EarningsBeats.com selects the top 10 stocks on the stock market draft… | Exchange places with Tom Bowley

“DRAFT Day” is just one day away! Each quarter, we select 10 equally weighted stocks to form three portfolios: Model, Aggressive, and Income. I have worked in public accounting for 20 years, auditing companies in the Washington, D.C. – Baltimore, Maryland metropolitan area. Most of what I teach generally encompasses technical analysis and how to use it, but I still haven’t abandoned my ‘roots’ in the fundamentals. Profit is important to me. I believe that management must develop a business plan that capitalizes on its strengths and limits the impact of its weaknesses. And the best executives execute their plans flawlessly, exceeding their own expectations and those of Wall Street.

To help executives leverage this clear competitive advantage, we created a flagship ChartList on StockCharts.com called the Strong Earnings ChartList (SECL). I believe that business performance and integrity are very important, so I will not select any company for our three portfolios unless it is part of SECL. There are currently 390 companies in this ChartList. Approximately 7-8% of those will be “drafted” at our “Top 10 Stock Picks” live virtual event tomorrow afternoon. It’s completely free and you’re welcome to join us and watch as I evaluate the current stock market environment and select stocks that are best positioned to profit from that environment. Click here for more information and to register.

Let’s take a look at three companies that could fit into our portfolio and will receive significant consideration.

Walt Disney (DIS)

On the long-term DIS chart, the triple bottom around 80 appears to have held and a new uptrend has begun. DIS hit new highs after successfully completing its first 20-week EMA test since 2020. We haven’t seen anything like this since the 20-week EMA was tested in September/October/November 2020. Check out the following:

The bottom panel is definitely concerning. The Broadcasting and Entertainment Index ($DJUSBC) has performed absolutely horribly compared to the S&P 500 over the past three years. Can DIS do well in such a harsh industrial environment? With DIS providing leadership, will the industry group begin to turn around? That’s a tough call. But what we do know is that DIS just posted excellent quarterly results. Revenues of $23.55 billion were slightly above consensus estimates of $23.41 billion. However, earnings were quite strong at $1.22 per share. Expectations were set at $0.97.

Is DIS a good fit for a first round draft pick? We’ll talk about it tomorrow.

Meta Platform (META)

Many scouts say META could be the No. 1 overall pick in the draft. In an incredibly strong Internet space ($DJUSNS) that ranks second only to Semiconductors ($DJUSSC) in terms of best relative performance versus the S&P 500 over the past year, META has had an industry-leading MVP type season. . colleague. The current chart is as follows:

META is one of eight stocks in last quarter’s model portfolio that are still part of SECL. There’s a good chance he’ll be selected in back-to-back drafts. Over the past three months, META has returned 41.63%, with only Palo Alto Networks (PANW) returning 51.22%. Not surprisingly, our model portfolio returned 21.87% quarterly, dwarfing the S&P 500’s 10.08% return.

Of course, it’s fashionable to say that META, along with every other major technology or communications service name, is overbought. However, those who only look at last year’s STRAIGHT UP moves conveniently want to ignore the fact that META was down 75% the previous year in a cyclical bear market. Market makers were able to purchase these All-Stars at dirt-cheap prices for their wealthy institutional clients. Maybe those institutions could make a #1 draft pick acceptance speech thanking everyone who was embarrassed by the manipulation-induced selloff.

What about the basics of META? Well, last quarter the company had revenue of $40.11 billion, which easily surpassed estimates of $38.99. And instead of the widely expected $4.83 profit, META blew that number, earning $5.33. What’s not to like here?

Let’s see if the name META is called first on Tuesday! Or how about our other seven model portfolio returning starters? Can I re-draft it? We have a really big problem!

AZEK Company (AZEK)

It’s easy to talk about META, AMZN, NVDA, etc., but sometimes our scouting team needs to look deeper and take a stance on potential high-flyers. Yes, their bottom may not be as high as a company like META, but for a smaller company the upside potential can be enormous. AZEK is not in the Hot Technologies (XLK) or Telecommunication Services (XLC) sectors. Instead, AZEK is a $6.6 billion company in the Industrial Products (XLI) sector that designs, manufactures, and sells building products for residential, commercial, and industrial markets in North America. Technically, we’ve had excellent results over the past few months.

Like META, AZEK is a relative leader in the leading industry group of Building Materials & Equipment ($DJUSBD), which I always like to see. DJUSBD is the 8th best performing industry group over the past year. However, AZEK is also a small company, so we know that small caps are struggling compared to large caps. Still, it’s hard to ignore the numbers posted by AZEK. Their revenue was $240 million, compared to expectations of $234 million. And the earnings doubled expectations, $.10 versus $.05. Results like this could change future earnings outlook, especially when guidance is higher. AZEK significantly increased its second quarter revenue guidance to a range of $470 million to $413 million from $381.6 million. So what happens if AZEK exceeds estimates again?

Is the potential here solid enough to warrant a top 10 selection?

We have our work cut out for tomorrow. I will be sequestered in the EarningsBeats.com “War Room” for the next 24 hours to determine where the stock market will go over the next three months and which regions and stocks will benefit from it. If you’re interested, you can find more information and register for the free event here.

Happy trading!

tom