Today is Thursday, which means it’s time for my weekly look at the New Bulls: stocks that just crossed into “Bullish” territory with a Green Zone Power Rating of 60 or higher out of 100.
And let me tell you… it’s a long list.
We have a cornucopia of highly-rated stocks to choose from this week spanning virtually every corner of the market.
Almost every corner, that is.
Tech and tech-adjacent sectors are nowhere to be found.
That’s not a one-week fluke. It’s been the pattern for a while now.
Long-forgotten sectors have been popping up on my Green Zone Power Ratings, while tech stocks have been trending “Neutral” or “Bearish.”
This is exactly what my system is built to do. It doesn’t care what’s popular or what the talking heads are hyping.
It follows the data, and the data often points to opportunities off the beaten path well before your neighbor or coworker hears about them on CNBC. So, let’s jump in, starting with the New Bulls from the S&P 500 Index…
S&P 500 New Bulls
I ran my usual screen for S&P 500 companies that popped up as “Bullish” this week, and this is what I came up with:
With nearly two dozen stocks on the list, I won’t go through every one. But one broad takeaway stands out: This list leans defensive.
Let me show you what I mean…
Health care has been trending “Bullish,” and the two stocks showing the biggest one-month jump in ratings are Pfizer (PFE) and Gilead Sciences (GILD).
It’s far too early to start whispering the “R” word. By most measures, the economy is still strong. But it’s worth pointing out that health care is one of the most recession-resistant sectors.
That’s because most health care spending isn’t optional. When you need treatment, you need treatment.
So if the market’s gyrations are a sign of things to come, health care stocks might be a refuge from the storm.
Utilities are another classic defensive sector, bought mostly as dividend plays for the proverbial widows and orphans.
Well, we have two on the list today: Dominion Energy (D) and Pinnacle West Capital (PNW). And while Waste Management (WM) isn’t classified as a “utility,” per se, it essentially is one.
What is the neighborhood garbage collector if not a monthly utility?
I’d add that Waste Management rates exceptionally well on its volatility and quality factors, with ratings of 88 and 76, respectively. But it’s also no slouch on growth, with a solidly “Bullish” factor rating of 71.
Insurance companies have also been popping up on my New Bulls screen for weeks, and American International Group (AIG) and the Cigna Group (CI) join their ranks today.
Like health care and utilities, insurance is a steady business that’s largely shielded from the ups and downs of the economic cycle.
Then there are the consumer staples…
Church & Dwight (CHD) makes Arm & Hammer baking soda and Trojan condoms. It’s hard to find a more conservative and defensive stock, though Big Tobacco leader Altria Group (MO) comes close.
I’d note that both of these stocks rate exceptionally well on their volatility factor (95 and 94, respectively) and on their quality factors (85 and 75, respectively). These are solid, low-drama companies that are unlikely to give you heartburn.
Of course, when the shekels really get tight, there’s always the value menu at Taco Bell…
Taco Bell parent Yum! Brands (YUM) also made the cut. Like the other consumer staples, YUM rates well on its volatility and quality factors (79 and 82, respectively) and also sports a strong growth factor rating at 82.
What conclusions should we draw from this?
I’m not telling you to sell everything and hole up in a bunker in Idaho. That’s not my style, and it never will be.
But my system is telling us that some of the best opportunities ahead may be in the sleepy, old-school sectors that got left behind during tech’s years-long bull run.
New Bulls Outside the S&P 500
Now, let’s look at the newly “Bullish” stocks outside of the S&P 500…
I ran a screen for the top 20 stocks with the largest score increases over the past month, and this is what popped up:
This list is a little less stodgy and defensive.
We see hotels and airlines well represented in Hilton Grand Vacations (HGV), Norwegian Air Shuttle (NWARF), Republic Airways (RJET) and Xenia Hotels and Resorts (XHR), and these sectors tend to be highly cyclical.
Perhaps this is a reflection of the “K-shaped” economy in which high earners are thriving while middle- and working-class Americans are struggling.
Or perhaps it’s simply a case of my system finding attractive stocks that Wall Street has largely ignored. It could be both!
Regardless, the takeaway is the same. Market leadership is changing. And my system is getting us ahead of those changes long before you read about them in the Wall Street Journal.
To good profits,
Adam O’Dell
Editor, What My System Says Today
