Weekly Performance Review

U.S. equities were able to squeak out weekly gains for all the major indexes, as the vaccine optimism that has driven stocks to fresh record highs was countered by Congress’ struggle to pass a fiscal relief and government funding deal with a shutdown hours away as the trading session ended Friday. Markets were higher for the week, as the DJIA was 0.4% higher, the S&P 500 increased 1.3%, and the Nasdaq Composite jumped 3.1%.

Congress finally reached a deal on a $900 billion coronavirus relief package after days of start and stop efforts.  Futures were little changed by the announcement.  We’ll see where the upcoming week takes us.  

As for last week’s WSWD trade performance, all finished the week in the green.  Continue reading to find out how we did.   

12-14-2020–GOLD up 2.72%

Considering the potentially hefty cost of Joe Biden’s policy platform, with the economy still in rough shape, the combination of increased government spending with sagging receipts could mean massive budget deficits for the foreseeable future.  Under that scenario, it would make sense to incorporate an inflation and dollar devaluation hedge.  

Gold, considered a hedge against inflation and currency debasement, has gained over 21% this year, helped by massive amounts of stimulus to support pandemic-hit economies. Gold has been under some pressure after the stalling of the relief plan in Congress, but with a new package now in the pipes analysts are expecting gold to move higher.  

Gold’s rally may extend into 2021 and beyond on dollar wobbles amid rising geopolitical risk in a lower for longer interest-rate environment.  Considering the potential increased government spending in 2021, gold seems like a good bet. 

12-16-2020–ALB up .02%

Albemarle (ALB) is one of the world’s top producers of lithium, which is used in batteries for electric vehicles and mobile devices, among other applications.  It produces lithium from its own assets in Chile, Nevada and in Australia.  The Chilean operation is among the world’s lowest-cost sources of lithium, according to Morningstar analyst Seth Goldstein.  

Greater adoption of EVs and buildout of large batteries for energy storage is expected to drive lithium demand growth 600% over the next decade, according to Goldstein.  Albmarle plans to nearly double its lithium production by the end of 2021.  Moreover, “We expect the company to continue investing in increasing its Lithium capacity after 2021,” the analyst says, likely through acquisitions or brownfield capacity expansions.  

Albemarle – also a supplier of catalysts for the petroleum refining and chemical industries – suffered a big hit to sales and profits in 2020, but both are expected to rebound in 2021.  



12-17-2020–CVLT up 6.62%

If you can stand a little risk, the rewards from small-cap tech stocks can be rich. 

CommVault Systems (CVLT) offers software to back up, manage, protect and recover data, via both the cloud and on-site systems.  The New Jersey based firm says its software makes it a leader in data resiliency.  About 80% of CVLT revenues are on some sort of subscription basis, which is typically viewed as more stable and predictable. 

John Freeman of CFRA, one of a few analyst outfits that use Strong Buy ratings gives one to CommVault.  He cites a laundry list of points that back up the bull case, including “solid progress for CEO (Sanjay) Mirchandani’s turnaround plan,” the expansion of a Microsoft (MSFT) partnership, attractive valuation and “large conservative, loyal customers.”  He adds that the company had $341 million in net cash as of June.  

12-18-2020–SYK up 0.78%

Stryker’s (SYK) medical devices range from implants used in joint replacements and spinal surgeries to surgical equipment and navigation systems.  

Analysts at Canaccord Genuity say Stryker should be a “core position for growth-oriented investors.” Based on 21 analysts offering recommendations, 13 rate the stock a Strong Buy.  There is 1 Moderate Buy rating, 6 Hold ratings, and 1 analyst rates the stock a Sell.  Argus Research analysts rate SYK a Buy and see the stock hitting $265 per share over the next 12 months.