Last Friday was a stunning day for the market. The S&P 500, Dow Jones Industrial Average and tech-heavy NASDAQ Composite ended the day up about 3.1%, 2.7% and 3.3%, respectively. For the week, the S&P 500, Dow and NASDAQ rallied 6.4%, 5.4% and 7.5% — a breath of fresh air following two straight weeks of at least 5% declines.
However, the market gyrations picked up steam today. While stocks stormed out of the gate this morning, with the S&P 500 and Dow climbing more than 1% and the NASDAQ jumping about 1% in early trading, the rally fizzled out in the afternoon.
Now, I should note that the strength in tech stocks is interesting to see, given how tough it’s been for the NASDAQ this year. As you may recall, the index officially fell into a bear market on March 7, after it closed 20% from its record high of 16,057.44 set on November 19, 2021. Of course, the NASDAQ still has a long way to go, as it’s still down about 28% from its all-time high. But the fact of the matter is some tech stocks were beginning to show signs of life last week — and that’s being reflected in my Portfolio Grader.
Over the weekend, I revised my Portfolio Grader recommendations for 97 blue-chip stocks, and many stocks that were upgraded from a Sell to a Hold or Hold to a Buy were in the tech industry. I’ve listed the first 10 stocks that were upgraded from a Hold to a Buy in the chart below. For the full list of stocks, click 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 act accordingly.
|Ticker||Company Name||Total Grade|
|AWK||American Water Works Company, Inc.||B|
|BAH||Booz Allen Hamilton Holding Corporation Class A||B|
|BR||Broadridge Financial Solutions, Inc.||B|
|CAG||Conagra Brands, Inc.||B|
|CAH||Cardinal Health, Inc.||B|
|CCI||Crown Castle International Corp||B|
|EA||Electronic Arts Inc.||B|
|EL||Estee Lauder Companies Inc. Class A||B|
Even though tech stocks did turn around a bit, I still believe the best opportunities lie in fundamentally superior energy stocks. Now, I know that the energy sector took a nasty hit recently. We spoke last week about how energy stocks have struggled after the algorithms that control trading on Wall Street finally hit the energy sector following the Biden administration’s letter to seven major oil companies, including Exxon Mobil Corporation (NYSE:XOM), BP plc (NYSE:BP), Shell plc (NYSE:SHEL) and Valero Energy Corporation (NYSE:VLO). The letter called for “immediate actions” to supply more fuel and said his administration was prepared to use “all reasonable and appropriate” tools to help boost the fuel supply.
I should also add that last Wednesday, the Biden administration proposed a three-month federal gas tax holiday. Currently, there is an $0.184 federal tax on gasoline and a $0.244 federal tax on diesel. The biggest political problem with the focus on gasoline taxes is that the refining profit margins are smaller than both federal and state taxes in most states, so the Biden administration’s criticism of refiners is backfiring with many voters. Back in March, Nancy Pelosi called suspending the gasoline tax “very showbiz,” so there is seemingly not a lot of unity in Congress pushing for a federal tax holiday.
The latest blowback on the prices at the pump came from Chevron Corporation’s (NYSE:CVX) chief executive, Mike Wirth, who in a letter to the Biden administration said that “we need clarity and consistency on policy matters ranging from leases and permits on federal lands to the ability to permit and build critical infrastructure, to the proper role of regulation that considers both costs and benefits.”
When asked by a reporter for the Biden administration’s response to Chevron’s letter, CEO Wirth said, “He’s mildly sensitive. I didn’t know they’d get their feelings hurt that quickly.” Chevron is based in California, which has its own unique fuel standards and is used to working with regulators, so if the Biden administration does not reach out to CEO Wirth, it is not a good sign and guarantees that the prices at the pump will remain high.
However, despite last week’s developments, I remain very bullish on fundamentally superior energy stocks — and I’ll explain exactly why in Thursday’s Market360 article, so keep an eye on your inbox for that!
Let me say now though that I am so confident in energy stocks that boast strong sales and earnings that they currently make up my latest Top 5 Stocks list in Growth Investor.
I encourage you to join me at Growth Investor today so you can receive my Top 5 Stocks list, as well as my three brand-new recommendations that not only have strong forecasted sales and earnings growth but have also benefitted from positive analyst estimates and persistent institutional buying pressure.
The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:
American Water Works Company, Inc. (AWK), Broadridge Financial Solutions, Inc. (BR), BP plc (BP), Conagra Brands, Inc. (CAG), Colgate-Palmolive Company (CL), Electronic Arts Inc. (EA), Shell plc (SHEL), Valero Energy Corporation (VLO)