MA Mastercard Incorporated Class A D D D
MDLZ Mondelez International, Inc. Class A D C D
MMC Marsh & McLennan Companies, Inc. D C D
PAYX Paychex, Inc. D C D
PFE Pfizer Inc. D C D
PLD Prologis, Inc. D C D
PSA Public Storage D D D
ROST Ross Stores, Inc. D C D
RYAAY Ryanair Holdings Plc Sponsored ADR C F D
SPGI S&P Global, Inc. D C D
STX Seagate Technology PLC D C D
SUI Sun Communities, Inc. D B D
TDG TransDigm Group Incorporated D D D
TFX Teleflex Incorporated D C D
TRI Thomson Reuters Corporation D C D
TRU TransUnion D C D
TRV Travelers Companies, Inc. D C D
TXT Textron Inc. D C D
ULTA Ulta Beauty Inc D D D
V Visa Inc. Class A D C D
VRSN VeriSign, Inc. F C D
XEL Xcel Energy Inc. D C D
YUM Yum! Brands, Inc. D C D

To stay on top of my latest stock ratings, plug your holdings into Portfolio Grader, my proprietary stock screening tool. You may get started here.

Sincerely,
Louis Navellier

Louis Navellier

How AI is Helping in the Fight Against COVID-19

2020 may well have been one of the most significant years for the healthcare industry in decades, as companies produced COVID-19 vaccines at lightning speed.

Artificial intelligence (AI) was a major player in creating a COVID-19 vaccine in literally record time, with several big-time healthcare companies – Pfizer (PFE), AstraZenenca (AZN) and Moderna (MRNA) – bringing COVID-19 vaccines to market in a matter of months. For some perspective, it took about four years for the mumps vaccine to be rolled out in the 1960s.

So far, 5.3 million people have been vaccinated in the U.S. Healthcare workers and residents of long-term care facilities were offered the vaccine first. Next in line to be vaccinated are frontline essential workers and people over the age of 75.

The reality is AI plays a huge role in the future of healthcare, due to its predictive analysis and essentially limitless access to information. All of the drug trial and vaccine data that needed to be analyzed was done significantly faster thanks to the help of AI.

The technology also aided researchers by suggesting chemical modifications, identifying existing drug candidates that could be repurposed, and scanning other research from data libraries to assist in the making of the vaccine.

Outside of vaccines, AI assisted in predicting COVID-19 patient outcomes. An algorithm was created using lab test and chest x-ray data to determine who is at the highest risk of needing intubation once arriving at the hospital. This helped doctors make more informed decisions and, ultimately, saved lives.

All of this AI technology is helping the healthcare industry grow at an incredible rate. Since 2018, the sector has increased by an average of 4.5%. In 2019 alone, Americans spent $3.65 trillion on healthcare, which amounts to 17.8% of the entire GDP.

Clearly, there’s a significant amount of growth that remains in this sector, and to my InvestorPlace colleague, Matt McCall, and me, that spells opportunity.

It’s why we recommended a healthcare company with a new type of software that assists in drug discovery and development to our Power Portfolio 2021 in December. It can help predict better drug study outcomes, help scientists have a better understanding of potential new medicines and use data to improve drug formulas and optimize their designs.

We like that the company sees only one significant competitor at the moment. While new competition can never be ruled out, the barriers for entry in the software industry are high thanks to regulatory considerations.

This strong competitive position has led to consistent revenue growth and increasing profitability over the last five years. The company has no debt and a growing cash balance, positioning it well to invest for more growth both internally and through further acquisitions.

This isn’t the only healthcare company we like right now, there are three other companies in our Power Portfolio that are great buying opportunities. For full details, sign up here.

The bottom line: There’s a lot of potential in the healthcare space thanks to new technologies, and we believe that we have found the best high-quality stocks to play the massive upside. If you want to get in early, now is the time to join us.

 

P.S. Matt and I just released another tech stock recommendation for our Power Portfolio 2021 on Wednesday that is leading their market. This company makes semiconductors that have special capabilities which lends them particularly useful in the expansion of 5G and the Internet of Things (IoT). Its earnings are expected to surge a stunning 285% over the next couple of years, so there is no better time to invest than now. For more information on this stock, click here. 

The Editor (Louis Navellier) hereby discloses that as of the date of this email, the Editor (Louis Navellier), directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:

How to Choose the Crème de la Crème of “The Cloud”

Before the pandemic struck, cloud computing was simply a buzzword flying around corporate board rooms and Wall Street corner offices. Then as COVID-19 began to take hold across American and the world, many of us shifted to a work from home environment. We began to rely on “the cloud” more and more to facilitate our daily business operations and keep the economy humming.

This year, according to Forrester Research, the global public cloud computing infrastructure market is expected to grow 35% to $120 billion. The research firm had to revise its prior estimate of 28% growth for 2021, after taking into account the global trend to adopt cloud computing even faster in light of the “new environment.”

And that’s just the beginning. The worldwide proportion of IT spending on the cloud should climb 18% in 2021 to $304.9 billion, Gartner says. About 93% of enterprises surveyed in the Flexera 2020 State of the Cloud report already use some cloud service.

No doubt you’ve heard the term, but just what is cloud computing? Simply put, it’s on-demand access via the internet to computing resources. We’re talking everything from servers and apps to data storage, development tools, networking capabilities and more.

Cloud computing as we know it today started back in late 1996 in a Houston office park. According to the MIT Technology Review, a Compaq marketing executive and another technologist coined the term “cloud computing-enabled applications” for their idea that business software would eventually come to be stored on the internet.

Ever since, some of the most competitive technology companies on the planet have been vying for a slice of the multi-billion-dollar industry, including behemoth cloud providers like Amazon (AMZN), Microsoft (MSFT) and Google (GOOG).

The reality is that cloud computing can help lower IT costs, speed the time an organization needs to start using computing resources, and provide an easier, more cost-efficient way to scale computing capacity within a business.

Investors have taken note.

One of the sector’s bellwether ETFs, the WisdomTree Cloud Computing ETF (WCLD), has gained 31.86% in the past six months, and 101% over the past year.

However, I’m not a huge fan of ETFs, as they’re often comprised of winners and losers in a given sector.

For example, the IT services company Pluralsight, Inc. (PS), a stock that currently makes up 1.46% of the WisdomTree Cloud Computing ETF, is a “Hold” in my Portfolio Grader, earning a Total Grade of “C,” a Fundamental Grade of “C” and a Return on Equity grade of “F.”

Not the best report card at the moment. This is why I look for fundamentally superior stocks on a case-by-case basis.

My InvestorPlace colleague, Matt McCall, and I believe we’ve found even better ways to play the cloud. I’m talking about the kinds of picks and shovels companies that are using the cloud to ring in fundamentally superior sales and earnings.

In fact, we recommended several stocks taking advantage of the cloud in their business models in our Power Portfolio 2021 in December.

One is a leading provider of cloud software for business call centers. The company is on a mission to replace the old on-premise contact center systems with quickly deployable solutions that come with seamless upgrades.

The business’s solutions can also be integrated with a company’s customer relationship management (CRM) system and other business applications. Customers feel as though they are getting more personalized and more attentive service.

Over the last 10 years, the company’s revenue has grown at a strong 33% compound annual rate without a down year. This stellar consistency is just as evident in its quarterly revenue. Since 2012, the company has grown its top line quarter-over-quarter every time. And it has multiple avenues for growth – adding new customers, expanding existing relationships, and entering international markets, so we don’t expect that growth to slow anytime soon.

Another stock added more recently to our Power Portfolio 2021 is using the cloud to operate a residential real estate brokerage platform. This allows realtors to expand their business without the burden of brick-and-mortar offices and redundant staffing costs.

Over the last decade, the company’s network has grown to more than 36,000 real estate professionals throughout the U.S. and Canada. The platform is beneficial to agents as well, as they can get professional support and the infrastructure to run their businesses – including a full suite of back-office functions like paperless file sharing and transaction management.

The power of a cloud-based business model can be seen in the company’s profitability. Through mid-December, the company’s cash flow had already grown by more than 6X compared to the same period last year!  And with record-low mortgage rates and lean home inventories, the outlook for the housing market is very bright.

These aren’t the only cloud plays we like right now, either. There are three cloud companies in our Power Portfolio 2021 that are great buying opportunities.

You can check them out in full detail by clicking here.

P.S. We just released another tech stock recommendation on Wednesday that is a leader in the semiconductor industry. This company makes semiconductors that have special capabilities which lends them particularly useful in the expansion of 5G and the Internet of Things (IoT). Its earnings are expected to surge a stunning 285% over the next couple of years, so there is no better time to invest than now. For more information on this stock, click here.

The Editor (Louis Navellier) hereby discloses that as of the date of this email, the Editor (Louis Navellier), directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:

Amazon (AMZN), Microsoft (MSFT) and Google (GOOG)

Why the Stock Market Sold Off on Monday

Wall Street certainly rang in the New Year on a mixed note!

After rallying to new record highs at the market’s open on Monday, Wall Street’s mood turned sour. As a result, the stock market reversed course, and the three major indices plunged more than 2% in the early afternoon before rebounding into the close and trading relatively steady today.

During any big selloff, it’s important to watch the selling volume. If the volume builds, then the selling will intensify. Luckily, that wasn’t the case yesterday. The volume was light, so the pullback looked more like a market pause and a good buying opportunity for fundamentally superior stocks.

The reality is there’s still a bit of uncertainty circling Wall Street right now. The biggest concern is that Alibaba (BABA) CEO Jack Ma is missing. In addition, there’s been some back-and-forth about delisting three Chinese companies – China Mobile (CHL), China Telecom (CHA) and China Unicom Hong Kong Ltd. (CHU) – because of their military ties. The NYSE announced the decision on December 31 to delist, but abruptly made an “about face” yesterday.

Details behind the decision are sparse. The NYSE stated, “In light of further consultation with relevant regulatory authorities with Office of Foreign Asset Control FAQ 857, the New York Stock Exchange LLC (“NYSE”) announced today that NYSE Regulation no longer intends to move forward with the delisting in relation to the three issuers…”

Another issue is that the Atlanta Fed revised their GDP growth estimates for the fourth quarter down significantly. The Fed last estimated GDP growth of 10.4%, but that was lowered to 8.6% yesterday. The downward revision isn’t too surprising following the states reinstating lockdowns and coronavirus protocols after the spike in coronavirus cases. Clearly, the lockdowns are weighing on the U.S. economy, as consumers are still hesitant to open their wallets.

With all that said, I remain bullish on the stock market.

The reality is that the earnings environment will improve dramatically in 2021. Year-over-year comparisons for earnings and sales should be particularly favorable for the first two quarters of 2021. You may recall that the global pandemic significantly hindered economic growth and business prosperity during the first six months of 2020. As a result, it will be easier for companies to achieve strong results in the first two quarters of 2021.

The analysts at FactSet agree: The S&P 500 is expected to achieve year-over-year earnings growth of 22.1% in full-year 2021. That’s well above the 10-year average growth rate of 10%.

I should also add that every new president is given a 100-day honeymoon, which likely means President-elect Biden and his administration will receive little criticism during the first 100 days of his presidency. The Biden administration is also not expected to significantly increase income taxes during the first couple years, given the precarious nature of the U.S. economic recovery.

The outcome of the Georgia senate races this month could impact tax policy. But if the Republicans maintain control of the Senate, I do not expect an increase in the favorable tax rates on qualified dividends or capital gains.

And we can’t forget that the Fed will be keeping interest rates at or near zero through 2023. The 10-year Treasury yield remains below 1%. In comparison, the Dow and S&P 500 yield 2.51% and 1.82%, respectively. So, yield-hungry investors will continue to chase dividend-paying stocks.

The bottom line: There are a lot of factors that should get the stock market firing on all cylinders again.

Preparing for a Prosperous New Year

With that in mind, I look for fundamentally superior stocks to step into the spotlight in January and lead the market higher in 2021. My Platinum Growth Club Model Portfolio stocks are directly in line to prosper, given that they are characterized by at least double-digit earnings growth and have benefited from positive analyst revisions in recent months. So, as investors return to their trading desks, I look for my Platinum Growth Club Model Portfolio stocks to continue to meander higher.

It’s why I made several changes to my Platinum Growth Club Model Portfolio last week to ensure that my Platinum Growth Club subscribers are well-positioned to profit in the New Year, including selling four stocks and adding eight new names.

If you’re interested in my latest recommendations and want to get into position to take advantage of the coming strength with fundamentally superior stocks, now is the time to join me here at Platinum Growth Club. Currently, I have more than 100 stocks across all my services to choose from, and as a Platinum Growth Club subscriber, you have full access to each and every one.

Of course, you don’t have to invest in all 100+ stocks to grow and prosper this year. If you’d rather start small, I have you covered there, too. My Platinum Growth Club also comes with my exclusive Model Portfolio. I handpick all of my Model Portfolio recommendations from my different services – Growth Investor, Breakthrough Stocks and Accelerated Profits – so you can rest assured that you’re always invested in the crème de la crème.

If you’re interested, please click here for full details. And if you decide to join today, not only will you have instant access to all of my recommendations, but you’ll be just in time for my first Platinum Growth Club Live Chat Event of 2021, scheduled for next Monday, January 11, at noon. I will be covering several topics, including my latest thoughts on the current market environment. I will also take some time at the end to answer subscriber questions. So, if you join me at Platinum Growth Club today, you can send me your questions early.

Sign up here now so you don’t miss out!

Note: On Monday, I released my latest Portfolio Grader 500, a quarterly list of some of the best and worst stocks on the stock market right now. In it, you have access to 250 A- and B-rated powerhouses and 250 D- and F-rated sell immediately stocks. As a valued Platinum Growth Club subscriber, this reference guide is yours free. Read it here now.

The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:

Alibaba (BABA)

Weekly Upgrades and Downgrades

During these busy times, it pays to stay on top of the latest profit opportunities. And today’s blog post should be a great place to start. After taking a close look at the latest data on institutional buying pressure and each company’s fundamental health, I decided to revise my Portfolio Grader recommendations for 41 big blue chips. 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 act accordingly.

This Week’s Ratings Changes:

Upgraded: From Hold to Buy
Symbol Company Name Quantitative
Grade
Fundamental
Grade
Total
Grade
ACN Accenture Plc Class A B C B
ADI Analog Devices, Inc. B C B
BHP BHP Group Ltd Sponsored ADR B C B
CAG Conagra Brands, Inc. B B B
CTAS Cintas Corporation B C B
CTVA Corteva Inc B C B
NVO Novo Nordisk A/S Sponsored ADR Class B B C B
PG Procter & Gamble Company B C B
PKG Packaging Corporation of America B C B
PKX POSCO Sponsored ADR B C B
SWKS Skyworks Solutions, Inc. B C B
ZTS Zoetis, Inc. Class A B C B
Upgraded: From Sell to Hold
Symbol Company Name Quantitative
Grade
Fundamental
Grade
Total
Grade
ANTM Anthem, Inc. C C C
BEN Franklin Resources, Inc. C C C
BMY Bristol-Myers Squibb Company D C C
CNC Centene Corporation D B C
EXPE Expedia Group, Inc. C D C
GILD Gilead Sciences, Inc. C C C
KB KB Financial Group Inc. Sponsored ADR D B C
MDLZ Mondelez International, Inc. Class A C C C
NTR Nutrien Ltd. C D C
TEVA Teva Pharmaceutical Industries Limited C D C
ULTA Ulta Beauty Inc C D C
V Visa Inc. Class A C C C
VIAC ViacomCBS Inc. Class B D B C
VMC Vulcan Materials Company C C C
XEL Xcel Energy Inc. C C C
Downgraded: From Buy to Hold
Symbol Company Name Quantitative
Grade
Fundamental
Grade
Total
Grade
BAH Booz Allen Hamilton Holding Corp. C C C
DHI D.R. Horton, Inc. C B C
FBHS Fortune Brands Home & Security, Inc. C B C
LBRDA Liberty Broadband Corp. Class A C C C
LBRDK Liberty Broadband Corp. Class C C C C
SRPT Sarepta Therapeutics, Inc. B D C
WHR Whirlpool Corporation C B C
Downgraded: From Hold to Sell
Symbol Company Name Quantitative
Grade
Fundamental
Grade
Total
Grade
BCH Banco de Chile Sponsored ADR D C D
CM Canadian Imperial Bank of Commerce D C D
GE General Electric Company D C D
MSI Motorola Solutions, Inc. D D D
OTEX Open Text Corporation D B D
TDY Teledyne Technologies Incorporated D C D
WPC W. P. Carey Inc. D B D

To stay on top of my latest stock ratings, plug your holdings into Portfolio Grader, my proprietary stock screening tool. You may get started here.

Sincerely,
Louis Navellier

Louis Navellier

The Big Trends to Watch in 2021

Happy New Year! 2020 was a wild ride to say the least, but it’s in the rearview mirror and we can all be thankful for that.

Now, I’m particularly optimistic about 2021. We’ve got a lot to look forward to this year, and it kicks off with the fourth-quarter earnings announcements in mid-January. That’s when Wall Street should begin to refocus its attention on superior fundamentals, like corporate sales and earnings.

The fact of the matter is that year-over-year sales and earnings comparisons are going to be particularly favorable in 2021. Analysts have also revised earnings estimates up by an average 10.4% in the past three months, so the fourth-quarter earnings season should be spectacular.

In this environment, the best defense remains a strong offense of fundamentally superior stocks. In Growth Investor, on average, my stocks are characterized by 41.6% annual sales growth and 204.2% annual earnings growth.

The bottom line: The New Year is a time for optimism, and my Growth Investor stocks are “locked and loaded” for another prosperous year.

So, while my investment strategy at Growth Investor is not changing in 2021, there are a few big changes on the horizon you should be aware of.

One important one is a weak U.S. dollar.

The U.S. dollar weakened considerably against other major currencies in 2020. The greenback isn’t expected to recover any time soon either, as out-of-control spending and massive federal budget deficits will continue to weigh on the U.S. dollar for the foreseeable future.

Believe it or not, a weak U.S. dollar is actually great news for the multinational and international companies that dominate the S&P 500. Keep in mind that about half of the S&P 500’s sales are from outside of the U.S., so a weak U.S. dollar boosts both sales and earnings. In other words, a weak U.S. dollar can create windfall profits for multinational companies.

Technology companies were certainly some of the biggest beneficiaries of the weak U.S. dollar in 2020, and they should continue to prosper in this environment in 2021. As a result, several of my Growth Investor stocks are well-aligned to benefit from this change in the New Year. Two of my favorites are Adobe, Inc. (ADBE) and Microsoft Corporation (MSFT).

Adobe basically controls the PDF format for documents, and it is the ideal and most-preferred format for email attachments. However, you now have to pay Adobe a license fee to modify PDF documents, and that has added nicely to the company’s top and bottom lines. For the fourth quarter, the consensus estimate calls for earnings of $2.78 per share, or 22.5% annual earnings growth, and revenue of $3.76 billion, or 21.6% annual revenue growth.

Like Adobe, Microsoft charges an annual license fee for individuals and businesses to use its software. So, all those folks—employees and students—that are working and studying remotely are now paying new license fees, and that’s been a boon for Microsoft. Analysts are anticipating that Microsoft’s earnings and sales will grow 8.4% and 9.0%, respectively, in the fourth quarter.

The Scramble for 5G Bandwidth

Another trend to watch closely is 5G wireless technology.

As the work-from-home environment will continue this year, I expect more people and businesses are going to rely on the lightning fast internet speed and low latency (basically, the time it takes to transfer data between its source and destination) that 5G offers. And they’ll do so as they seek to take part in the wave of advances in autonomous vehicles, smart factories and connected sensors that 5G will help enable.

U.S. cellphone carriers are currently scrambling to secure access to 5G wireless licenses being auctioned off by the Federal Communications Commission (FCC), and setting records as they do so.

Already, the FCC has raked in $68.9 billion after three weeks of bids for 5G licenses in the mid-band spectrum, according to the Wall Street Journal. The huge increase has crushed Wall Street’s forecasts for the auctions and blown past the $44.9 billion the FCC raised in 2015 for midrange cellular licenses that mobile carriers used to beef up their 4G offerings.

And the FCC isn’t even done yet. The next auction is scheduled for January 4. The public doesn’t know who won which licenses as the process is a secret until complete, but you can be sure the major carriers like AT&T (T) and Verizon Communications (VZ) are vying for access.

So, let’s take a quick look at how these companies rate in my Portfolio Grader.

As you can see, AT&T gets an overall “Strong Sell” and “F” grade, with an “F” for the Quantitative Grade and a “D” for Fundamentals. Verizon doesn’t fare much better, earning a D-rating for its Overall Grade and Quantitative Grade. This tells me that there’s little interest in the stock from institutional investors like hedge funds and mutual funds.

The good news is there’s a better way to play the rollout of 5G and the technologies it will enable, including several opportunities among my Growth Investor Buy Lists.

One is Taiwan Semiconductor Manufacturing Company Limited (TSM). It was the first dedicated semiconductor foundry in the world when it was founded in 1987. In other words, TSM does not develop or market any semiconductor products under its own brand. So, the company is never in direct competition with its customers. Today, Taiwan Semiconductor is the largest semiconductor foundry in the world, with a 56% market share.

Taiwan Semiconductor manufactures more than 10,760 products that use 272 unique technologies for its nearly 500 customers. The company manufactures semiconductors that are used for computers, consumer, industrial, communications and standard markets. In 2019, Taiwan Semiconductor’s total managed capacity reached more than 12 million 12-inch equivalent wafers.

As the world’s largest semiconductor foundry, it’s not too surprising that Taiwan Semiconductor is benefiting immensely from the 5G boom. Did you know that 5G phones actually have 30% to 40% more semiconductor chips than previous models? This alone has contributed strongly to the demand for TSM’s semiconductors. During the third quarter, the company achieved 46% of its sales from mobile chip sales, and it anticipates 5G demand will drive demand for 5nm chips to account for 20% of sales next year.

The launch of Apple’s (AAPL) new 5G smartphone series will certainly add demand for TSM’s chips. The company is supplying the 5nm chips for Apple’s iPhone 12 5G phones. The chipset, A14 Bionic SoC, contains 171.3 million transistors in each square nanometer, or 15 billion transistors, which compares to only 8.5 billion transistors in Apple’s iPhone 11.

Along with providing chipsets for Apple’s 5G mobile phones, TSM also develops chips for several of the other largest semiconductor companies in the world, including Qualcomm (QCOM), NVIDIA (NVDA), Advanced Micro Devices (AMD) and Huawei. Increased 5G chip demand from each of these companies is sure to add to TSM’s top and bottom lines for the foreseeable future.

In the third quarter of 2020, total revenue rose 21.6% year-over-year to NT$356.43 billion, and earnings jumped 35.9% year-over-year to NT$137.37 billion, or NT$5.30 per share. In U.S. dollar terms, TSM achieved earnings of $0.90 per ADR and revenue of $12.14 billion. The analyst community was looking for earnings of $0.77 per ADR on $11.51 billion in revenue. So, TSM posted a 16.9% earnings surprise and a 5.5% revenue surprise.

Looking forward, TSM expects fourth-quarter revenue between $12.4 billion and $12.7 billion. That forecast was nicely higher than analysts’ initial estimates. As a result, analysts have upped fourth-quarter earnings and revenue forecasts. For the fourth quarter, analysts now expect earnings of $0.93 per ADR on $12.33 billion in revenue, which represents 27.4% annual earnings growth and 18.6% annual revenue growth.

It also earns an A-rating in Portfolio Grader, with an “A” for its Quantitative Grade and “B” for its Fundamental Grade, making the stock a “Strong Buy” right now.

Preparing for 2021 Trends

But I’m just getting warmed up. In my Growth Investor January Monthly Issue, I’ve outlined four other major trends I expect will be important this year, and some of the companies best positioned to take advantage of these trends. In this Monthly Issue, I also unveil my newest buy in the cybersecurity space, as well as two Elite Dividend Payers. You can get the names and my buy advice here.

We’ve got an exciting year ahead of us, and I can’t wait to get started.

But before I go, I have to let you know about one more trend I’ve been keeping a close eye on.

The disturbing fact is that a great divide is opening up in America. On one side is a new aristocracy that’s amassing more wealth, more quickly than any other group in American history. For people like me, the one percent, life has never been better, more prosperous.

On the other side, the opposite is happening. Wealth is flowing out of the pockets of ordinary Americans at an unprecedented rate.

What’s happening is only going to gather in strength over the coming decades. It certainly won’t weaken.

Few Americans even know that any of this is going on. I’ve never seen anyone from my side of the chasm step forward to explain any of these things.

It’s why I put together this video. In it, I’ll lay out exactly what is happening, including several key steps every American should take right now.

It doesn’t matter if you have $500 in savings or $5 million. You can benefit from the information in this video.

It’s free to watch and by doing so I know you’ll be ahead of everyone else struggling to understand what is really going on.

Note: The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:

Adobe, Inc. (ADBE), Advanced Micro Devices (AMD), Microsoft Corporation (MSFT), NVIDIA (NVDA), Taiwan Semiconductor Manufacturing Company Limited (TSM)

The Dark Horse in the Electric Vehicle Race

Competition is heating up in the electric vehicle (EV) space. Investors have largely focused on three companies recently: Tesla (TSLA), Volkswagen Group (VWAGY) and QuantumScape Corporation (QS).

But what if I told you there’s another horse in this race? I’m talking about Apple (AAPL).

Apple has flown under the radar for some time now, secretly working on its own electric vehicle, Project Titan, since 2014. The project has been rumored and then shelved several times, but Apple looks to be finally moving forward with its own self-driving car technology, targeting 2024 for its release date.

Personally, I predict that the Apple car will be made by VW Group, which invested $300 million in QuantumScape before it went public. Interestingly, there has been a “revolving door” between Apple’s Titan team and VW Group’s Project Artemis, nicknamed “LandJet,” to build the first truly revolutionary vehicle with solid-state batteries for Audi, Bentley and Porsche (all owned by VW Group).

The most important person that has gone back and forth from the Titan and LandJet teams is Alexander Hitzinger, who also helped Porsche develop its 919 racecar that won the LeMans race three times and set the track record at Nürburgring, Spa and other famous racetracks.  The 919 racecar is incredible; it was faster at Spa than a Formula 1 racecar with only a 4-cylinder engine and its hybrid technology.

Hitzinger was lured away from Apple’s Titan project by VW Group and announced back in January that VW Autonomy would show off autonomous buses at the World Cup in 2022. 

Regarding Project Artemis, Hitzinger said that “The idea behind Artemis is to have a comprehensive understanding of the vehicle.  When something is optimized, this has knock-on effects and these need to be understood.”  He added that “The human-machine interface, the interior design, the exterior design, aerodynamics and the range are all interconnected.  If I modify something on the exterior, it will impact the aerodynamics and the efficiency.”

Both Apple and VW Group want to introduce their revolutionary vehicles in 2024, which is when QuantumScape will open its first plant to build solid-state batteries before building a second bigger plant in 2025. Essentially, the timelines for both Apple and VW Group are identical, so I am expecting the new “people’s car” to be an Apple vehicle built by VW Group, which will also make a “LandJet” for Audi, Bentley and Porsche.  By combining two highly respected brand names to make a new autonomous people’s car, Apple and VW are both guaranteed to be big winners.

With all the “buzz” about the new Apple car and QuantumScape being the likely solid-state battery supplier, TSLA has been consolidating. The Environmental, Social and Governance (ESG) money that has been chasing “disruptive change,” like Tesla and QuantumScape, do not care about fundamentals like sales, earnings and price-to-earnings ratios.

QuantumScape, in particular, is significantly overbought. The stock briefly hit a $47 billion market cap last week, but keep in mind that its first plant is not scheduled to open until 2024 and is not forecasted to make money until 2027. The truth of the matter is the stock does not have the fundamentals to support its sky-high valuation, so do not be surprised if it consolidates, like it did today.

It’s why I only invest in fundamentally superior growth stocks. These are the types of growing companies that investors will rotate to as Wall Street looks past the hype and focuses more on company fundamentals.

This is especially important as the fourth-quarter earnings season kicks off in mid-January. This will be another phenomenal earnings season, thanks to easy year-over-year comparisons. My Growth Investor Buy Lists are chock full with fundamentally superior companies, so I expect investors to gravitate to my high-quality stocks and drive them higher as their earnings reports roll out.

If you want to get into position to ride the next earnings wave, please join me at Growth Investor today.

And on that note, I’d like to wrap up today’s article by wishing you a happy and healthy New Year! The stock market will be closed on Friday, January 1, as will the InvestorPlace offices. I will be back in touch with my next Market360 article on Saturday, so stay tuned!

Note: There’s a great divide that’s opening up in America. On one side is a new aristocracy that’s amassing more wealth, more quickly than any other group in American history. For people like me, the one percent, life has never been better, more prosperous.

On the other side, the opposite is happening. Wealth is flowing out of the pockets of ordinary Americans at an unprecedented rate.

The thing is, what’s happening is only going to gather in strength over the coming decades. It certainly won’t weaken.

Few Americans even know that any of this is going on. I’ve never seen anyone from my side of the chasm step forward to explain any of these things.

That’s why I put together this video. In it, I’ll lay out exactly what is happening, including several key steps every American should take right now.

It doesn’t matter if you have $500 in savings or $5 million. You can benefit from the information in this video.

It’s free to watch and by doing so I know you’ll be ahead of everyone else struggling to understand what is really going on.

Note: The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:

Weekly Upgrades and Downgrades

During these busy times, it pays to stay on top of the latest profit opportunities. And today’s blog post should be a great place to start. After taking a close look at the latest data on institutional buying pressure and each company’s fundamental health, I decided to revise my Portfolio Grader recommendations for 37 big blue chips. 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 act accordingly.

This Week’s Ratings Changes:

Upgraded: From Hold to Buy
Symbol Company Name Quantitative
Grade
Fundamental
Grade
Total
Grade
CCK Crown Holdings, Inc. B B B
CHKP Check Point Software Technologies Ltd. B C B
MS Morgan Stanley B B B
MT ArcelorMittal SA ADR B C B
Upgraded: From Sell to Hold
Symbol Company Name Quantitative
Grade
Fundamental
Grade
Total
Grade
BURL Burlington Stores, Inc. C D C
EQH Equitable Holdings, Inc. C D C
FITB Fifth Third Bancorp D C C
OTEX Open Text Corporation D B C
SYF Synchrony Financial C D C
TXT Textron Inc. C C C
WPC W. P. Carey Inc. D B C
Downgraded: From Buy to Hold
Symbol Company Name Quantitative
Grade
Fundamental
Grade
Total
Grade
ACN Accenture Plc Class A C C C
BABA Alibaba Group Holding Ltd. C C C
BHP BHP Group Ltd Sponsored ADR C C C
CTAS Cintas Corporation C C C
CTVA Corteva Inc B C C
FDS FactSet Research Systems Inc. C C C
KSU Kansas City Southern B C C
NVO Novo Nordisk A/S Sponsored ADR B C C
PAGS PagSeguro Digital Ltd. Class A B C C
ZTS Zoetis, Inc. Class A C C C
Downgraded: From Hold to Sell
Symbol Company Name Quantitative
Grade
Fundamental
Grade
Total
Grade
BMY Bristol-Myers Squibb Company D C D
CNC Centene Corporation D B D
CNQ Canadian Natural Resources Limited D C D
CRH CRH Plc Sponsored ADR D C D
EMR Emerson Electric Co. D C D
GILD Gilead Sciences, Inc. D C D
KB KB Financial Group Inc. D B D
KEP Korea Electric Power Corporation D C D
MCD McDonald’s Corporation D C D
MDLZ Mondelez International, Inc. Class A D C D
RSG Republic Services, Inc. D C D
TCOM Trip.com Group Ltd. Sponsored ADR D B D
ULTA Ulta Beauty Inc D D D
V Visa Inc. Class A D C D
VTR Ventas, Inc. D D D

To stay on top of my latest stock ratings, plug your holdings into Portfolio Grader, my proprietary stock screening tool. You may get started here.

Sincerely,
Louis Navellier

Louis Navellier

My Favorite Cybersecurity Plays Right Now

The cybersecurity industry has been all over the headlines this past month – and not in a good way.

It started on December 8 with FireEye, Inc. (FEYE). If you don’t know, FireEye is considered one of the best cybersecurity companies in the country. It offers a wide variety of cybersecurity services, including consulting, network security, email security and threat intelligence.

The company was climbing nicely higher following its strong third-quarter earnings results in late October. FireEye unveiled record revenue and earnings. For the third quarter, the company posted earnings of $0.11 per share on revenue of $238 million. Analysts were expecting earnings of $0.07 on $227.7 million in revenue, so FEYE posted a 53.6% earnings surprise and 4.7% sales surprise. It also represented a whopping 450% year-over-year earnings growth and 5% year-over-year sales growth.

However, FEYE’s uptrend came grinding to a halt on December 8 after company management announced that FEYE had been hacked by foreign actors and their Red Team tools stolen.

This is a big deal. According to FireEye CEO Kevin Mandia, “These tools mimic the behavior of many cyber threat actors and enable FireEye to provide essential diagnostic security services to our customers.” He also noted that “the attacker primarily sought information related to certain government customers.”

The stock plummeted more than 13% the following day. While the stock has since regained its losses, I still wouldn’t recommend buying it right now, simply based on its fundamentals. FEYE currently earns a C-rating in Portfolio Grader, making the stock a “Hold.”

Aside from mediocre earnings and operating margin growth, what really stands out to me is the company’s C-rating for its Quantitative Grade. My exclusive quantitative formula measures the institutional buying pressure supporting a stock and then determines the quantitative grade.

Like individual investors, large institutional investors, such as corporations, cities or school systems, invest in stocks for income. These large institutional clients buy chunks of a stock, often worth millions of dollars. Typically, the more attractive a stock currently is to institutional investors, the better the stock will perform in the near term.

Clearly, that’s not the case with FEYE right now.

But it’s not just FEYE that’s had a hacking problem recently. A wide range of U.S. government agencies were attacked, too, including the Treasury Department, Commerce Department, Department of State, Department of Energy, the Cybersecurity and Infrastructure Agency, the National Nuclear Security Administration, Department of Homeland Security, three U.S. states and the City of Austin.

This was due to a breach in SolarWinds Corporation (SWI), which provides IT software management software to more than 425 of the Fortune 500 companies, the top ten U.S. telecommunications companies, the U.S. military, U.S. departments, the top five U.S. accounting firms and universities and colleges. Its Orion Platform, a network monitoring and management software, was hacked via a Trojan horse. This created a “backdoor” for hackers to enter and control the software. Interestingly, it was a FEYE employee who first spotted the SolarWinds hack.

This is a very serious issue, but make no mistake, I believe the need for cybersecurity will only grow in years to come.

The reality is there’s a lot of opportunity here for investors. In 2019, the cybersecurity industry was worth $161.07 billion. In five years, that’s expected to nearly triple to $363.05 billion, according to Mordor Intelligence. So, there’s a lot of growth ahead. It’s just a matter of investing in the right cybersecurity company with superior fundamentals to back it up.

Two Top Cybersecurity Plays

The good news is that I have two for you in Growth Investor. The first is Fortinet, Inc. (FTNT). The company provides unified security solutions that can be deployed over digital networks to protect users against malware, spam and network intrusions. The company provides its security solutions to data centers, enterprises, carriers and distributed offices around the globe. Fortinet currently boasts a portfolio of over 530 patents worldwide.

Since its founding back in November 2000, the company has had a meteoric rise. Over the past 18 years, it has shipped more than four million units of its security solutions. It has built up a base of over 360,000 customers. And since 2002, its revenues have surged from just $2 million to nearly $2.5 billion.

For the third quarter, Fortinet achieved total revenue of $651.1 million, or 19% year-over-year growth. Product revenue accounted for $223.8 million, while service revenue accounted for $427.3 million. Analysts were expecting total revenue of $639.12 million.

Third-quarter earnings increased 24% year-over-year to $145.4 million, or $0.88 per share, up from $117.3 million, or $0.67 per share, in the same quarter a year ago. Analysts were looking for earnings of $0.78 per share, so Fortinet topped estimates by 12.8%.

Looking forward to the fourth quarter, Fortinet expects total revenue between $710 million and $730 million and earnings per share between $0.95 and $0.97. That’s up from earnings of $0.76 per share and revenue of $614.4 million in the fourth quarter of 2019.

Given FTNT’s solid fundamentals and positive future guidance, I look for this high-quality stock to only head higher from current prices.

FTNT also carries a B-rating in Portfolio Grader, making it a “Buy.”

As you can see in the Report Card above, unlike FEYE, FTNT receives a B-rating for its Fundamental Grade, Quantitative Grade and Total Grade. Not only are its fundamentals better, but clearly there’s still a lot of institutional buying pressure to continue driving the stock higher.

The second is a cybersecurity company that I just recommended in my Growth Investor January Monthly Issue last Friday. It recently posted a strong third-quarter earnings report, and walloped analysts’ expectations by more than 18,000%! Looking ahead to the fourth quarter, company management continues to see strong growth ahead. Click here for the name and latest buy advice.

The bottom line: There’s a lot happening in the cybersecurity industry right now, and I look for specific, high-quality stocks to continue to do well as the magnitude of the importance of cybersecurity becomes front and center. If you’re interested in profiting in this growing space, join me here at Growth Investor today.

Note: There’s a great divide that’s opening up in America. On one side is a new aristocracy that’s amassing more wealth, more quickly than any other group in American history. For people like me, the one percent, life has never been better, more prosperous.

On the other side, the opposite is happening. Wealth is flowing out of the pockets of ordinary Americans at an unprecedented rate.

The thing is, what’s happening is only going to gather in strength over the coming decades. It certainly won’t weaken.

Few Americans even know that any of this is going on. I’ve never seen anyone from my side of the chasm step forward to explain any of these things.

That’s why I put together this video. In it, I’ll lay out exactly what is happening, including several key steps every American should take right now.

It doesn’t matter if you have $500 in savings or $5 million. You can benefit from the information in this video.

It’s free to watch and by doing so I know you’ll be ahead of everyone else struggling to understand what is really going on.

The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:

Fortinet, Inc. (FTNT)

Stuff Your Stocking Portfolio With This Gaming Stock

Santa Claus is coming to town, and while the mood turned a bit sour on Monday, I look for the holiday cheer that typically spreads across Main Street to perk Wall Street right back up.

So what stocks should you stuffing in your stocking before the Christmas holiday?

Personally, I like companies in the booming online and mobile gaming business, which has been surging during the pandemic and into the holiday season.

The global mobile gaming market alone reached $75.4 billion so far this year, up 19.5% from 2019, according to Sensor Tower. Five games achieved $1 billion in revenue in 2020, including PUBG Mobile, Honor of Kings, Pokemon Go, Coin Master and Roblox. Some of these games were around last year but saw sales surges in 2020. An example is PUBG Mobile, which brought in $2.6 billion in sales this year, up 64.3% from 2019’s sales figures.

Industry analysts have noted they don’t expect 2020’s uptick in games sales will dwindle next year, either. For instance, in China, one of the world’s largest mobile gaming nations, and where COVID-19 infections and lockdowns are mostly a thing of the past, elevated interest in gaming has persisted.

With that in mind, a great gaming “stocking stuffer” is Logitech International SA (LOGI).

Back in October, LOGI shares surged after the company smashed analysts’ expectations for its second quarter in fiscal year 2021 and upped its full-year guidance.

In its latest quarter, Logitech achieved sales of $1.26 billion, or a 75% year-over-year increase. That crushed analysts’ estimates for $834.55 million. Second-quarter earnings soared 295% year-over-year to $354 million, or $1.87 per share, compared to $89 million, or $0.50 per share, in the same quarter a year ago. Analysts were looking for earnings of $0.57 per share, so Logitech posted a whopping 228.1% earnings surprise.

The outstanding quarter can be attributed to four major trends the company sees working in its favor: working and learning from home, video everywhere, electronic sports driving gaming engagement and participation and the further democratization of content creation.

Sales of PC Webcams climbed 258% from a year prior to $102 million, the first time the company saw sales of the device top $100 million in a quarter, while video collaboration sales rose 161% to $237 million — Logitech’s best ever quarter for the metric. Gaming sales also rose 84% from a year prior as the company’s racing simulation game took off.

Logitech stated, “Our products are essential to helping customers work, play and create wherever they are. Logitech is well positioned for long-term growth.”

As a result, Logitech increased its full-year 2021 outlook. The company now expects to achieve sales growth between 35% and 40%, up from its previous forecasts for 10% to 13% annual sales growth. Full-year earnings are forecast to be between $700 million and $725 million, compared to previous estimates for $410 million to $425 million.

The company also earns the rare AAA-rating in my Portfolio Grader, as it holds an A-rating for its Fundamental Grade, Quantitative Grade and Total Grade.

I added the stock to the Growth Investor Buy List back in August, it’s already up about 31%. I also listed it as one of my Top 5 stocks in Growth Investor.

Aside from being a strong play on the gaming industry, LOGI is also a good example of the type of stock investors will rotate to in 2021 as Wall Street turns its focus more on superior fundamentals.

If you’re interested in the other stocks I expect do well next year, I recommend giving my latest Growth Investor January Monthly Issue a read. In this Monthly Issue, I discuss how I expect the investment landscape to change and where to find the best opportunities. I also unveil my newest buy in the cybersecurity space. You can get the name and my buy advice here.

In the meantime, I hope you have a wonderful holiday weekend! Remember, the stock market will close early on Thursday, December 24, and will be closed on Friday, December 25, in observance of the Christmas holiday.

Note: There’s a great divide that’s opening up in America. On one side is a new aristocracy that’s amassing more wealth, more quickly than any other group in American history. For people like me, the one percent, life has never been better, more prosperous.

On the other side, the opposite is happening. Wealth is flowing out of the pockets of ordinary Americans at an unprecedented rate.

The thing is, what’s happening is only going to gather in strength over the coming decades. It certainly won’t weaken.

Few Americans even know that any of this is going on. I’ve never seen anyone from my side of the chasm step forward to explain any of these things.

That’s why I put together this video. In it, I’ll lay out exactly what is happening, including several key steps every American should take right now.

It doesn’t matter if you have $500 in savings or $5 million. You can benefit from the information in this video.

It’s free to watch and by doing so I know you’ll be ahead of everyone else struggling to understand what is really going on.

The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:

Logitech International SA (LOGI)

More Louis Navellier

Twitter

Facebook

RSS Feed

Little Book

InvestorPlace Network

InvestorPlace.com