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Earnings Winners Could Put Money In Your Pocket For Years To Come

Published 07/16/2019, 02:14 AM
Updated 07/09/2023, 06:31 AM

It's hard to believe, but it's that time again…

PepsiCo (NASDAQ:PEP) is already out of the gate with strong numbers on the back of snack and beverage sales, especially in higher-growth beverage categories; I mean energy drinks like Mountain Dew Game Fuel, and Bubly sparkling water.

That said, this upcoming batch of quarterly reports is widely expected to be a downer, with the average decline in earnings coming in at 2.6% according to FactSet data.

If that's where the scorecard finishes, it'll be the second straight quarter of declines year over year. By comparison, the average estimated earnings decline was just 0.5%, so this is potentially a big deal.

I say "potentially" because mainstream analysts had the same sort of doom and gloom in mind last quarter, and the numbers were stronger than most folks expected – as was the S&P 500.

Anybody betting on a decline got left on the proverbial bench, caught flatfooted by a market that ran away from them.

And as Chief Investment Strategist, I don't ever want that to happen to you, so listen up…

Here's How To Capture All The Upside

Here's the thing: I believe that earnings will once again be stronger than most people expect, which means you want to be "in to win" if you're serious about profits like I am.

I also believe there will be serious split developing between companies that meet or beat expectations and those that don't.

Technology, healthcare, defense – these are all areas where there's still strong growth, so they're likely to reap stronger future earnings. On the other hand, I see revenue and earnings getting tighter for retailers, and companies incapable of leaning into the future.

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Effectively, they're a value trap for unsuspecting investors.

That's something we don't have to worry about, with our money positioned nicely ahead of tomorrow's growth.

For instance, IDC estimates that 60% of the worlds' GDP will be "digitized" by 2022. At the same time, 75% of all IT spending will be on third-party platforms, which means companies providing integrated data management will monetize fastest.

In fact, the IDC also estimates that 90% or more of all enterprises will build digital native IT environments with specific focus on cloud-centric services, leveraging on-site legacy systems and plugging into consumer data.

That means the average investor could probably double their exposure to data-related firms and still not have enough.

So right now, you need to do three things:

  1. Forget about the Fed and its rate cut. Instead, focus on the Unstoppable Trends and companies that are making "must have" products that dovetail with that. That's how you'll keep the wind in your sails as opposed to against you if I'm wrong and the numbers stink or volatility rears its ugly head.

  2. Be prepared to cut the slackers from your portfolio – immediately and with no looking back. Be ruthless and unsentimental, because any company that doesn't hit its numbers will be pounded mercilessly, and there's nothing you can do about that except move on. Even if you have to take a few lumps here and there, better to do it on your own terms… or a professional trader will separate you from your money to add it to their pile.

  3. Make a list of "buys" that you'll swoop in and buy if given the chance. Some of my favorites include defense plays, cybersecurity, healthcare, and even digital money providers (and I DO NOT mean Bitcoin)… I'm talking Visa (NYSE:V), which is still very inexpensive even at $180.62 a share.
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As always, I will be with you every step of the way.

I just did a column in Total Wealth on market predictability that I want everyone to get the chance to read, and here's why:

I'm developing some new tools to predict the markets and find better investments, and I'm going to be looking for a small group of beta-testers in the months ahead to help me refine 'em. So let me know if that's of interest in the comments below when you have a minute.

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