SPECIAL ALERT: The November episode of the Zacks Ultimate Strategy Session is now available for viewing! Tune in to this “must-see” event when Kevin Matras, Tracey Ryniec, Daniel Laboe and David Bartosiak discuss the investment landscape from several angles.
Don’t miss your chance to hear:
▪Tracey and David Agree to Disagree on whether investors should still buy Bitcoin after hitting new highs
▪ Kevin answers several questions in Zacks Mailbag, including How will the stock market react if Congress fails to pass their stimulus bill? When would you expect a recovery in Chinese stocks? How can you avoid big losses?
▪ David and Daniel choose one portfolio to give feedback for improvement
▪ And much more
Simply log on to Zacks.com and view the November episode here. And please let us know what you think of this format. Email all feedback to mailbag@zacks.com.
SPECIAL ALERT #2: A new Space Race is now fully underway and analysts predict it will become a $2.7 trillion market. With NASA’s commitment to put humans on the moon by 2024 and recent trips to space by Richard Branson and Jeff Bezos, space exploration is making headlines like never before. Investors can begin positioning themselves now for a chance at significant short-term profits and long-term wealth-building. But the companies we believe are the best investments may not be the ones you would guess. Stock Strategist Jeremy Mullin has just released Space Exploration: The Next Trillion-Dollar Industry, a detailed Special Report highlighting 4 space exploration stocks with massive upside. Log on to Zacks.com to read it now.
Believe it or not, the market didn’t set new highs on Tuesday! Instead, stocks took a well-deserved break as we prepare for another update on inflation.
The NASDAQ slipped 0.60% (or about 95 points) to 15,886.54, while the S&P declined 0.35% to 4685.25. Thus ends an eight-day run of record closes for these indices, which began back on Thursday, October 28. Shares of Tesla (NASDAQ:TSLA) continued moving lower, dropping today by 12%. Meanwhile, the Dow was off 0.31% (or around 112 points) to 36,319.98.
“While the stock market breaking higher and making all-time highs each and every day is fun, it’s not going to last forever,” said Dave Bartosiak in Surprise Trader. “Today the furious rally paused, retreating from the highs and taking a breather. Most of the damage was done in the first 45 minutes of the session.”
We got our first of two straight days of inflation data on Tuesday. The PPI for October was up 0.6% month over month and 8.6% year over year. Those results are sweltering... but they’re also pretty much as expected.
“We got the Producer Price Index this morning, giving us a feel for inflation on the wholesale side. This data came in as expected, so no surprises ahead of the CPI tomorrow,” said Jeremy Mullin in Counterstrike. “The year over year number is scary, coming in at 8.6%. However, remember where we were a year ago at this time when nerves were high and the vaccines had yet to arrive.”
Tomorrow’s CPI report is expected to be just as scalding as the PPI. Expectations are for a 0.6% increase in consumer prices with a surge of about 6% year over year. If the actual results stay within these ballparks as the PPI did today, then the market should be able to digest the data without a sharp inflation-induced selloff as we’ve seen in the past.
Elsewhere, this strong earnings season is quickly winding down, but there’s still some major household names yet to report. For example, the big release on Wednesday will be entertainment giant Disney (DIS) after the bell.
Today's Portfolio Highlights:
Headline Trader: Semiconductor demand is soaring these days, so it would be great to find an under-the-radar name from this hot space. Well, Dan thinks he’s found just that with Smart Global Holdings (NASDAQ:SGH), a designer, manufacturer and supplier of electronic subsystems to OEMs. This Zacks Rank #1 (Strong Buy) has been beating the Zacks Consensus Estimate by an expanding percentage over the past three quarters. In addition, it more than doubled profits in its fiscal 2021 (ended in late August) on rapidly-expanding margins and accelerated sales growth. The editor is a big fan of SGH’s “new forward-thinking chief”, who has already improved its operational performance and ramped up R&D spending to stay ahead of the innovative curve. In other news, the portfolio also sold its “slow-moving” FedEx (NYSE:FDX) position. Read the full write-up for a lot more on today’s addition. By the way, this service also included a couple top performers on Tuesday as Riot Blockchain (NASDAQ:RIOT) gained 8.6% and Alight (ALIT) rose 7.1%.
Stocks Under $10: The service is fully-invested once again at 15 positions after today’s addition of Accuray (NASDAQ:ARAY), maker of the CyberKnife that cuts cancer out of people with robotic precision. Earnings estimates for the full year jumped to a profit of six cents from a loss of two cents over the past 60 days. Next year advanced to 27 cents from 19 cents in that time. It’s no wonder why Brian thinks this Zacks Rank #2 (Buy) should be a Zacks Rank #1 (Strong Buy). The editor also appreciated that topline growth jumped 26% in the most recent quarter. Learn more about today’s buy in the complete commentary.
Surprise Trader: Everything auto-related has been doing great of late with prices soaring, so that’s why Dave added Shift Technologies (SFT) on Tuesday. The company provides an end-to-end auto ecommerce platform. Revenue growth is expected at 204% for this year and another 72% next year. SFT has a positive Earnings ESP of 14% for the quarter coming after the bell this Thursday. The editor added SFT today with a 12.5% allocation, while also selling SM Energy (NYSE:SM) for 11% in exactly two weeks. Read the full write-up for more on today’s moves.
TAZR Trader: Shares of Luminar Technologies (LAZR) jumped nearly 15% on Tuesday after news of a partnership with NVIDIA (NASDAQ:NVDA). LAZR is a provider of light detection and ranging (LIDAR) technologies of autonomous vehicle platforms that Kevin bought back in late July and then added to in early October. Basically, these sensors help self-driving cars gain a three-dimensional view of the road by boomeranging lasers from all directions. And those are the sensors that NVDA wants in its Hyperion autonomous vehicle platform. LAZR was the best performing stock among all ZU names on Tuesday. And it just so happens that NVDA is the biggest winner in the portfolio right now by soaring 155% since inception. In similar news, The Trade Desk (NASDAQ:TTD), which was yesterday's top performer, kept showing off today with the second biggest gain of 9.4% in the wake of a nice beat-and-raise quarter.
Zacks Short Sell List: The portfolio cashed in TWO double-digit winners on Tuesday while changing four positions. The stocks that were short-covered today included:
• StoneCo (STNE, +37.2%)
• Zillow Group (NASDAQ:ZG, +23.5%)
• Huazhu Group (NASDAQ:HTHT, +3.3%)
• SunPower (NASDAQ:SPWR)
The new additions that filled these spots were:
• Caesars Entertainment (NASDAQ:CZR)
• Chegg (NYSE:CHGG)
• JD.com (NASDAQ:JD)
• Shake Shack (NYSE:SHAK)
Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short Sell List Trader Guide.
Until Tomorrow,
Jim Giaquinto
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