The Dow Jones and the S&P 500 are both in the red Tuesday.
However, NASDAQ Futures are ticking higher on positive news from Tesla and Amazon.com.
Despite falling 161 points this morning, the Dow is back within striking range of 30,000.
Today, we’re looking at the continued rotation out of growth stocks and into value stocks.
Beaten down stocks have been rallying after Pfizer and Moderna both announced vaccines with efficacy rates north of 90%.
I’ll discuss the state of the economy, and why new opportunities are forming to snap up some great companies from any tech selloff.
I’ll also talk about my Watch List and Berkshire’s latest moves.
On Tuesday, there are a few key things we want to explore. I’ll be live today talking about the economy and the markets.
And then I’ll be outlining a few new trades for my Family Portfolio to take advantage of the trends that I foresee.
But keep in mind, if you don’t attend, you will not get access to the picks I’m outlining today.
Right now, we’re witnessing a rotation from high-growth stocks to the value stocks tied to any economic recovery. I think that a selloff in several growth stocks is a mistake for so many investors. An opportunity will exist to snap up some of the best long-term tech companies on the cheap with this rotation happening.
In addition, I think that people might be overestimating the impact of a COVID vaccine right now. There are a few things that continue to limit the upside of certain value stocks.
- Congress has not gotten together to focus on extending unemployment benefits. Unless Congress doesn’t get moving on a deal, about 13 million Americans will see their benefits end come January. This will impact their ability to pay rent, buy food, and pay other bills.
- A vaccine will require significant time to deploy. There are serious logistical challenges, including the need to store vaccines in pricy cold storage containers. It appears that getting the vaccine to cities will be far less of a challenge than it will be to deliver it (in two doses) into rural areas.
- Viral cases continue to surge. Despite a sharp downturn in testing here in the states, cases are exploding across the Midwest and the Western United States. This trend could fuel additional shutdowns, more furloughs, and new problems for the U.S. economy.
As usual, there is a disconnect between the state of the economy and the state of the stock market.
After all, in the analysis we did last week, I found that the company with the strongest balance sheet, the lowest probability of bankruptcy, and strong cash flow was…
If the company that does “rent to own” sales of lamps and cheap electronics doesn’t tell you the state of the U.S. economy, nothing will.
Tickers in Focus
TSLA: Elon Musk is now the third-richest person in the world. Shares of TSLA popped more than 12% on news that the company will join the S&P 500. This could provide a big pop to other companies in the electric vehicle and battery space.
Right now, Tesla has the same market capitalization as Walmart at more than $420 billion. Walmart is the largest private employer in the U.S. It generates 10% of ALL RETAIL in the nation. Revenue for Walmart was north of $500 billion. Tesla was $24.5 billion. This is an incredible difference between expectations for Walmart (which isn’t going anywhere) to Tesla, who most believers think will overhaul the future of batteries, engines, and electric vehicles.
HD: Home Depot shares are off 1.2% despite an incredible surge in same-store sales last quarter. The company reported an increase in comparable stores by 24%. That number almost doesn’t make any sense for a firm this size. The company beat revenue and sales expectations. But for too many analysts, the question is “What 2021 will look like for this company?” HD said it’s going to be spending a lot of money on employees who helped it navigate COVID, which will impact profitability in the medium term.
AMZN: Amazon.com announced the launch of its own online pharmacy, sending competitors stocks tumbling. Amazon Pharmacy will make it easier for customers to get access to their prescription medicines online. The new program will provide two-day shipping for Prime Members. The deal expands on Amazon’s purchase of PillPack and the company’s infrastructure.
This morning, shares of Walgreens Boots Alliance (WBA), CVS Health (CVS), and Rite Aid (RAD) were all off more than 6% on the news that Amazon is moving into their territory.
MY STOCK WATCH LIST
PRTY: Party City Holdco shares rallied more than 6.7% on Monday. Shares have rallied by 87% since October 28 after a busy round of insider buying. But be cautious now. Director James Harrison just dumped $693,000 in stock. Insider buying overall remains positive, but this is the first major sell that has come in months. This one will definitely not be part of my conversation later today.
BRKA: Berkshire Hathaway has just slashed its stake in gold miner Barrick Gold (GOLD) by 42%. What else did Berkshire Hathaway do during the third quarter? Given that Berkshire is typically well ahead of the big money trends, let’s take a look at the SEC filing.
Berkshire bought 2.4 million shares in T-Mobile (TMUS) during the quarter. This could signal that BRKA is optimistic about the future of 5G for the company.
The conglomerate picked up shares of pharmaceutical giants like Abbvie (ABBV), Merck (MRK), Pfizer (PFE), and Bristol Myers (BMY).
Buffett’s firm cut its Apple (AAPL) stake by 3.7%. It sold most of its position in JPMorgan Chase (JPM). It also sold stakes in other financial firms like Wells Fargo (WNC) and PNC (PNC).
Again, please remember that I’ll be live again today at 2 PM.
You should attend, right here.
Remember, there will be no replay of today’s event.