MarketBeat: Week in Review

It was another volatile week for equity markets. The Dow continued its up-again, down-again pattern, but the Nasdaq surged to a record high.

It’s further evidence that timing the market is a fool’s errand. However, when you understand the reasons the market is moving, it can help you position your portfolio for gains. And in advance of earnings season next week, the narrative continues to be the novel coronavirus, technology stocks, and expectations of what a “new normal” may look like.

In case you missed it, here’s what you missed.

• The week started with news that Regeneron (NASDAQ: REGN) stock was moving to new highs after positive results on late-stage trials for its antibody cocktail to prevent Covid-19. Chris Markoch told investors “… there are many reasons to buy the stock that won’t become apparent to many investors until well after the pandemic is over. But those are the exact reasons there’s still time for you to get on the Regeneron train and enjoy the ride.”
  
  
• But not all hot biotech stocks are climbing due to research on the novel coronavirus. Sam Quirke likes Vertex Technologies (NASDAQ: VRTX), a company that specializes in cystic fibrosis treatments. “With all the ups and downs that pharmaceutical and biotech companies go through…it’s not all that usual to find one whose stock seems to be on a consistent uptrend. But although it’s had its fair share of haircuts and volatility, on the long term chart that’s exactly what shares of Vertex Pharmaceuticals have been doing for most of the last decade.”
  
  
• Another biotech that is making noise is BioXcel Technologies (NASDAQ: BTAI). However, Chris Markoch wrote the stock looks undervalued as investors focus on companies developing vaccines. “Analysts give the stock a consensus buy rating. But the stock only has a rating from six analysts. While that isn’t necessarily a rousing endorsement, it does indicate the BTAI stock may be flying under the radar with much of the focus on the companies that are in the race for a Covid-19 vaccine.”
  
  
• And continuing on the health care theme, Markoch also wrote an article that highlighted 3 digital health stocks that can help your portfolio right now. ”I’m generally fascinated by the way events, such as the Covid-19 pandemic, bring about or provide a catalyst for trends that when we look at them in 10 years will seem so obvious. That’s what I feel about digital health.”
  
  
• A different way to invest in response to the novel coronavirus is by looking at pharmacy retailers that have been doing quite well during the pandemic. Chris Markoch described why CVS (NYSE: CVS) was more than a dividend stock. “In a market that seems to be looking for any green shoot, it can find CVS has been a laggard. CVS stock plummeted nearly 30% from mid-February until mid-March…Unfortunately, that’s not a compelling story to get investors interested in your stock. Fortunately, CVS has a bigger story to tell.”
  
  
• And Thomas Hughes took a look at how CVS stacks up with Walgreens Boots Alliance (NYSE: WBA), and gives reasons for why Walgreen’s may be an even better buy. ”On a technical basis, I prefer Walgreens because it is sitting on potentially very strong support while CVS looks like it may retreat. Add to this the fact of Walgreens’ superior yield, equally strong balance sheet, positive outlook for growth in the current period, and lower valuation and it becomes the winner in my book.”
  
  
• One of the hottest stocks has been Nikola (NASDAQ: NKLA). Sam Quirke took a look at the latest hype surrounding the electric truck manufacturer. “In a four week period through the start of June, shares popped 600% as comparisons with Tesla (NASDAQ: TSLA) were quickly drawn up despite Nikola being months if not years away from having their products, primarily hybrid trucks, on the market.”
  
  
• Tech stocks continue to perform well as the economy reopens. Sam Quirke took a look at PayPal (NASDAQ: PYPL), the fintech pioneer that continues to outperform the broader market. “Many flashy stocks in the tech industry started to see strong bids towards the end of Q1, even as economies were still shut and unemployment was skyrocketing, and PayPal was no different.”
  
  
• Another tech stock that Quirke took a look at was Nvidia (NASDAQ: NVDA). It seems that the semiconductor stock is reaching new highs every day, but Quirke still believes NVDA stock is a buy. “So while the college textbooks may say to be wary of a stock that’s printing multiple all-time highs as part of a multi-week 100% rally while its RSI is hovering close to 70, the 21st century investor is seeing the opportunity at play here and the momentum the stock is carrying. Unless video games go extinct in the next few weeks, any pullback should be considered a buying opportunity.”
  
  
• Continuing in the technology sector, Sean Sechler gave an opinion about Alteryx (NYSE: AYX), a big data company that Sechler believes has big potential. ”Many companies are moving into the digital age at an accelerated pace due to the current circumstances surrounding the pandemic and need a way to figure out what to do with all of their data. This is one of the big reasons why Alteryx Inc stock has been performing so well.”
  
  
• And Chris Markoch wrote about how Shopify (NYSE: SHOP) continues to fire on all cylinders including a new partnership with Chipotle Mexican Grill (NYSE: CMG). “Shopify continues to move higher on news of yet another paradigm-shifting partnership with Chipotle Mexican Grill. The two companies are partnering to create a virtual farmer’s market. On June 30, Shopify announced that it would help create virtual storefronts for chain suppliers of Chipotle restaurants.”
  
  
• The initial public offering (IPO) market is starting to heat up. Sean Sechler analyzed what investors should think about the “cutting edge” insurance company Lemonade (NYSE: LMND) that surged 139% in its first trading session. “Lemonade uses artificial intelligence and big data to make the processes of buying insurance and filing insurance claims more efficient and user-friendly. Investors are recognizing the potential that this company has to disrupt the insurance industry, but has the stock gone up too far too fast?”
  
  
• Jea Yu took a look at the consumer brand Hanesbrands (NYSE: HBI) which has gained momentum as Americans continue to stay home during the Covid-19 pandemic. ”While consumer apparel stocks have been some of the worst beaten up shares, essential apparel like underwear, socks, and face masks tend to carry more significance during pandemic times and stay-at-home periods.”
  
  
• Yu also wrote about Nautilus (NYSE: NLS), another consumer brand that has been a winner during the pandemic. “This iconic innovator of fitness machines have been a key benefactor of the isolation mandates. Home gyms are rapidly becoming a part of the “new normal” of life with COVID-19. Risk tolerant investors that acknowledge the new reality may want to consider adding Nautilus shares on opportunistic pullback levels.”
  
  
• Continuing to focus on consumer brands, our staff also took a look at Simply Good Foods (NASDAQ: SMPL), the parent company behind the Atkins brand, and an e-commerce company that saw already strong performance surge during the pandemic. “Simply Good Foods already had a strong online presence before the pandemic. This meant people yearning to stick with diets or eat healthier were able to get their shakes and other nutritional products through the company's website channels. Online sales surged 125% in the third quarter.”
  
  
• For contrarian investors looking for a way to play consumer stocks, Thomas Hughes suggests that Levi Strauss (NYSE: LEVI) may be a buy coming out of a restructuring. ”Levi’s fiscal 2nd quarter for 2020 was in near-perfect alignment with the national shutdown. What this means for investors is that virtually all of the COVID-related felt by this company has already happened…Since the end of the quarter, the company has reached a 90%+ reopening rate which more than suggests a rebound is underway. The only question is how good will the rebound be?”
  
  
• However, despite announcing potential layoffs, the future is not looking bright for United Airlines (NYSE:UAL). ”Just as airlines were finally starting to see traffic coming back, many states began pulling back on reopening measures. That’s creating a bigger math problem for the airlines.”
  
  
• Ride-hailing companies were hit hard by the Covid-19 pandemic. However, Sam Quirke wrote that things may be turning around for Uber (NYSE: UBER). ”With non-essential businesses like restaurants closed indefinitely and many office workers told to work from home for the rest of the year, no one was calling an Uber for the fun of it through much of March, April, and May. However, by the middle of June, reports from China had ride-share volume back at pre-COVID levels.”
  
  
• Quirke also liked the prospects for McDonald’s (NYSE: MCD) as a blue-chip stock to own as the economy re-opens. “RBC analyst Chris Carril struck a bullish tone in a note to clients last month when he said that McDonald's “is well-positioned for the industry’s potential shift back toward a value focus in a more challenging macro environment, given the brand’s historical strength in the core, everyday value.”
  
  
• Nick Vasco likes Avis Budget Group (NASDAQ: CAR) now that analysts are upgrading the stock. “CAR shares quickly stabilized after making the March lows and trended all the way past $30 a share before settling in the $20s to close the month of June.”
  
  
• Chris Markoch wrote about a brighter future for electric car manufacturer, Nio (NYSE: NIO). “Right before the holiday weekend in America, Nio announced it had delivered 3,740 vehicles in June. That was a 179% year-over-year increase. It was also the company’s best month and rounded out its best quarter.”
• However, if you’re looking for a different way to play the automotive segment, Thomas Hughes writes why Vroom (NYSE: VRM) is becoming a disruptive name in automotive e-commerce.
  ”Vroom has been a seriously hot stock in the month since its IPO. The company, a pure-play on automotive eCommerce, offers a platform buying and selling used cars on-line as well as financing and other options. Over the last 30 days, fueled by results from the likes of Carmax and others, the stock has risen about 50% and looks like the run will keep going.”
  
  
• The volatility in the market has turned out to be decent for growth investors who are willing to actively trade fast-moving stocks. But how are value investors doing? Sean Sechler wrote about 3 value stocks that look undervalued. “With growth stocks hitting new all-time highs seemingly every day, the possibility for a correction and sky-high valuations is turning some investors towards value stocks…The good news is that there are several stocks that appear undervalued and offer attractive entry points at this time.”

• Thomas Hughes reminds us that consumer staples are where the money is with four articles that focused on different ways to play this defensive segment. First, Hughes compared Clorox (NYSE: CLX) and Kraft Heinz (NASDAQ: KHC). “Clorox and Kraft Heinz don’t have a lot in common other than their classification as staples but they share an important relationship among today’s best-positioned consumer staples stocks; one is the market leader and the other the market laggard.”
  
  
• Hughes also reminded investors that dividend growth is a critical reason to hold onto these stocks. You can read more about his comparison of General Mills (NYSE: GIS) and Kellogg (NYSE: K). “In my quest for the very best consumer staples investments for dividend-growth, I’ve matched two of the market’s most iconic brands. In the one corner is General Mills and the other Kellogg Company…When looking at the fundamentals the companies are evenly matched but there is still a question to be answered. Which is the better buy today?”
  
  
• Moving into the packaged goods arena, Hughes compared Conagra (NYSE: CAG) to Campbell’s Soup Company (NYSE: CPB). ”When it comes to pantry loading shelf-stable items are key. In this light, it is no wonder that Conagra Brands and Campbell Soup Company have both seen bullish activity in recent months.” 
  
  
• And Hughes rounded out his look at consumer staples with an attractive small-cap stock, Seneca Foods (NASDAQ: SENEA). ”Seneca Foods is by no means a major player in the packaged foods space but is well-established and receiving the same benefits as its larger cousins. Seneca Foods just reported earnings a few days ago and shares are on the move because of it. The last few days have seen share prices pop from a recent low with indicators in support of further gains.”
  
  
• Steve Anderson took a look at Dominion Energy (NYSE:D) pointing out that any stock that draws the attention of Warren Buffett’s Berkshire Hathaway (NYSE:BRK.A) is still something that deserves attention. ”Warren Buffett's stock purchasing moves have led to some incredible gains over the years, though some have suggested that the name has become a bit tarnished in recent years. Berkshire Hathaway is still a name to conjure with, though, and Buffett's recent move to buy in on Dominion Energy is a move that's drawing some big new attention.”
  
  
• Our staff writers took a look at Cinedigm (NASDAQ: CIDM), an interesting but little-known player in the streaming wars. “…Cinedigm is the nation's top independent entertainment studio focused on digital content distribution and related technology services. It provides streaming distribution solutions for any type of content and has a leading 20% market share among independent studios based on digital and physical revenue.”

-     Jean Yu also took a look at another entertainment category, electronic gaming, in this article about International Gaming Technologies (NYSE: IGT). “Electronic gaming products operator International Gaming Technologies PLC shares have been relatively muted during the sports betting app frenzy … Unlike many of the recent runups, IGT has much more structure both in terms of fundamentals and share price making it a more stable value play for risk-tolerant longer-term investors.”

-     The pandemic has separated retailers who have a strong e-commerce presence with those that don’t. Overstock (NASDAQ: OSTK) falls into the former category. Nick Vasco explains to investors why Overstock has performed well and whether it’s still a buy. ”So how has Overstock managed to 15x off the lows and quadruple from pre-pandemic levels? And is there still more meat on the bone for investors?”

-     And Steve Anderson contends that Walmart (NYSE: WMT) may not see the benefit it expects from its new Walmart+ offering. “Recently, Walmart unveiled its newest weapon in the ongoing fight to reclaim retail market share from the internet's primary retail juggernaut, Amazon (NASDAQ: AMZN). Some have even gone so far as to call this new weapon the “Amazon Prime Killer.” It's called “Walmart+”, and though it certainly has some advantages of its own, it's not likely to do a whole lot of damage to Amazon going forward.”

-     However, Anderson was less optimistic about the future of Bed, Bath & Beyond (NASDAQ: BBBY) stock, but still cautioned investors from being too hasty. “The coronavirus closures have done no one any serious favors, and most of the retail sector is still trying to recover.  The news has been especially brutal for Bed Bath and Beyond, but as much as you may want to, dumping your position right now may not be the best play.”

-     Nick Vasco had a different approach to the retail sector in this article that makes a bullish case for BJs Wholesale (NYSE: BJ). “As a warehouse club chain, BJs is somewhat recession-proof to begin with. Add in the restaurant closures forced by the pandemic, and BJs, which derives around 85% of its merchandise sales from grocery goods, becomes a beneficiary of the current environment.”

-     Weekly jobless claims continue to fall and our staff writers were questioning if payroll services provider PayChex (NASDAQ: PAYX) had any catalysts to push the stock higher. “The fortunes of the Rochester, New York-based payroll services provider are largely tied to the success of small businesses. It's understandable then that the company's recent performance has been impacted by the misfortunes of small businesses everywhere in the wake of the coronavirus crisis.”

-     But if you’re looking for a way to invest in the recovering labor market, Thomas Hughes offered this comparison between Cintas (NASDAQ: CTAS) and ADP (NASDAQ: ADP). “I’ll be honest, when it comes to the labor-related stocks Cintas is by far my favorite, but that doesn’t mean it’s the best buy now or for every portfolio. Automatic Data Processing, a less-direct play on labor markets, could be the better choice but it depends on what you are looking for.”

-     Restaurant stocks were also hit hard as many restaurants were ordered to close their doors to dine-in traffic. Even with the increase in newly reported cases for the novel coronavirus, Steve Anderson wrote about why Bloomin’ Brands (NASDAQ: BLMN) may be a surprise buy. “There's plenty of risk in Bloomin' Brands right now, but that risk seems to have been priced into its currently-diminished share price, which is, again, down 41 percent against this time last year. It may be, therefore, a good time to show this diversified chain restaurant umbrella some love, and maybe stop in sometime.”

-     Commodities are starting to gain attention, notably copper. And Sam Quirke took a look at the prospects for Freeport-McMoran (NYSE: FCX). ”It might have been hard to see it happening back in the depths of Q1 when the stock was trading at 2016 levels and close to all-time lows, but Freeport’s shares are within touching distance of their pre-COVID levels on the back of a three month 160% rally.”

-     And Sean Sechler reminded investors that gold is still the ultimate store of value and suggested why SSR Mining (NASDAQ:SSRM) may be a great way to play the precious metal. “Most investors look at Gold ETFs as a way to add precious metal to their portfolios. However, another attractive option is to buy mining stocks, which will also benefit greatly from rising prices in precious metals. SSR Mining Inc is a mining stock that could be a nice option for several reasons.”

-     China stocks have been in the spotlight for some of the wrong reasons. However, Sam Quirke makes a case that the, Chinese owned travel management service,Trip.com (NASDAQ: TCOM) may be a worthwhile investment for investors who have the nerve to ride out the pandemic. “With Monday’s session in the mix, shares of the Chinese owned travel management service were able to cap off a 10% jump in two days. This was particularly promising for investors who might have been growing unsure about the stock’s ability to keep the rally going.”

-     Speaking of taking a road trip, Thomas Hughes wrote about how Harley-Davidson (NYSE: HOG) is starting to draw attention from analysts who are signaling they may have been wrong about the stock’s potential. “Citi initiated coverage of Harley-Davidson with a buy setting the Wall Street high-price-target…Considering the outlook and yield at Harley this situation sets the stock up for one of two things. Either Citi is offbase on their rating of Harley or the rest of the analyst’s community is about to play a game of catch-up with their ratings.”

-     Nu Skin (NYSE: NUS) is another stock that benefited from a recent upgrade from analysts. Nick Vasco wrote why the company’s business model gives NUS stock a long runway. ”The pandemic should only make it easier for Nu Skin to acquire low-cost online sales agents across the world, as people should be more open to side hustle opportunities in a weak economy.”

-     However, Vasco was more cautious on Vista Outdoor (NYSE: VSTO), an ammunition and outdoor sporting goods manufacturer that has been outperforming during the pandemic. “So VSTO is clearly benefiting from the macro environment. But this feels more like a short-term cyclical increase than a sustainable move. The fear emanating from widespread violence is already decreasing as the situation comes under control.”

-     And Jea You examined the return to travel from the perspective of automotive parts manufacturer, Genuine Parts (NYSE: GPC). The stock may be a winner as consumers will get their vehicles ready for the open road. ”The stay-in-shelter mandates took an obvious toll on business as people were in lockdown working and playing from home. However, as regions initiate the phasing in of restarts and more vehicles return to the road, Genuine Parts is a solid restart beneficiary especially as vehicle maintenance demand also rebounds.”