The bulls have retaken control of the stock market in November so far, with all of the major indices charging higher last week. In the first four trading days of the month, the S&P 500 is up more than 4%, and the Dow is up more than 3%.
The rally started after the Federal Reserve decided to keep key interest rates unchanged at 5.25% — and 5.50% at its November Federal Open Market Committee (FOMC) meeting last Wednesday. But more importantly, the Fed also provided a dovish FOMC statement.
As I discussed in last Thursday’s Market 360, the Fed acknowledged that the runup in long-term Treasury rates is now weighing on economic activity. Specifically, it stated, “Tighter financial and credit conditions for households and businesses is likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain.”
The Fed also acknowledged that inflation is still elevated but also did its best doublespeak and admitted that inflation is cooling.
Now that the FOMC meeting is behind Wall Street, investors can return their attention to what’s most important: the third-quarter earnings season.
The third-quarter earnings season has been humming along nicely. 82% of S&P 500 companies have released their latest quarterly numbers, with many reporting better-than-expected earnings and revenues results. According to FactSet, the average earnings surprise is 7.1% and the average revenue surprise is 0.7%. Earnings are expected to grow 3.7% in the third quarter, up from forecasts for earnings growth of 2.6% last week.
FactSet also noted that companies whose earnings fall short of analysts’ expectations see their stock decline an average 5.2% two days before the earnings results are published through two days after the earnings are out.
The bottom line: Companies that miss earnings expectations are being punished by Wall Street.
This also means that we are still in a market environment where the fundamentals matter, and the best way to prosper is with a strong offense of fundamentally superior stocks. So, in today’s Market 360, I’ll reveal 10 stocks with weak fundamentals that you should avoid. And then, I’ll share where you can find the best fundamentally superior stocks.
This Week’s Ratings Changes
After taking a closer look at the latest institutional buying pressure and each company’s financial health, I decided to revise my Portfolio Grader for 122 big blue chips. Of these 122 stocks, 41 were downgraded from a B-rating (Buy) to a C-rating (Hold), and 32 were downgraded from a C-rating to a D-rating (Sell).
I’ve listed the first 10 stocks to sell below, but you can find the full list – including the stocks’ Fundamental and Quantitative Grades – 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 adjust accordingly.
| Ticker | Company Name | Total Grade |
|---|---|---|
| AMX | America Movil SAB de CV Sponsored ADR Class B | D |
| APTV | Aptiv PLC | D |
| AVTR | Avantor, Inc. | D |
| BN | Brookfield Corporation | D |
| CNHI | CNH Industrial NV | D |
| CP | Canadian Pacific Kansas City Limited | D |
| DOV | Dover Corporation | D |
| DTE | DTE Energy Company | D |
| ETR | Entergy Corporation | D |
| F | Ford Motor Company | D |
As an investor who focuses solely on fundamentals, my Growth Investor stocks have done exceptionally well this earnings season. As of last Friday, I’ve had 52 companies release results from their latest quarter. Of these companies, 43 topped analysts’ estimates. My average earnings surprise is an impressive 10%.
I should also add that my Growth Investor stocks remain characterized by 160.8% annual earnings growth and have benefitted from a 7% increase in analysts’ estimates over the past three months.
So, wave-after-wave of positive earnings surprises should drive even more investors to my fundamentally superior stocks and send them soaring.
Case in point: Growth Investor stock Ingredion Inc. (INGR), which develops starches, sweeteners, nutritional ingredients and biomaterials, popped more than 5% in the wake of its third-quarter earnings results today.
Third-quarter adjusted earnings rose 34.7% year-over-year to $2.33 per share, up from $1.73 per share in the same quarter a year ago. Analysts expected adjusted earnings of $1.96 per share, so Ingredion beat estimates by 18.9%. Total sales grew 1% year-over-year to $2.03 billion, shy of estimates for $2.12 billion.
Company management also increased its guidance for full-year 2023. It now expects adjusted earnings per share between $9.05 and $9.45, which is nicely higher than analysts’ current projections for $9.00 per share. The company also anticipates full-year sales growth in the mid-single-digits.
So, if you want to make sure that your portfolio is chock-full of fundamentally superior stocks that can move like INGR did today, then join me at Growth Investor now. You’ll receive instant access to all my Buy List stocks – including my two newest recommendations – and much more.
Click here to sign up for Growth Investor now.
(Already a Growth Investor subscriber? Go here to log in to the members-only website.)
Sincerely,
Louis Navellier
P.S. The big tech companies recognize the impact that AI is having, with each focusing on and infusing it into their companies as they look ahead to the next quarter and even next year. And just as they see the opportunity on the horizon, I firmly believe that the AI boom we’re witnessing will be the biggest opportunity of the next decade.
To take advantage, all you have to do is apply my “Billion Dollar Tech Blueprint” to the AI market and you could turbocharge your investment portfolio in a major way.
And it will work best if you act now while the majority of AI-related stocks are still small and relatively unknown. The AI boom is just getting started and you don’t want to miss out.
That’s why I created this urgent message to share with you how my time-tested “Billion Dollar Tech Blueprint” can properly position your portfolio for the chance to make the most money possible from the AI Revolution.
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:
Ingredion Inc. (INGR)
