I haven’t got to let you know that these markets have been robust.
Final week was notably attempting, as we had been seeing indicators of a downtrend reversal earlier than Thursday’s excessive inflation report, coupled with heightened tensions between Russia and Ukraine, pushed the markets again right into a downtrend, The headfake reversal got here with elevated volatility and it is sufficient to drive an investor to drink. Or to tobacco. Heck, even playing at a on line casino appears like a good suggestion about now.
In all seriousness, shares from these areas have a historical past of performing properly throughout robust market environments. The Dow Jones Playing Index gained 63% in the course of the first yr of the Tech bubble burst in 2000, whereas the Dow Jones Tobacco Index gained 145% that yr. Brewers gained 75% in 2000, with the inventory we’re highlighting at the moment from this group gaining much more.
DAILY CHART OF PHILLIP MORRIS (PM)
Let’s check out a well known Tobacco firm, Phillip Morris (PM). The corporate has seen progress in rising markets, which has countered a slowdown within the U.S. and Europe. The true future for the corporate, nonetheless, is their heated tobacco system, which the corporate claims is way much less dangerous than conventional cigarettes. Gross sales of this product have surged and, yesterday, PM broke out of a 5-month base on quantity after reporting sturdy 4th quarter outcomes, with administration guiding increased for earnings this yr.
Tobacco shares are sometimes seen as being protected towards inflation, given the sector’s sturdy pricing energy and skill to lift costs. Phillip Morris’s 4.9%-yield is a bonus as properly, as higher-yielding shares are identified to outperform in periods of rising rates of interest.
DAILY CHART OF BOYD GAMING CORP. (BYD)
Amongst Playing firms, Boyd (BYD) has been trending increased following the discharge of 4th-quarter outcomes earlier this month. The corporate got here in with earnings that had been 193% above final yr, as easing COVID-related restrictions have introduced operations again to full capability.
The information pushed BYD into an uptrend on above-average quantity, which helped push the inventory out of a 4-month base. The inventory may be purchased on a pullback to its 5-day transferring common, as its constructive RSI and MACD level to additional near-term upside.
DAILY CHART OF MOLSON COORS BREWING CO. (TAP)
Final up is beer producer Molson Coors (TAP), which is within the throes of making an attempt to reverse a prolonged downtrend; this has put the inventory at a P/E of 13 instances final yr’s earnings. The corporate has ventured into the metaverse with their Meta Lite Bar, simply in time for the Tremendous Bowl. TAP introduced a brand new enterprise with Coca-Cola (KO) in late January, the place they’re going to be launching spiked juices beneath the Merely model. The Merely model is Coca Cola’s 2nd largest by way of income and the partnership ought to assist increase Molson’s backside line down the highway.
TAP would wish to maneuver additional above its 200-day transferring common on quantity earlier than reversing its downtrend. The two.7%-yielder already has a constructive RSI and MACD, with a bullish crossover going down.
As talked about, the markets have been robust, and the at present excessive volatility is anticipated to be with us for some time because the Federal Reserve — and traders — can be centered on each financial knowledge report within the coming months. It is a very unsure interval and, if you would like to be alerted to when the markets flip constructive once more, in addition to different areas we count on to do properly regardless of an ailing market, use this hyperlink right here to trial my twice weekly MEM Edge Report for 4 weeks at a nominal charge.
Final yr, this top-performing publication posted over 110 prompt holdings and 75% of them had been profitable shares. Of the shedding names, the typical loss was 4%. Use this hyperlink right here and you may achieve instant entry to my most up-to-date reviews.
On this week’s version of StockCharts TV’s The MEM Edge, I evaluation the place the markets are headed and which areas are poised to climate the elevated volatility. I additionally share the place to cut back your publicity because the Fed begins their rate of interest hike cycle.
Mary Ellen McGonagle, MEM Funding Analysis
Mary Ellen McGonagle is knowledgeable investing guide and the president of MEM Funding Analysis. After eight years of engaged on Wall Avenue, Ms. McGonagle left to turn out to be a talented inventory analyst, working with William O’Neill in figuring out wholesome shares with potential to take off. She has labored with shoppers that span the globe, together with large names like Constancy Asset Administration, Morgan Stanley, Merrill Lynch and Oppenheimer.
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