Old News is Good News
The April episode of the Zacks Ultimate Strategy Session is now available for viewing! Tune in to this “must-see” event when Kevin Matras, Kevin Cook, Dr. John Blank and Sheraz Mian discuss the investment landscape from several angles. Don’t miss your chance to hear:
• Sheraz and John Agree to Disagree on whether the end of the U.S. – China trade war will spark a new leg in the bull market
• Kevin Matras answers your questions in Zacks Mailbag
• Sheraz and Kevin Cook choose one portfolio to give feedback for improvement
• And much more
Simply log on to Zacks.com and view the April episode here. And please let us know what you think of this format. Email all feedback to mailbag@zacks.com.
The major indices are still waiting for the next big catalyst to propel stocks higher, but at least today they got a reiteration of some old (but still very good) news. As a result, stocks bounced back from yesterday’s losses to finish slightly in the green.
The NASDAQ jumped 0.69% to 7964.24, while the S&P advanced 0.35% to 2888.21. The latter index’s eight-session winning streak came to an end on Tuesday as the whole market took a break, but being up in 9 of the last 10 sessions is pretty impressive as well.
The Dow spent most of the day in the red as Boeing, which was off another 1.1%, continues to pressure the index. However, a very late-day advance provided a slightly positive close of 0.03% (or a little more than 6 points) to 26,157.16.
It’s always great to be reminded about good news. That’s what happened to the market on Wednesday when the Fed minutes from last month’s meeting reiterated that the Committee doesn’t expect to raise rates this year. The Fed’s change of heart to a more dovish stance provided a major boost to the market and is one of the biggest reasons why we’ve had such a strong start to 2019.
But its still just old news… and the market would like something fresh to make the final push to new highs. A trade deal with China looks to be on the way, which would be a load of our minds even if it doesn’t have a dramatic and immediate impact on stocks. In fact, just today Treasury Secretary Steven Mnuchin spoke about being hopeful that an agreement would be reached soon.
Earnings season could have an even bigger impact, especially since the market is nervous about slowing growth. The quarter is expected to be the softest we’ve seen in years, so stocks could be primed to move higher if the season is even slightly better than the low forecasts. Fingers crossed...
Today's Portfolio Highlights:
Home Run Investor: Homebuilders have been getting stronger. But instead of buying one of the big names in that space, Brian Bolan plans to take advantage of this improvement in a different way. On Wednesday, the editor bought La-Z-Boy (LZB), which everyone knows is a furniture company. Basically, this is a play on interest rates moving lower and, therefore, opening up new home sales. So the idea here is obvious: new homes = new furniture. LZB has a great history of surpassing the Zacks Consensus Estimate, including a beat of more than 14% in its most recent quarter and an average of more than 21% over the past four. Brian also likes that its share price is moving in the right direction. Read the full write-up for more on this new buy.
Surprise Trader: The negative earnings trend for Bed Bath & Beyond (BBBY) reversed course earlier this year. In fact, the turnaround has been so impressive that Dave added this domestics and home furnishings specialty retailer on Wednesday with a 12.5% allocation. This Zacks Rank #2 (Buy) has a positive Earnings ESP of 2.1% for the quarter being reported after the bell today. If the company has a solid report tonight (positive surprise and good guidance), then the editor thinks it could be poised for a solid upside move. By the way, the portfolio also sold Momo (MOMO) for a return of 13% in a little over a month. Read the complete commentary for more on today’s moves.
Healthcare Innovators: After jumping on a big earnings beat and strong outlook in late February, shares of BioTelemetry (BEAT) suddenly took a header around the turn of this month on some bad news for a competitor. However, it appears that BEAT was thrown out with the bathwater, as this mobile cardiac telemetry leader does not have the same problem with extended wear holters as its competitor iRhythm. So now after a 25% decline from all-time highs, Kevin sees BEAT as a solid opportunity for long-term investors in a device and services innovator who has helped Apple do heart monitoring research. Read the full write-up for a lot more on this buy.
Until Tomorrow,
Jim Giaquinto
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