Weekly Stock Roundup

Investor uncertainty took over in the two weeks leading up to the election.  The CBOE volatility index spiked over 45% to its highest level since late April.  Fear was quelled as ballot numbers rolled in last week and investors embraced the idea of a mixed government, volatility has since lowered back to early October levels.  NBC news and other outlets have projected a Biden win, but the looming possibility of a contested election threatens to hold up progress.  Some analysts say the effects from that scenario may already be baked in. 

Will stocks continue to climb in the weeks to come?

There’s no telling what the future holds, but here’s a look back at some of our recent trades.   

11-02-2020–COST up 6% 

With covid cases spiking to record highs, the stockpiling mentality that began during the pandemic is only likely to grow.  If we get a contested election, people are going to stock up even further.  Warehouse club operator, Costco (COST) will likely continue to benefit as citizens prepare for the winter.  

Digging into the valuation, COST stock does come at a premium, with a forward P/E ratio of 38.03 compared to its industry’s average Forward P/E of 21.62.  But share price for COST stock gained 2.81% last month while the Retail-Wholesale sector only gained 1.34% and the S&P 500 lost 2.23%.

Costco will be looking to display strength as it nears its next earnings release, scheduled for December 10th.  COST is projected to report earnings of $1.97 per share, which would represent year-over-year growth of 13.87%.  Recent positive changes to analyst estimates for COST are a good sign for the company’s outlook.  However, investors should note that the overall consensus projects a slight miss for upcoming earnings.

11-03-2020–BABA up 5%

Alibaba’s U.S. listed share price fell more than 9% following the suspension of the Ant Group’s $37 billion listing, which would have been the world’s biggest IPO.  The loss trimmed BABA’s six month gain to around 47.5% and brought share price down to around 1.5% shy of its buy zone.  BABA share price subsequently recovered more than 6% of the earlier losses into Friday’s close.   

Considering Alibaba’s position at the top of its industry in China, the IPO suspension may be just a setback along the company’s strong path. 

11-04-2020–CBT up 5%

Cabot Microelectronics (CCMP) is scheduled to report earnings on Monday November 9th.  It’s also worth noting that there have been upward revisions in current-year earnings estimates for Cabot, which is a bullish sign.  

Right now, year-over-year cash flow growth for Cabot is 84% which is higher than many of its peers. The historical EPS growth rate for CBT is 34.5%.  The company’s projected EPS is expected to grow 8.5% this year, crushing the industry average, which calls for EPS growth of 3.6%.

11-05-2020–FSLR UP 8% 

First Solar is enhancing its growth strategy.  The company was recently awarded a power purchase agreement (PPA) for a 180 megawatt solar project that will provide the clean energy needs of three General Motors facilities in 2023.  

First Solar recently released strong third-quarter results.  The company reported sales of $928 million, that’s a 70% jump in sales versus the same quarter last year.  Sales were 44% above second quarter revenue of $642 million. 

11-06-2020–ALRM UP 11%

Home security and home automation is a market that has taken off in recent years.  The market is currently valued at $53.6 billion.  And it’s projected to hit $78.9 billion by 2025.

Alarm.com (ALRM) stock has posted growth of 243% over the past five years.  As more home security and home automation solutions become mainstream, demand for Alarm.com’s connectivity solution will likely grow.

Alarm.com just released its third-quarter report.  Statutory earnings performance was extremely strong, with revenue of $159 million, beating expectations by 23% and EPS of $0.71.  That’s an impressive 439% ahead of expectations.