The coal industry is one of the most under-the-radar ponds to fish in.
Investors write it off because "clean energy" will displace the industry. While this is likely true, we think it will take far longer than most expect.
In the meantime, this extreme mispositioning is our opportunity to profit.
You would have made a fortune if you bought these stocks at the depths of the COVID crash. Far more than if you purchased the hottest "work from home" stock.
These stocks had their best day in years last summer after a major Australian coal mine caught fire and halted production.
While we haven't seen the upside follow-through we anticipated, the setup looks ripe for the bulls to take control.
Let's dive into the charts.
Our Coal Index is testing a key level of interest:
Our Coal Index rallied from 5 to 40 from 2020 to 2022, making it the best industry group during the post-COVID bull market.
Since then, it has churned sideways in a well-deserved digestion of gains.
For the market to experience a meaningful correction, we need to see clear signs of defensive rotation—and so far, that hasn’t happened.
In the bond market, U.S. Treasuries are viewed as the defensive play, especially compared to their High Yield counterparts.
It’s the same concept in equities when you compare Consumer Staples to the broader S&P 500. If the environment favors risk-taking, both Treasuries and Staples should underperform.
Overlaying the Treasuries versus High-Yield ratio (IEI/HYG) with the Staple vs S&P 500 ratio (XLP/SPY), you’ll notice they move in the same direction.
Currently, both are trending lower and making new lows, signaling no defensive positioning from bond or equity investors.
As long as these lines keep trending down and to the right, there’s nothing to worry about for risk assets. But if they start to turn higher, that would be a key warning sign of trouble ahead, potentially...
A stock featured in a recent Junior Hall of Famers report has triggered an entry today, and it has a lot of room to run.
Earnings are on the horizon, but we'll play this stock with a defined-risk spread that takes a little of the sting out of the options' cost while giving us the ability to participate in upside follow-through should we get it.
Our International Hall of Famers list is composed of the 100 largest US-listed international stocks, or ADRs.
We've also sprinkled in some of the largest ADRs from countries that did not make the market cap cut.
These stocks range from some well-known mega-cap multinationals such as Toyota Motor and Royal Dutch Shell to some large-cap global disruptors such as Sea Ltd and Shopify.
It's got all the big names and more–but only those that are based outside the US. You can find all the largest US stocks on our original Hall of Famers list.
The beauty of these scans is really in their simplicity.
We take the largest names each week and then apply technical filters in a way that the strongest stocks with the most momentum rise to the top.
Based on the market environment, we can also flip the scan on its head and filter for weakness.
Let's dive in and take a look at some of the most important stocks from around the world.
One of my junior analysts (Rick! He's the Man!) brought a stock to my attention that is in an attractive sector that could fly under the right conditions.
Add to this that there is a high short interest and there is "meme" stock potential, and this could really be an upside portfolio-buster for us.
In this scan, we look to identify the strongest growth stocks as they climb the market-cap ladder from small- to mid- to large- and, ultimately, to mega cap status (over $200B).
Once they graduate from small-cap to mid-cap status (over $2B), they come on our radar. Likewise, when they surpass the roughly $30B mark, they roll off our list.
But the scan doesn't just end there.
We only want to look at the strongest growth industries in the market, as that is typically where these potential 50-baggers come from.
Some of the best performers in recent decades – stocks like Priceline, Amazon, Netflix, Salesforce, and myriad others – would have been on this list at some point during their journey to becoming the market behemoths they are today.
When you look at the stocks in our table, you'll notice we're only focused on Technology and Growth industry groups such as Software, Semiconductors, Online...