We’re now three months into 2019 — but, based on the financial headlines, you might think not much has changed since the beginning of the year.
The U.S. and China are still negotiating in this slow-moving “trade war.” Economies all over the world are posting various, lackluster data points. Brexit is still in the works.
And, by and large, the market is still trucking higher.
But I’m starting to see signs of a big change. One that the talking heads in the financial media, like CNBC or Bloomberg, are ignoring.
It has to do with one of my key indicators: buying pressure. At the end of January — and again at the end of February — institutional money was being deployed in high volumes. That’s normally what you’d expect, as money managers do their “window dressing” before reporting performance.
But here at the end of March, we aren’t seeing a lot of buying. And given that this is not only the end of the month, but the end of a quarter, that’s telling.
Some are taking this as a sign that the “smart money” is selling. However, I think they are simply being more selective. This means that it’s going to “funnel” into fewer stocks…
… the ones that are managing to post strong sales and earnings growth.
That’s why it’s so important to look past the headlines and instead focus on what really matters: the underlying fundamentals.
What’s great about my Portfolio Grader is that it doesn’t look at trade wars and politics. It crunches numbers, and assesses stocks on two fronts: fundamentals and buying pressure…which is exactly what we need to know we’re investing in fundamentally superior companies.
Here are five “stealth” stocks that earned great ratings on both key factors — and, as you can see below, received Portfolio Grader‘s “A” grade on both sales growth and earnings growth.
|Company||Symbol||Sales Growth Score||Earnings Growth Score|
|The Liberty Braves Group||BATRA||A||A|
|E.W. Scripps Company||SSP||A||A|
|World Wrestling Entertainment||WWE||A||A|
Now, while it is important to not get distracted by the major headlines, it is important to follow economic data to get a pulse on the health of the U.S. economy, as those reports can sometimes be market-moving. So, I’ve laid out the key economic reports that will be released next week that you’ll want to keep an eye on.
What to Watch Next Week
Monday: Retail Sales. Through this report, the Commerce Department announces total receipts of retail stores for February. Retail sales do not include spending on services, which makes up over half of total consumption. The report also covers retail sales ex-autos, removing the most volatile consumer purchases. The changes in retail sales are followed closely and are a good indicator of broad consumer spending patterns. This report will be released at 8:30 a.m. Eastern.
Monday: Business Inventories. The Commerce Department’s business inventories will be released at 10 a.m. Eastern. The report includes sales and inventory statistics from all three stages of the manufacturing process (manufacturing, wholesale and retail). The retail inventory number is an important part of this report as it can move the market. The report also can affect the Gross Domestic Product (GDP) outlook.
Tuesday: Durable Goods Orders. At 8:30 a.m. Eastern, the Commerce Department will release this monthly report for February that details the dollar volume of orders, shipments and unfilled orders of durable goods. Durable goods are those items with an intended lifespan of more than three years. Orders for durable goods are considered an excellent indicator of manufacturing activity. It is likely that the stock market will move on this report.
Friday: Unemployment Rate Report. The Labor Department will release its monthly report at 8:30 a.m. Eastern. This is one of the government’s most important reports and is closely watched by investors. Using the number of unemployed and employed persons, the report reveals how many people are looking for and need jobs, as well as wage trends. As such, this report also tends to weigh on the Federal Reserve’s decision on whether to raise key interest rates.
Friday: Consumer Credit. The Federal Reserve will release this monthly measure of consumer debt for February at 3:00 p.m. Eastern. Consumer credit is broken down into three categories: auto, revolving (credit card) and other debt. Periods of strong spending can be accompanied by relatively weak credit growth and vice versa.
I hope you have a wonderful weekend, and I’ll be back in touch next week with my latest thoughts on stocks and the market!