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🏃♂️ Going From Worst to First
Plus, some low volatility picks to play amid market turmoil
Happy Sunday to everyone on The Street.
The week before last, we asked you about "The Midday Trade." Here's how you voted:
🟩🟩🟩🟩🟩🟩 💚 I absolutely loved it
🟨🟨🟨🟨🟨⬜️ 💛 It was okay
🟨⬜️⬜️⬜️⬜️⬜️ ❌ I didn't like it
I'm pumped that a majority of you at least thought it was okay, and even absolutely loved it. Here are two responses that I felt encapsulated a majority of the feedback on both ends of the spectrum:
From the "I absolutely loved it" crew: “Excellent product offering, highly useful Mid-day market recap. Please continue beyond this 60-day trial period.”
From the "I didn't like it" cohort: “Too many emails, I just need one per day”
For all of the people who said they absolutely loved "The Midday Trade," don't worry. We're whiteboarding an idea right now that I think you'll love.
For those who feel like you just need one email per day, rest assured that's what you'll be getting moving forward. Unless you want more, of course, which is what we're working on :)
More to come, but for now, enjoy the dog days of summer. We're gearing up for an amazing fall. We hope you have an amazing rest of the month with your family, friends, and of course, these crazy markets.
Big things coming,
Brooks
By the way, before we dive in, today’s partner is packing 40 years of investing secrets into one free guide. Grab it here.
TOGETHER WITH DIVERSIFIED TRADING INSTITUTE
Investing expert Tom Busby's free guide, the Little Black Book, could do two things:
First, empower everyday traders to make what could be more profitable choices and second...
It could make the execs on Wall Street absolutely furious.
Find out why today!
Hunkering Down
Some Low-Volatility Stocks
High-flying, mega-cap stocks were winning trades for investors for much of this year. But the tide has turned over the last few weeks.
Nvidia (NVDA) saw its shares fall by double digits over the last month. Microsoft (MSFT), Amazon (AMZN), Apple (AAPL), and some other notable tech names are well off their 52-week highs.
With this market turmoil, some researchers are dusting off the book on low-volatility stocks.
Safety Dance
CNBC compiled a list of stocks that historically have slighter market moves and large dividend payouts.
The list included some equities within the REIT and food sectors.
Stocks on the list have dividend yields of over 2%, earnings growth above 5% for the last three years, and have outperformed the S&P 500 over the last month.
Fast food giant McDonald’s (MCD) and snack producer Mondelez (MDLZ) made the cut. Both have dividend yields around 2.5% and an average price target over 10% higher than current levels.
Morgan Stanley recently put out a bullish note on McDonald’s, citing its attractive valuation and new value offerings to drive more traffic.
Property Bros
The REITs on the CNBC list include Equinix (EQIX) and VICI Properties (VICI).
Wells Fargo is an Equinix bull. The firm recently upgraded the stock, expecting data center demand to build over the next year as artificial intelligence usage grows.
VICI Properties specializes in entertainment properties like casinos. The stock is up around 14% over the last month and offers investors a dividend yield of roughly 5.3%. The company beat estimates in its last earnings report, and analysts were impressed with revenue numbers.
These low-volatility picks could help investors balance out their portfolios in a time of market uncertainty.
Which stock on this list would you buy? |
Going From Worst to First
Turning Things Around
Real estate stocks have underperformed the broader market so far in 2024. But asset management group Janus Henderson thinks the sector holds some untapped potential.
Portfolio manager Greg Kuhl thinks one type of REIT could be in for a comeback. Industrial REITs have performed poorly when compared to other assets in the real estate world. However, construction data shows that supply is expected to decrease towards the end of 2024 while demand remains strong.
Location, Location, Location
Industrial REITs purchase, manage, and lease industrial facilities. The industry as a whole was dragged down in April when real estate giant Prologis (PLD) downgraded its outlook for the year. In July it raised its outlook back up.
Construction reports are showing that new builds are slowing nationwide, but supply and demand logistics should be more favorable for REITS in certain areas. Kuhl pinpointed the Sun Belt and the Midwest as locations with potential.
REIT Picks
There are a few REITS that Kuhl is bullish on, including EastGroup Properties (EGP) and First Industrial Realty Trust (FR). EastGroup owns properties throughout the Sun Belt and its dividend yield currently sits around 2.7%.
First Industrial owns properties across the country, including many along the coasts. Its share price is well below many of its competitors and it currently yields around 2.7% as well. Many of First Industrial's properties were acquired at low valuations, and Kuhl expects it to fill currently un-leased buildings with below-market rents. The analyst doesn’t think this competitive edge is currently factored into the stock.
As construction slows and demand stays high, these industrial REITs could be well-positioned to take advantage of the situation.
Are you bullish or bearish on industrial REITs over the next 12 months? |
This Toy Company Isn’t Playing Games
Breaking the Mold
The Chinese economy has been rocky lately, but toy company Pop Mart (9992-HK) managed to bring in double-digit growth over the first half of 2024. According to the company, revenue and profits should grow another 55% and 90%, respectively.
In response, Morgan Stanley (MS) raised its price target on the stock. However, the share price has fallen since the company’s commentary, thanks to a general decline among Asian stocks.
IP Is Key
According to analysts from CLSA, the toy company should be opening 30 new retail locations in China this year, with sales growth of 21%.
Morgan Stanley analysts believe that much of Pop Mart’s growth is due to online sales, offline sales growth, and Pop Land, the company’s theme park that opened last year.
Pop Mart considers intellectual property as its most important asset, but it’s branching out into offerings like art, gaming, and animation. In the future, the toy company’s IP could also include games and movies. Focused efforts to grow retail by utilizing Pop Land could help to lengthen IP cycles as well.
Differing Opinions
Jefferies (JEF) analysts like Pop Mart’s strategy of focusing on IPs and investing in them through various avenues.
Morgan Stanley gave the stock an overweight rating and a price target of HK$52. Despite the recent drop, the stock is still up over 90% YTD. However, Chinese analysts aren’t as bullish, giving it a price target of only HK$27.39. They cited the company’s June sales falling 6% year-over-year.
Pop Mart has been more than resilient in a difficult year for the Chinese economy. If Morgan Stanley analysts are correct, it could have a lot more room to run.
Are you bullish or bearish on Pop Mart (9992-HK) over the next 12 months? |
TOGETHER WITH DIVERSIFIED TRADING INSTITUTE
Investing expert Tom Busby's free guide, the Little Black Book, could do two things:
First, empower everyday traders to make what could be more profitable choices and second...
It could make the execs on Wall Street absolutely furious.
Find out why today!
How do you see LVMH (LVMUY) stock?
🟨🟨🟨🟨🟨⬜️ Bullish 🐂
🟩🟩🟩🟩🟩🟩 Bearish 🐻
Are you bullish or bearish on jet engine makers over the next 12 months?
🟩🟩🟩🟩🟩🟩 Bullish 🐂
🟨🟨🟨🟨🟨⬜️ Bearish 🐻
Which stock do you think will outperform over the next 12 months?
🟨🟨🟨🟨⬜️⬜️ Bristol Myers Squibb (BMY)
🟩🟩🟩🟩🟩🟩 AbbVie (ABBV)
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