November 30, 2017
Last week, the stock market brushed off its early November doldrums to rally ahead of Thanksgiving. In fact, both the S&P 500 and the Dow breached new all-time highs again. It was encouraging to see I'm not the only one who thinks this bull market has more room to run. In fact, we're smack dab in the middle of the seasonally strong time of year. But that also means it's a good time to trim the dead weight in your portfolio and make sure your stocks are ready to soar.
You can do this by checking your stocks in Portfolio Grader. When you run your holdings through this screening tool, take note of each stock's Quantitative Grade (the current level of institutional buying pressure) and each stock's Fundamental Grade (a weighted blend of eight financial metrics). Also check which of your stocks are rated as Conservative, Moderately Aggressive or Aggressive. Shoot to have 60% of your holdings in Conservative stocks, 30% in Moderately Aggressive and 10% in Aggressive.
I can't stress this last point enough because aggressive stocks will be the first ones to take a beating during a correction. That's why you want to limit your exposure to these "spicier" stocks. To get you started, here are 15 aggressively-rated stocks you'll want to steer clear of in the coming month.
|AKS||AK Steel Holding Corporation||F||D||F|
|AQMS||Aqua Metals, Inc.||F||D||F|
|ASNA||Ascena Retail Group, Inc.||F||F||F|
|BBOX||Black Box Corporation||F||C||F|
|BW||Babcock & Wilcox Enterprises Inc||F||D||F|
|ICON||Iconix Brand Group, Inc.||F||D||F|
|JONE||Jones Energy, Inc.||F||C||F|
|MBOT||Microbot Medical Inc||F||C||F|
|NVIV||InVivo Therapeutics Corporation||F||D||F|
|ODP||Office Depot, Inc.||F||C||F|
|PGNX||Progenics Pharmaceuticals, Inc.||F||D||F|
|PTI||Proteostasis Therapeutics, Inc.||F||D||F|
|SHOS||Sears Hometown & Outlet Stores, Inc.||F||D||F|
So far this year, the S&P 500 has jumped more than 15%, and the Dow has surged nearly 19%. And the strong earnings environment, corporate tax reform and 3% GDP growth are a few reasons why the stock market is expected to continue its climb higher in 2018.
Of course, I'm looking for my Emerging Growth Buy List to do even better, especially in the next few months. As we've discussed before, small- and mid-cap stocks tend to outperform large-cap stocks in November—and well into the New Year. An early "January effect" coupled with yearend pension funding and other seasonal buying pressure often drives small- and mid-cap stocks higher between November and April.
Already, our Emerging Growth Buy List stocks have been vastly outperforming the broader indices. Since the November issue was posted on November 10, our Buy List has surged nearly 5% higher. But if you aren't ready to join Emerging Growth right now, simply stay tuned into this blog in the days and weeks to come where I'll keep you up-to-date on the market.
Until next time,