Weekly Performance Review May 24th – 28th, 2021

Equities moved higher this week with growth stocks and cyclical stocks leading the way.  Consumer Discretionary stocks also contributed to the weekly gain as the retail sector continued to put the finishing touches on Q1 earnings season.  Strong results and guidance from names like The Gap, Best Buy, and Dick’s Sporting Goods bolstered expectations of a robust economic recovery as vaccine rollouts continue to ramp up and allow pandemic restrictions to ease further.  Friday’s report on PCE prices essentially came out in-line and bond yields responded to the downside, which may have helped build investor confidence.  

The Dow added 0.9% this week and for the month of May added 1.9%.  The S&P 500 advanced 1.2% for the week and was able to eek out a 0.6% gain in May.  Both indices broke two week losing streaks and posted their fourth up month in a row.  The tech-heavy Nasdaq rose 2.1% to post its best weekly performance since April 9.  However, it wasn’t enough to make up for May losses.  The Nasdaq suffered a 1.5% loss this month for its first negative month in seven.  

Congratulations to our readers who followed Monday’s trade alert and bought shares of emerging fintech company Affirm Holdings (AFRM).  Since we issued the trade alert share price for AFRM has risen nearly 15%.  For more market insight and to find out how our trades did this week, continue reading.  

05-24-2021_AFRM up 14.95%

Affirm Holdings (AFRM) is an emerging fintech company that is best known for their buy now, pay later (BNPL) solution for retailers and shoppers.  As one of the top three players globally in the BNPL space, they believe they can reinvent the payment experience. The stock has been in free fall since it’s $139 February peak, partly due to investor sentiment. 

If you believe that BNPL will become a regular fixture in fintech like Max Levchin, PayPal co-founder and creator of Affirm, than you may be considering a positon in AFRM, which is possibly the best pure play on BNPL available.  

Of 8 analysts covering the stock, 4 recommend to Buy AFRM and 4 call it a Hold.  There are no Sell ratings.  An average price target of $76.88 points towards a 44% increase from its current price, which is around $53.  

05-25-2021_HCAT up 3.09%

The pandemic induced shutdown of March 2020 sent shares of healthcare cloud platform operator, Health Catalyst (HCAT) plunging to an all time low of $23.39.  But it actually created an excellent buying opportunity as the stock has more than doubled since –  and the Wall Street pros covering the stock say this strength will likely continue.    

At Raymond James, five-star analyst John Ransom reiterated his Strong Buy recommendation, citing that he expects business to accelerate in the coming months as the COVID-19 crisis gradually abates.  

“Post-pandemic we expect to see increased demand for Health Catalyst suite of solutions and note that the discounts provided to customers in the depths of the pandemic should buy a significant amount of goodwill and is evidence of the company’s dedication to helping providers improve,” writes Ransom, who specializes in the Healthcare sector.

Health Catalyst shares have added about 22% since the beginning of the year versus the S&P 500’s gain of 13% and there may be plenty of runway ahead.  

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05-26-2021_ETSY down 2.14%

The online marketplace for crafts and handmade goods, Etsy (ETSY), saw its business soar during the pandemic, posting four subsequent quarters of triple-digit revenue growth.  However, due to concerns about slowing growth and stretched valuation, the stock is now down 32% from its February peak.  The concern seems overdone.

Many of Etsy’s new users will remain beyond the pandemic as the company offers a unique platform, and for both buyers and sellers there isn’t a similar marketplace offering the vast customer base or the breadth of unique products that Etsy has. 

The company also demonstrated the profitability of its model during the pandemic, turning in an adjusted EBITDA margin of 33% in the first quarter and earnings per share of $1.00.  ETSY sports a consensus Buy rating.  An average price target of $226.13 implies a 34% upside for the stock.  

05-27 -2021_NTES up 1.66%

NetEase’s (NTES) leading position in the video game market is expected to grow at a double-digit CAGR over the next decade.  NTES also has shown the ability to develop and launch new games that are well-received by the public and partner with foreign developers to bring popular games to the Chinese market. 

The current consensus among 32 polled analysts is to buy NTES.  There are 28 Buy ratings, 3 Hold ratings and only 1 Sell ratings for the stock. 

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05-28-2021_IDNA up 0.95%

One area of the market that can offer hefty returns is biotech.  It’s not unheard of for a winning biotech stock to produce 10x or 20x returns in a very short period of time.  But biotech companies are difficult to evaluate due to the speculative nature of their technologies, and due to the breadth of knowledge, experience, and education required to understand them.  Although this is true for all industries, it is particularly true for biotech. 

iShares Genomics Immunology and Healthcare ETF (IDNA) holds a concentrated portfolio of global companies in the biopharmaceutical and healthcare equipment and services industries that could benefit from the long-term growth and innovation in genomics, immunology and bioengineering. 

It’s worth noting that IDNA beat Cathie Woods’ ARK Genomic Revolution ETF (ARKG) in the first ten weeks of 2020, when global markets were rocked by the coronavirus outbreak and investors were eagerly hunting for potential profit in companies researching treatment and vaccines.  

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