Quant Ratings Updated on 102 Stocks Dear Reader, There’s no real way to sugarcoat it, folks. The world is a bit of a mess right now. Global chaos has intensified recently – and I’m not just talking about the ongoing conflicts in the Middle East or between Russia and Ukraine. Over the weekend, rebel forces captured major cities in Syria, including Aleppo, Hama, Homs and Damascus. Rebel leader Hassan Abdul-Ghani is now in charge after launching a surprise, 11-day offensive and storming the Presidential Palace. Syrian President Bashar al-Assad and his family were forced to flee the country, and they have reportedly been given asylum in Russia. Iran and Russia protected Assad for decades, but both countries have withdrawn their protection – and that opened the door for the fall of Assad after 50 years of rule. Clearly, there is a leadership vacuum in the Middle East, and it will be interesting to see which countries establish diplomatic relations with Syria’s new leader. Further east of Syria, South Korea is facing its own leadership challenges. In a nationally televised address last week, South Korean President Yoon Suk Yeol stated that he imposed Martial Law to protect the country from “anti-state forces” and North Korean sympathizers. Six hours later, though, President Yoon accepted Parliament’s vote and lifted Martial Law. President Yoon narrowly escaped impeachment after this incident because impeachment requires a two-thirds vote from Parliament. Yoon’s People Power Party has slightly over one-third of the votes in Parliament, but much of his party has deserted him. The chaos in South Korea hasn’t spread to other Asian nations yet, but other countries are adding to the current chaotic environment around the world. Take Europe, for example… Last week, the French government collapsed over a budget battle. Marine Le Pen’s National Party pushed a no-confidence vote that passed by 331 votes (288 required), which could force a new election in 60 days. The fact is President Macron’s party holds a minority in Parliament, while the National Rally Party holds the most seats. As a result, it continues to undermine Macron’s authority. So far, President Macron hasn’t declared a new election. He even stated in a nationwide address last week that he does not intend to leave and will strive to assemble a new administration that will appease Marine Le Pen. In my opinion, that’s an impossible task, and France will remain rudderless in the near term.
Adding to Europe’s leadership crisis is Germany’s upcoming election. The country is expected to form a new government after the February election. The reality is that Germany has fallen into a recession, and it is worsening. In fact, union workers at nine Volkswagen AG (VWAGY) plants commenced two-hour strikes last week due to fears of impending layoffs and plant closures. These strikes are anticipated to expand to four hours at select plants this week. Virtually the entire automotive sector in Germany is suffering from a big drop in global demand. The reality is the Eurozone is “headless” right now. Between France’s budget woes and Germany’s upcoming election, as well as the fact that two of Europe’s largest economies are now in a recession, it’s clear that the Eurozone as a whole is now at risk of falling into a recession. If the Eurozone chaos persists, do not be surprised if the euro “breaks the buck” against the U.S. dollar. In other words, dollar-euro parity may be forthcoming. Overall, amidst all the chaos in the world, the U.S. remains an oasis. The fact of the matter is that the U.S. has a big economic advantage compared to other nations. The U.S. economy grew at a 2.8% annual pace in the third quarter, and the Atlanta Fed currently estimates 3.3% annual GDP growth in the fourth quarter. And with the presidential election complete (and uncontested), the U.S. isn’t dealing with political chaos, either. So, I anticipate a flight to quality and a strong U.S. dollar will continue to drive more and more investors back to the U.S. This Week's Ratings Changes Here in the U.S., markets began the first week of December on the right foot. Both the S&P 500 and the NASDAQ had their third straight positive week. And, after climbing 1% and 3.3%, respectively, last week, both indexes closed at record highs on Friday. This strength was, in part, thanks to the November jobs report. Last Friday, the Labor Department announced that 227,000 payroll jobs were created in November. That was slightly higher than the consensus expectation of an increase of 220,000. Most importantly, the unemployment rate rose to 4.2% in November, up from 4.1% in October due to a declining worker participation rate. Since the Fed has been more worried about unemployment than inflation lately, I expect the Federal Reserve will cut key interest rates by 0.25% at its Federal Open Market Committee (FOMC) meeting on December 18.
However, we will still want to watch for two key inflation measures later this week: the Consumer Price Index (CPI) on Wednesday and the Producer Price Index (PPI) on Thursday (look for a Market 360 later this week covering both of these reports.) In the meantime, I want you to feel confident that your portfolio is set to grow as we finish the year. So, I looked at the latest institutional buying pressure and each company's financial health. I decided to revise my Stock Grader (subscription required) recommendations for 102 big blue chips (subscription required.) Of these 102 stocks… - Nine stocks were upgraded from a Buy (B-rating) to a Strong Buy (A-rating).
- Twenty-eight stocks were upgraded from a Hold (C-rating) to a Buy (B-rating).
- Fifteen stocks were upgraded from a Sell (D-rating) to a Hold.
- Three stocks were upgraded from a Strong Sell (F-rating) to a Sell.
- Sixteen stocks were downgraded from a Strong Buy to a Buy.
- Twenty stocks were downgraded from a Buy to a Hold.
- Six stocks were downgraded from a Hold to a Sell.
- And five stocks were downgraded from a Sell to a Strong Sell.
I’ve listed the first 10 stocks rated as Buys below, but you can find a more comprehensive list – including all 102 stocks’ Fundamental and Quantitative Grades – here. Chances are that you have at least one of these stocks in your portfolio, so you may want to give this list a skim and adjust accordingly. | AAL | American Airlines Group Inc. | B | | ALNY | Alnylam Pharmaceuticals, Inc | B | | AMZN | Amazon.com, Inc. | B | | AU | Anglogold Ashanti PLC | B | | AUR | Aurora Innovation, Inc. Class A | B | | AZO | AutoZone, Inc. | B | | CHTR | Charter Communications, Inc. Class A | B | | CRDO | Credo Technology Group Holding Ltd. | B | | DKS | Dick's Sporting Goods, Inc. | B | | DSGX | Descartes Systems Group Inc. | B | Put a Powerful Quant System at Your Fingertips As I mentioned in last Thursday’s Market 360, Stock Grader is the “secret sauce” behind some of the big wins of my career. It helps me identify “what’s working” in the market at any given time. It’s how I made over 700% on an online discount retailer in China called Vipshop Holdings Ltd. (VIPS) a few years ago. It’s also led me to current winners in my Growth Investor service, like NVIDIA Corporation (NVDA) – where we’re sitting on a gain of 3,100%! The point is getting into the right stocks at the right time is extremely difficult for most investors. But not for those who set aside their human biases and follow a proven quantitative system. That’s why Stock Grader has been so powerful in helping me find long-term winners. And it’s why I’ve also been telling readers about my friend and InvestorPlace colleague Luke Lango’s all-new Auspex system. His powerful quant system blends different fundamental, sentiment and technical factors to find stocks that can hand you long-term gains in short-term holding periods. To see how it’s done, click here to save your spot at Luke’s Auspex Anomaly webinar. It all happens tomorrow, Dec. 11, at 1 p.m. Eastern. Sincerely, | .png)
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