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China’s balloon could propel these stocks to new highs

Feb 06, 2023

Good morning!

It’s easy to focus on the negative and, honestly, that’s what a lot of people are doing this morning with all the major averages in the red.

Big mistake.

The S&P 500 is up 7%+ YTD heading into today’s opening bell while the Nasdaq is on course for a 5-week winning streak. There ARE still great companies putting up numbers that matter and, not coincidentally, those are the names you want to own if the selling resumes... but especially if it doesn’t!

Here’s my playbook.

China’s “weather balloon” could propel these stocks to new highs

Buying defense stocks right now makes tremendous sense. And as I noted this morning during a conversation with the fabulous Stuart Varney, China’s as dangerous as it gets. (Watch)

Lockheed Martin, one of my favourites, is up 20.86% over the past 12 months while the S&P 500 has fallen -7.62% over the same time frame, according to Yahoo!Finance. My second favourite has tacked on 3.73% over the past year and could break to fresh highs without much effort. Upgrade to Paid

Weather balloon, my asteroids.

Tyson’s unappetizing results

Tyson Foods missed Wall Street expectations big time. Sales for the fourth quarter came in at $13.26 billion—1.9% lower than $13.52 estimates from Refinitiv. Meanwhile, EPS came in at $.85 vs. the $1.34 estimates. (Read)

My Thoughts. I had hoped the company would put up great numbers and that there’d be a chance to re-enter the position, but evidently, that’s not an appetizing thought as beef prices bite into profits. All puns absolutely intended! 🤦‍♂️

I told the One Bar Ahead® Family to exit on December 19, 2022, and it would appear that my concerns at the time were well founded. I think Tyson could break to new 52-week lows very quickly.

There are bigger fish to fry!

Disney: Buy, sell, or hold?

Iger’s back at Disney, and he’s got a serious set of challenges on his hands at a time when the markets desperately need him to bring his magic. (Read)

Wall Street analysts are making a stink out of streaming, but I think the real story will be branding and operations. Iger’s predecessor did so much damage in such a short period of time that he’s going to have to ensure customers want a piece of the Magic Kingdom.

That’s why I want to see where the company takes guidance before I pick up shares again or recommend you do the same.

Bernstein upgrades Diageo, but...

Bernstein upgraded Diageo (DEO)—a multinational alcoholic beverage company with brands like Johnny Walker, Guinness, Smirnoff, and Baileys—noting in a research report that the stock could rally nearly 30%. (Read)

I agree.

People tend to drink more when the going gets tough, and Diageo is a primary beneficiary of that behaviour.

However, insider sentiment is negative on the stock, which strikes me as suspicious.

Brown-Forman (ticker BF.B; Jack Daniels, Finlandia, El Jimador tequila) might be the better bet.

Public Storage takes out the competition

Public Storage (PSA) has launched an $11 billion hostile bid for Life Storage, Inc. (LSI). Including debt, the deal jumps to about $15 billion. (Read)

Broader Picture. If the deal had taken place last year, the numbers are big enough that it would have earned the #6 slot when ranked by overall deal size.

OBA Investing Implication: It’s a GREAT sign to see a monster deal like this so early in the year because it speaks to the change in psychology that I referenced last week. It also lends credence to my contention that there is still plenty of money that wants to go to work.

Remember: The strong feed when the meek retreat! Upgrade to Paid