The fallout from Nvidia (NVDA) CEO Jensen Huang’s fall from grace is still unclear.
The AI trade has been sputtering for months, and it remains to be seen whether it can get its groove back without its most important chipmaker leading the charge.
But whichever way that soap opera goes, my system is still finding solid opportunities, both in and outside of tech. So, let’s jump in, starting with the New Bulls from the S&P 500 Index…
S&P 500 New Bulls
As I do every Thursday, I’ll be reviewing stocks that just crossed into “Bullish” territory with a Green Zone Power Rating of 60 or higher out of 100.
And for the second week in a row, it’s an especially long list. We had 20 from the S&P 500, and well over 100 outside of the index.
That’s a good sign.
Take a look:
A few themes jump out right away.
To start, the New Bulls have been trending defensive for the past several weeks, and this week is no different. For example, Big Tobacco giant Philip Morris International (PM) made the cut, following its sister company Altria (MO) last week.
Tobacco is one of the most recession-resistant consumer staples you’ll ever find, and Philip Morris fits the bill. It rates a “Strong Bullish” 94 on its volatility factor, making it one of the steadiest stocks in the entire S&P 500. But it also rates a “Bullish” 78 on quality. This is an objectively high-quality stock that isn’t likely to give you heartburn.
We also see a collection of exceptionally defensive health care stocks.
Labcorp Holdings (LH) is one of the two largest lab testing companies in America. Whenever you get bloodwork done at your doctor’s office, there’s a good chance it gets processed at a Labcorp facility.
And there’s also a good chance the syringe and other equipment your doctor used were sterilized by STERIS Plc (STE), a leader in infection-prevention products and services.
Cencora (COR) and McKesson (MCK) are also about as boring and defensive as you can get. They’re distributors and wholesalers that move pharmaceuticals behind the scenes.
Not all the New Bulls are defensive or low-tech, though. Microsoft (MSFT) – a major AI hyperscalers and a proud member of the “Magnificent Seven” – made the cut for the first time in a long while, as did digital payments pioneers PayPal Holdings (PYPL) and Block (XYZ).
So, while the New Bulls definitely skew toward defensive names these days, my system is telling us that the tech bull market may still have a little gas left in the tank.
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:
How many licks does it take to get to the Tootsie Roll center of a Tootsie Pop?
The world may never know. But closely-held Tootsie Roll Industries (TR) made the cut this week.
Tootsie Roll rarely goes on sale, and today is no exception. The stock rates a 16 on its value factor. But it also rates a “Strong Bullish” 83 and 81 on its volatility and quality factors, respectively.
The Gordon family has run the company as its personal fiefdom for nearly a century, but with the company chair and leading shareholder now over 90 years old, the company has been the subject of takeover or sale rumors for years.
That day may or may not ever come, as the Gordons tend to be tight-lipped about their plans. But in the meantime, investors can buy shares in one of America’s best-known candy brands and enjoy the consistent earnings compounding.
For those who remain curious, competing studies have sought to prove exactly how many licks it takes to reach the Tootsie Roll center, and the debate rages on. Purdue engineering students built a robotic licking machine that required 364 licks. The university’s human control subjects required only 252. A University of Michigan research group found that its rival licking machine required 411 licks.
Moving on, Tootsie Roll wasn’t the only iconic brand from American childhood to make the list.
Mattel (MAT), whose iconic brands include Barbie dolls, Hot Wheels cars and Fisher-Price toys among others, also popped up as “Bullish.”
If you’re looking for a quirky income play, Americold Realty Trust (COLD) is worth a deeper dive. COLD is a REIT that owns and operates temperature-controlled warehouses.
Food producers, processors and retailers use its cold storage and logistics services to move frozen and refrigerated products through the supply chain.
The cold storage market is in the midst of a shakeout of sorts.
Overbuilding after the pandemic has left it oversupplied. That’s not a bad thing for the largest operators like COLD, as it gives them the potential to buy out their competitors on the cheap.
Regardless, COLD’s shares have been trending higher for the past year and yield close to 6%.
To good profits,
Adam O’Dell
Editor, What My System Says Today
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