November was an incredible month for small-cap stocks. The Russell 2000 surged 18.3%, while the Dow and S&P climbed 11.8% and 11%, respectively.
The reality is that small- and mid-cap stocks flourish between November and May. Small- and mid-cap stocks are positively impacted by an “early January effect” that commences as yearend pension funding, annual gift giving and other positive seasonal events heat up. Yearend pension funding and annual gift-giving often create forced buying pressure under smaller-cap stocks, which are more sensitive to volume. As a result, they tend to rally strongly in December and into January.
Thanks to the early January effect, my Breakthrough Stocks, on average, climbed more than 10% in the past month, and one stock soared nearly 100%. And nearly all of my Breakthrough Stocks in my Platinum Growth Club Model Portfolio posted gains in November. Only one stock slipped lower, and its loss was less than 5%. The average gain of my Breakthrough Stocks in the Platinum Growth Club Model Portfolio last month was a stunning 22%.
Aside from seasonal strength, small- and mid-cap stocks are also prospering in the current earnings environment. The third-quarter earnings announcement season was much, much better than analysts were anticipating. According to Factset, as of November 20, about 84% of S&P 500 companies topped analysts’ earnings estimates and 78% beat sales forecasts. Third-quarter earnings declined an average 7.1%, but that exceeded estimates at the start of the quarter for a 21.1% decline.
My Breakthrough Stocks, however, have reported even stronger earnings results this past earnings announcement season. My average Breakthrough Stock posted stunning average annual sales growth of 80.9% and average annual earnings growth of 726%.
In addition, in the past month, the average Breakthrough Stock has had its earnings estimates revised by a stunning 34.9% higher by the analyst community. Looking forward, the analyst community expects 85% average annual sales growth and 445.7% average annual earnings sales growth for my Breakthrough Stocks.
So, I look for fundamentally superior small-cap stocks, and especially my own Breakthrough Stocks, to continue to trek higher.
The reason why is simple: December is one of the strongest months of the year for the stock market.
Historically, December is a seasonally strong month. In the past four Decembers, the S&P 500 and Dow have both posted gains in three out of the four. In 2019, the S&P 500 and Dow tacked on gains of 2.86% and 1.74%, respectively, in December.
Now consider this: The S&P 500 is up about 13% year-to-date. Bespoke pointed out that since 1983, in years when the S&P 500 has rallied 10% or more heading into the month of December, the index has climbed an average 2.25% in December. Considering the holiday season and the potential for three vaccines by yearend, Wall Street is betting on a Santa Claus rally and for the markets to continue to climb higher this month.
I’ll discuss in more detail how I expect the stock market to perform this month in my Breakthrough Stocks December Monthly Issue and what this means for my Breakthrough Stocks, which will be released tomorrow after the market close. I will also reveal three new buy recommendations. If you join me at Platinum Growth Club, you will have access to each and every one.
This also includes seven stocks I added to the Platinum Growth Club Model Portfolio on Tuesday and two stocks to my Accelerated Profits Buy List on Wednesday. All told, I have more than 100 stocks across all my services to choose from!
With that said, you don’t have to invest in all 100+ stocks. If you’d rather start small, I’ve got you covered there, too. This is where my Platinum Growth Club Model Portfolio comes into play. 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.
Case in point: In my Model Portfolio, my Elite Dividend Payers gained 12%, my Accelerated Profits stocks averaged a 20% gain and my Growth Investor stocks climbed more than 7%. And, as I mentioned earlier, the average gain of my Breakthrough Stocks was 22%. And this was just for November!
The reality is that my Platinum Growth Club Model Portfolio remains uniquely positioned to prosper in the current market and economic environment—which is why I expect my stocks to continue to lead the market higher in December.
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 sign up for Platinum Growth Club. My Model Portfolio and Buy List stocks, in particular, are ripe for the picking.
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: