Stocks Under $10 Weekly Summary (original) (raw)

Note: Given the Thanksgiving holiday and abbreviated market hours on Friday, we are coming to you with an abbreviated Roundup. We will resume our regular Roundup format and timing next week.

The Stocks Under $10 Portfolio Last Week

Last week we closed the books on November, a month that saw all key major U.S. stock market indices climb, led by the Nasdaq Composite Index, which rose 4.5%. Close behind were the Nasdaq 100 and the Russell 2000, which both rose 4.0% for November, while the S&P 500 and the Dow Jones Industrial Average trailed the others. Despite that lag November marked the best month for the S&P 500 since June. Fueling the market indices were on-again, off-again hopes that a U.S.-China trade deal was possible and data that showed a domestic recession was becoming less likely.

President Trump last week said the U.S. is in the "final throes of a very important deal" with China, but he is "holding up" the deal to get better terms. More trade talk ping pong is what it seems like, and that view was confirmed over the weekend when China’s Global Times newspaper shared the following, “A US pledge to scrap tariffs scheduled for December 15 cannot replace the rollbacks of tariffs.”

We think market watchers are growing increasingly tired of this “He said, Xi said” back and forth with trade talks and our concern is the longer a phase-one deal takes the greater the risk that investors and the market could be underwhelmed. We say this knowing full well the market has put in several new highs of late across various indices.

Last week we received fresh domestic economic reports that should help refine current-quarter GDP forecasts from the upwardly revised September-quarter print of 2.1%. Core capital goods orders for October rebounded to +1.2%, the highest reading in several months.

Today we received the final November IHS Markit US Manufacturing PMI as well as the November ISM Manufacturing Index, and simply put they were at odds with each other. While the November IHS Markit Manufacturing PMI for the U.S. pointed to a faster rate of improvement with its 52.6 reading, up from 51.3 in November, complete with the pace of new order growth quickening during the month, ISM’s findings showed November manufacturing activity dipped month over month to 48.1. Key ISM indicators, including new orders, employment, backlog of orders and new export orders all fell in November. Subsequent to that and other key data to be had this week (more on that below), we’ll be checking the Atlanta Fed and New York Fed for their latest December-quarter GDP forecasts.

In terms of consumer-facing data, Wednesday’s October Personal Income & Spending report may have thrown some cold water on those holiday spending expectations mentioned above. October income was flat, missing the expected 0.3% increase. U.S. consumer spending rose 0.3% in October but much of the gain reflected spending on electricity and gas. These findings likely mean investors will weigh the holiday spending numbers in the coming days with even greater importance.

Thanksgiving was about more than just turkey this year with consumers spending a record amount online Thursday and Friday. Data from Adobe Systems found shoppers spent 4.2billiononlineonThanksgivingDay,a14.54.2 billion online on Thanksgiving Day, a 14.5% increase year over year and a new record high with 65% of digital orders placed via a smartphone. The digital spending continued on Black Friday, hitting 4.2billiononlineonThanksgivingDay,a14.57.4 billion per Adobe.

The consumer love was not felt at bricks-and-mortar stores to the same degree, however. Data from ShopperTrak found that while bricks-and-mortar sales rose 2.3% on Thanksgiving, they fell 6.2% on Black Friday.

Cyber Monday sales are expected to set a new record as the largest and fastest-growing online shopping day of the year, with $9.4 billion in sales, almost a 19% increase year over year.

Now let’s turn to the Stocks Under $10 Portfolio’s performance during the abbreviated trading week. The portfolio’s performance was led by the double-digit gains from USA Technologies (USAT) and Durect Corp. (DRRX) as well as solid returns from Digital Turbine (APPS) and Lending Club (LC) .

Gains were mitigated by modest losses last week from Ambev SA (ABEV) , Antares Pharma (ATRS) , CPI Aerostructure CVU, and Ecana Corp. (ECA) .

For the first two months of the December quarter, large advances from Farfetch Ltd. (FTCH) , Habit Restaurants (HABT) , and Antares Pharma softened the sharp drops in Pareteum (TEUM) and Alkaline Water (WTER) .

The Stock Market This Week

On the economic data side of things, this week brings:

Weekly MBA Mortgage Applications Index; November ADP Employment Change Report; November ISM Non-Manufacturing Index; Weekly EIA Crude Oil Inventories.

Thursday, Dec 5: Weekly Jobless Claims; October Trade Balance; October Factory Orders; Weekly EIA Natural Gas Inventories.

Friday, Dec 6: November Employment Report; December University of Michigan Consumer Sentiment Index (Preliminary); October Consumer Credit.

As you can see, we will start and end the week with a number of key data points that will shape expectations for not only the month of December but for the entire quarter. Last week we saw several Federal Reserve GDP forecasts for the December quarter tick higher, but as we begin to get more meaty November data the economic growth picture for the quarter should really take shape.

Turning to quarterly earnings reports (yes, just because we are now past the Thanksgiving holiday there are still reports to be had), here are the key reports we’ll be focusing on after the long weekend:

Monday, Dec 2: Coupa Software (COUP) .

Tuesday, Dec 3: AutoZone (AZO) , Land’s End (LE) , Marvell (MRVL) , Salesforce (CRM) .

Wednesday, Dec 4: Barnes & Noble Education (BNED) , Campbell Soup (CPB) , Five Below (FIVE) , RH (RH) , Slack (WORK) .

Thursday, Dec 5: Brown-Forman (BF.B:NYSE), Dollar General (DGLNYSE), J.Jill (JILL) , Kroger (KR) , Tiffany & Co. (TIF) .

Friday, Dec 6: Big Lots (BIG) .

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