The markets saw a fair share of ups and downs in May, but the S&P 500 and the Dow both ended on a high note, with the S&P 500 climbing 0.5% and the Dow rising 1.9%
Now, the question on everyone’s mind is if this strength will carry over into June.
I personally deem the next three months as the “bumpy summer months.” Interestingly, though, June is a decent month and July is historically a strong month for the stock market; it’s the month of August that gives the summer months a bad name on Wall Street.
June is still one of the weaker months of the year, but not nearly as weak as September. According to our friends at Bespoke, the Dow has posted an average gain of 0.41% in June over the past 100 years. In the past 50 years, the Dow has risen 0.12% in June, posting gains 52% of the time. But looking at the past 20 years, the Dow has posted an average decline of 0.71%.
But my fundamentally superior stocks, though, often exhibit tremendous relative strength in June for one simple reason: persistent institutional buying pressure.
Regular readers of Market360 may recall that the second half of June is typically characterized by quarter-end window dressing.
Simply put, at the end of every quarter, institutional investors will want to make their portfolios “pretty” before the end of June, and smart beta and equally weighted exchange traded funds (ETFs) are also rebalanced every 90 days. Together, these two events create forced buying pressure under my Platinum Growth Club Model Portfolio stocks, simply given their strong forecasted earnings and sales growth, as well as their recent outperformance.
Take Logitech International S.A. (LOGI), for example. I recommended the Swiss maker of home office equipment and other tech gadgets to my Platinum Growth Club subscribers back in December 2020.
Thanks to strong demand for its products, Logitech crushed analysts’ earnings estimates for its fourth quarter in fiscal year 2021, when it reported results April 29.
Fourth-quarter adjusted earnings soared 245% year-over-year to $1.45 per share, up from $0.42 per share in the same quarter a year ago. Analysts were expecting adjusted earnings of $0.83 per share, so LOGI crushed estimates by 74.7%.
Fourth-quarter sales surged 116.6% year-over-year to $1.54 billion, which also beat analysts’ expectations for $1.1 billion. For its fiscal year 20201, Logitech also achieved total sales of $5.25 billion, or 74% annual sales growth, and adjusted earnings of $6.42 per share, or 199% annual earnings growth.
Company management commented, “Fiscal year 2021 was our best year ever. It has been rewarding to see Logitech’s products play an essential role, enabling work, creation, connection and entertainment.”
As you can see from the chart below, Logitech shares climbed nicely higher for about a week after the company reported its outstanding earnings and sales figures.
Shares then dipped for about a week as the stock “burped” and digested its gains. After that, though, investors came roaring back into this fundamentally superior stock and shares started soaring again, climbing nearly 15% since April 29. Meanwhile, the S&P 500 increased 0.1% over the same timeframe, while the Dow rose 1.7% and the NASDAQ fell over 2%.
So, it should come as no surprise that Logitech remains a “Strong Buy” in my Portfolio Grader, with a Total Grade of “A” and a Quantitative Grade of “A,” which represents institutional buying pressure under the stock.
But there’s plenty more profit potential ahead for Logitech.
Given the strong finish to its fiscal year 2021, the company upped its guidance for fiscal year 2022. Logitech now expects full-year earnings between $800 million and $850 million, up from previous guidance for $750 million to $800 million.
Upping Your Investing Game
I have more than 100 stocks across all of my services, and each and every one boasts strong earnings and sales growth. My Platinum Growth Club Model Portfolio stocks have been posting wave-after-wave of positive earnings results in the most-recent quarter, which, in turn, has dropkicked and driven many of them higher.
Of course, you don’t have to invest in all 100+ stocks. If you’d rather start small, I’ve got you covered there, too. My Platinum Growth Club service comes with my exclusive Model Portfolio. I handpick all of my Model Portfolio recommendations from my different stock services – Growth Investor, Breakthrough Stocks and Accelerated Profits – so you can rest assured that you’re always invested in the crème de la crème.
And as a Platinum Growth Club subscriber, you’ll also have full access to all of my services, including every Weekly Update, Monthly Issue and Flash Alert, as well as exclusive Platinum Growth Club Live Chat Events.
The great news is you really couldn’t be joining at a better time, as I am releasing five new additions to my Platinum Growth Club Model Portfolio in my Platinum Growth Club Monthly Issue today, as well as another stock to my Accelerated Profits Buy List analysts expect will post triple-digit, year-over-year earnings and sales growth. Plus, I will be publishing my Breakthrough Stocks June Monthly Issue on Friday, which you can read as well. Here, I’ll be revealing eight exciting new buys.
Note: The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owned 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 S.A. (LOGI)