On Monday morning, Keith Gill was in the news again. You may remember him as Roaring Kitty of the Reddit-fueled meme stock mania back in 2021.
A few weeks ago, Gill posted a cryptic meme suggesting he was active again. Then, on Sunday, Gill shared a screenshot on Reddit showing that he had apparently bought 5 million shares of GameStop Corporation (GME), along with 120,000 call options.
The total stake was estimated to be worth about $175 million. GME shares were up by as much as 75% in premarket trading Monday morning and finished the day up 21%.
Now, if this is the beginning of another meme stock mania, the media is going to spend a lot of time covering this nonsense. But I don’t want you to get too caught up in the hysteria. The fact is there are more things worth our attention in this market right now.
For example, the European Central Bank is expected to announce key interest rate cuts on Thursday. The Bank of England may follow shortly thereafter.
Our central bank, the Federal Reserve, was supposed to cut key interest rates in June. But after progress stalled on bringing inflation in line, they decided to postpone. As a result, we may not see our first cut until July 31st or September 18th.
Since our Fed will be lagging behind Europe, it’s expected to increase what’s called the “carry trade.” This is where foreigners put money into the U.S. bond market, seeking higher yields and a stronger currency.
It will be interesting to see what happens as a result. If these carry trades approach a trillion dollars or more, it could actually drive Treasury yields lower and encourage the Fed to cut sooner than later.
So, let’s hope that global rates decline and that Treasury yields follow.
I realize that that the global bond market may not be as entertaining as a revival of the meme stock mania. But it’s far more consequential – and it’s just one item among a laundry list of important developments I’m monitoring.
This Week’s Ratings Changes
But despite all of these distractions, the fact is individual and institutional investors’ attention has shifted back to stocks with superior fundamentals. In fact, I ran a backtest recently, which showed that the top 60% of stocks with the highest fundamental scores in Portfolio Grader have outperformed the broader market.
Now, I want to help ensure that you remain in fundamentally superior stocks – and avoid stocks with weak fundamentals. So, I went ahead and took a fresh look at the latest institutional buying pressure and each company’s financial health and revised my Portfolio Grader for 74 big blue chips. Of these 74 stocks…
- 6 stocks were upgraded from a Buy (B-rating) to a Strong Buy (A-rating)
- 19 stocks were upgraded from a Hold (C-rating) to a Buy (B-rating)
- 17 stocks were upgraded from a Sell (D-rating) to a Hold
- 14 were downgraded from a Buy to a Hold
- 16 stocks were downgraded from a Hold to a Sell
- And only two stocks were downgraded from a Sell to a Strong Sell (F-rating)
I’ve listed the first 10 stocks rated as a Sell below, but you can find a more comprehensive list – including the stocks’ Fundamental and Quantitative Grades – here. Chances are that you have at least one of these stocks in your portfolio, so you may want to give this list a skim and adjust accordingly.
| Ticker | Company Name | Total Grade |
|---|---|---|
| A | Agilent Technologies, Inc. | D |
| ACM | AECOM | D |
| BEPC | Brookfield Renewable Corp. Class A | D |
| BSBR | Banco Santander (Brasil) S.A. Sponsored ADR | D |
| CTSH | Cognizant Technology Solutions Corporation Class A | D |
| DOCU | DocuSign, Inc. | D |
| HRL | Hormel Foods Corporation | D |
| JHX | James Hardie Industries PLC Sponsored ADR | D |
| KHC | Kraft Heinz Company | D |
| LECO | Lincoln Electric Holdings, Inc. | D |
The bottom line is that the market may get a bit wild this summer. But as long as you are invested in the crème de la crème of the market – i.e. the stocks with superior fundamentals – you can expect to come out ahead.
For example, 21 of our Accelerated Profits Buy List stocks posted double-digit gains between 10% and 29% last month!
What’s more, our Buy List stocks are characterized by 25.9% average forecasted sales growth and 26.6% average forecasted earnings growth. So, I expect our stocks to continue to emerge as new market leaders no matter what the market has in store for us next.
That’s because the “secret sauce” behind our recommendations is a quantum data system, which we harness according to our strict criteria. This helps pinpoint the best fundamentally superior stocks the market has to offer.
This approach has proven to work time and time again… In fact, 19 of our current Buy List stocks are up by 50% or more!
To learn more about my Accelerated Profits service, including how we use our cutting-edge quantitative data system to identify our picks, go here now.
(Already an Accelerated Profits member? Click here to log in to the members-only website now.)
Sincerely,
Louis Navellier
Editor, Market 360
