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Top Ten Trader
Discover the Market’s Strongest Stocks

December 20, 2021

First, a scheduling note: With Christmas coming quick, next Monday (December 27) is the second of our two regular weeks off for Top Ten. We’ll be in later that week, but if we don’t talk to you have a great holiday season!

After an encouraging bounce, the sellers immediately came back to the well last week. While we don’t think this is going to morph into 2008, it’s clear that most of the evidence remains negative: The intermediate-term trend of most indexes and stocks is pointed down and the vast majority of former leaders are in shambles. We’ll let others predict (guess) what happens from here, but with most things acting poorly, it’s best to remain cautious, holding plenty of cash, building your watch list and keeping any new buys on the small side.

This week’s list has a variety of names that are resisting the market’s weakness, so if you want to nibble on something, you’ll find it here. Our Top Pick is a unique IoT-related firm whose stock is acting just fine.

Market Overview


Current Market Outlook

Selling Pressure Remains Intense
After an encouraging bounce, the sellers immediately came back to the well last week, first punishing growth stocks, and on Friday and today, coming around for most other areas, too. That’s not to say all is dark and gloomy—sentiment has clearly turned lower, and we’re still seeing more than a few indexes, sectors and stocks that are holding above their early-December lows. (We’re even seeing some minor positive divergences pop up when looking at the number of stocks hitting new lows.) Still, while we don’t think this is going to morph into 2008, it’s clear that most of the evidence remains negative: The intermediate-term trend of most indexes and stocks is pointed down and the vast majority of former leaders are in shambles. We’ll let others predict (guess) what happens from here and assign reasons for the decline—to us, it’s far more important to stay in gear with the market’s evidence. And with most things acting poorly, it’s best to remain cautious, holding plenty of cash, building your watch list and keeping any new buys on the small side.

This week’s list has a variety of names that are resisting the market’s weakness, so if you want to nibble on something, you’ll find it here. Our Top Pick is Silicon Labs (SLAB), a rare growth-oriented name that acts great.

Stock NamePriceBuy RangeLoss Limit
Alcoa (AA)5350.5-5344.5-45.5
Alnylam Pharmaceuticals (ALNY)198194-200173-176
Broadcom Limited (AVGO)645610-625560-567
Endeavor Group Holdings (EDR)3029-30.526.5-27.5
Lumentum (LITE)10498-10289-91
Nucor Corporation (NUE)111108-11298-100
Seagate Technology (STX)105101-10692-94
Silicon Laboratories, Inc. (SLAB) ★ TOP PICK ★196192-200173-176
Tandem Diabetes (TNDM)146139-144127-130
Vulcan Materials Company (VMC)199195-200181-183

Stock Picks & Previously Recommended Stocks

Stock 1

Alcoa (AA)

PriceBuy RangeLoss Limit

Why the Strength

A combination of lower inventories and improving demand from top consumer China are pushing aluminum prices to their highest levels in over a decade, which is welcome news for Alcoa, one of the world’s largest aluminum producers. The company has also captured interest with its latest balance sheet enhancement efforts by offloading legacy liabilities, a move that removes nearly $1.5 billion in pension obligations. Further contributing to the strength was the recent announcement that it will close 146,000 tons of aluminum smelting capacity at its Wenatchee Works plant in Washington as part of its five-year review of operating assets. (An additional contribution to the latest strength was the firm’s inclusion in the S&P 400 MidCap index.) And while these bullish factors prompted a major institution to give Alcoa a “conviction buy” rating, the upgrade was also due to Alcoa’s efforts at decarbonizing its portfolio while supporting the “green transition.” On the financial front, revenue was up by a solid 31% from a year ago in Q3, above estimates and driven by higher aluminum prices and higher premiums for value-added products. The firm also set a record for quarterly net income, with per-share earnings of $2.05 beating the consensus by 29 cents. The strong results prompted management to initiate a quarterly cash dividend of 10 cents per common share and launch a $500 million stock buyback plan. On the liquidity front, Alcoa had a cash balance of nearly $1.5 billion at quarter’s end, with no substantial debt maturities until 2027. Best of all is that these elevated earnings look likely to stick—analysts see the bottom line north of $6 per share in 2022.

Technical Analysis

AA more than doubled between February and early May before hitting the wall at just under 45. This led to a (normal) 25% correction that didn’t compromise the longer-term uptrend. Shares also rounded out a base after this correction, and by August, AA was off to the races again. Shares spent eight weeks consolidating following the latest peak at 57 and are perking up once again. Volatility is extreme, but we like the recent upside volume—we’re fine starting small here if you want to take a stab at it.

Market Cap$9.95BEPS $ Annual (Dec)
Forward P/E8FY 2019-0.99
Current P/E11FY 2020-1.16
Annual Revenue$11.2BFY 2021e6.20
Profit Margin12.6%FY 2022e6.30

Qtrly RevQtrly Rev GrowthQtrly EPSQtrly EPS Growth
($M)(vs. yr-ago-qtr)($)(vs.yr-ago-qtr)
Latest qtr3.1131%2.05N/A
One qtr ago2.8332%1.49N/A
Two qtrs ago2.8721%0.79N/A
Three qtrs ago2.39-2%0.26N/A

Weekly Chart


Daily Chart


Stock 2

Alnylam Pharmaceuticals (ALNY)

PriceBuy RangeLoss Limit

Why the Strength

We keep waiting for biotechs to have their day in the sun … and we’re still waiting, as most sector ETFs are holding below even longer-term moving averages. But that makes Alnylam’s relative strength all the more impressive—the firm’s rapid, and likely reliable, growth story is clearly keeping big investors interested. Alnylam is the leader in RNA interference (RNAi) technology, where drugs “turn off” certain genes that actually can cause rare diseases; indeed, the firm has the only approved RNAi drugs on the market. The big draw is Onpattro (treats a disease that interferes with nerve function), which brought in two-thirds of revenue in Q3 (total was up 6% sequentially), though both Givlaari (treats a family of rare diseases; $32 million in revenue, up 4% sequentially) and Oxlumo (treats a disease that overworks the kidneys; $15 million of revenue) have bright futures as well. The story here is about the long runway of growth, both for these drugs (current and future indications) and other products: At a recent R&D day, Alnylam said it expects to launch vutrisiran (treats certain types of amyloidosis) in both the U.S. and Europe next year, while it’s recently submitted a label expansion for Oxlumo and sees a few late-stage clinical trial results posting next year. All in all, the firm expects revenues to grow at a 40%-plus annual rate through 2025! To be fair, Q3 did bring two hiccups, with revenues missing estimates and the CEO leaving—but those look like one-time events (the revenue miss was partly due to a change in dosing schedules, while the new CEO is well-regarded). All in all, it’s a good growth story.

Technical Analysis

ALNY was up and down for months but looked to be getting going in the summer and early fall—before the Q3 report caused the stock to fall sharply. However, the damage didn’t last long, with shares repeatedly finding support near the 40-week line in the weeks that followed, and the stock has actually pushed higher of late despite the horrid market environment. There’s still a lot of resistance in the 200-210 area, so it’s fine to just watch it—but if you want in, we’re not going to argue with a small buy around here.

Market Cap$22.9BEPS $ Annual (Dec)
Forward P/EN/AFY 2019-6.70
Current P/EN/AFY 2020-6.38
Annual Revenue$751MFY 2021e-6.47
Profit MarginN/AFY 2022e-3.89

Qtrly RevQtrly Rev GrowthQtrly EPSQtrly EPS Growth
($M)(vs. yr-ago-qtr)($)(vs.yr-ago-qtr)
Latest qtr18849%-1.51N/A
One qtr ago221112%-1.30N/A
Two qtrs ago17878%-1.64N/A
Three qtrs ago164128%-1.60N/A

Weekly Chart


Daily Chart


Stock 3

Broadcom Limited (AVGO)

PriceBuy RangeLoss Limit

Why the Strength

A strong recovery in enterprise spending, plus higher data center and cloud demand, helped semiconductor and infrastructure software giant Broadcom achieve record metrics in the September quarter. Revenue of $7.4 billion was up 15% from a year ago, led by 17% growth in semiconductor solutions, while per-share earnings of $7.81 beat the consensus by seven cents. The firm reported robust hyper-cloud and service provider demand and said that strong wireless growth in Q4 was driven by the launch of next-generation smartphones. By segment, networking (34% of Broadcom’s semiconductor revenue) was up 13%, driven by strong demand from campus switching and double-digit growth in the deployment of the firm’s Jericho routers. Server storage connectivity revenue showed a big improvement from the first half of 2021 and was up 21% in the quarter, driven by higher demand from enterprises upgrading compute and storage infrastructure. Broadband revenue, meanwhile, grew 29% while wireless was up 21%. Industrial revenue was up an eye-popping 36%, thanks to strong demand from electric vehicle, robotics, factory automation and healthcare customers. Significantly, infrastructure software revenue grew 8% and was nearly a quarter of total sales as the company has expanded this business through some recent acquisitions. Broadcom booked over 300 contracts worth north of $1 million in Q4, with over 30 contracts worth over $10 million annually. Also contributing to the strength was a 14% dividend boost (now a 2.6% yield) and the start of a new $10 billion stock repurchase plan. Big picture, Broadcom is a well-rounded semiconductor blue chip with solid growth and a reasonable valuation ... just what big investors are looking for these days.

Technical Analysis

AVGO capped off a strong and persistent rally in 2020 by hitting a record high of 490 in February. Shares corrected in March, falling to 420 before finding support and then retesting this level in May. From there, AVGO spent the next 21 weeks tightening up above the rising 40-week line. The stock broke out in October, and after a brief dip with the market, the latest earnings report caused a solid gap to new highs. If you want in, look for weakness into the low 600s.

Market Cap$260BEPS $ Annual (Jan)
Forward P/E17FY 202022.16
Current P/E22FY 202128.01
Annual Revenue$27.5BFY 2022e33.15
Profit Margin47.3%FY 2023e36.24

Qtrly RevQtrly Rev GrowthQtrly EPSQtrly EPS Growth
($M)(vs. yr-ago-qtr)($)(vs.yr-ago-qtr)
Latest qtr7.4115%7.8123%
One qtr ago6.7816%6.9629%
Two qtrs ago6.6115%6.6229%
Three qtrs ago6.6514%6.6126%

Weekly Chart


Daily Chart


Stock 4

Endeavor Group Holdings (EDR)

PriceBuy RangeLoss Limit

Why the Strength

Endeavor is making itself into a sports-focused property, combining leagues, teams and sports betting businesses into one. Long a collection of talent agencies (it grew out of Hollywood agent William Morris and owns IMG), Endeavor leapt whole-heartedly into owning content by buying all of Ultimate Fighting Championship ahead of its IPO earlier this year. UFC is the leading mixed martial arts (MMA) league, of which Endeavor owned half since 2016; the league generates nearly $ 1 billion sales annually from live events, TV fees and other merchandising efforts. Beyond that, Endeavor just took a stake in minor league baseball, buying nine minor league baseball teams for a reported $300 million. It’s potentially a financial play on the long-term future of Major League Baseball, which has culled junior teams down and is aiming to bolster the remainder. It and Endeavor’s other smaller sports properties—Professional Bull Riders and Euroleague basketball—also give it sports intellectual property, which is seen as the key to maximizing future value. That’s driven in part by the belief that TV–media services will continue to pay premiums for sports content, as well as the emergence of sports betting in North America. Indeed, another key acquisition this year was OpenBet, a sports wagering technology business sold off by Scientific Games for $1.2 billion. Direct sales from OpenBet are expected to be $150 million next year, while Wall Street sees another $100 million in related revenue from selling services and Endeavor-owned sports data to clients. All told, the new business should put Endeavor over $5 billion revenue in 2022 with $1.32 in EPS. It’s a new, intriguing story.

Technical Analysis

EDR went public in April at 24, having called off a planned IPO two years prior. The initial IPO burst was quickly replaced by selling, which took shares down to 22 in July and led to a three-month bottoming phase—in mid-October, shares were still hanging around 24. But the action has been solid since, with a thrust to 32 in November after earnings, and after a pullback, continued (choppy) upside to 32 in recent days. The day-to-day action is a bit wild, but dips toward the 25-day line would be tempting.

Market Cap$22.0BEPS $ Annual (Dec)
Forward P/E24FY 20190.25
Current P/E45FY 20200.12
Annual Revenue$4.53BFY 2021e0.90
Profit Margin10.3%FY 2022e1.32

Qtrly RevQtrly Rev GrowthQtrly EPSQtrly EPS Growth
($M)(vs. yr-ago-qtr)($)(vs.yr-ago-qtr)
Latest qtr1.3961%0.33999%
One qtr ago1.11140%0.18N/A
Two qtrs ago1.07-10%0.0833%
Three qtrs ago0.96-26%0.10-23%

Weekly Chart


Daily Chart


Stock 5

Lumentum (LITE)

PriceBuy RangeLoss Limit

Why the Strength

Photonics is a critical technology used in many industries and is particularly essential to the scaling of data center and telecom network capacity. That’s where Lumentum, which makes optical and photonic products for optical networking and commercial laser customers, comes in. The company’s optical components are part of virtually every type of telecom and data center network, while its lasers enable advanced manufacturing techniques, including next-generation 3D sensing capabilities. The firm recent acquired laser manufacturer NeoPhotonics (a reason for the strength), which expands its product portfolio to address the rapidly growing market (estimated at $20 billion) for 400 gig and above applications in optical communications. Further contributing to the strength was Lumentum’s fiscal Q1, which featured top- and bottom-line beats of 2% and 16%, respectively. While revenue of $448 million and per-share earnings of $1.79 were both flat compared to a year ago, sales were 14% higher sequentially while earnings were 56% higher from the prior quarter. Telecom revenue was down, but Lumentum’s terrestrial pump laser sales (a leading indicator for future telecom demand) were up sequentially as the firm reported its highest pump sales in many years, prompting management to guide for higher telecom revenue going ahead. Industrial and consumer revenue was up 14% due to seasonality in the consumer market, while commercial laser revenue rose 77%, driven by strong kilowatt fiber laser sales. Though management expects 7% lower revenue in Q2, sales are expected to improve in the next few quarters thanks to “unsatisfied demand” due to shortages of semiconductors and other materials.

Technical Analysis

LITE was dead as a doornail for much of 2020 and 2021; indeed, it’s pre-pandemic high of 93 mostly contained the stock for the following couple of years. More recently, though, the stock quieted down a lot—usually a sign that the weak hands are out—and now the buyers are stepping up, with two straight weeks of big-volume buying in the teeth of an awful market. Buying a little on pullbacks is tempting.

Market Cap$7.52BEPS $ Annual (Jun)
Forward P/E16FY 20205.41
Current P/E23FY 20216.21
Annual Revenue$1.74BFY 2022e6.11
Profit Margin28.9%FY 2023e6.67

Qtrly RevQtrly Rev GrowthQtrly EPSQtrly EPS Growth
($M)(vs. yr-ago-qtr)($)(vs.yr-ago-qtr)
Latest qtr448-1%1.790%
One qtr ago3927%1.15-3%
Two qtrs ago4204%1.4011%
Three qtrs ago4795%1.9930%

Weekly Chart


Daily Chart


Stock 6

Nucor Corporation (NUE)

PriceBuy RangeLoss Limit

Why the Strength

One “theme” we’re seeing in a couple of different indsutries is this: For one reason or another, the pandemic really helped business, but investors assumed that, as the world slowly turned right-side-up, earnings would essentially go back to where they were before the virus disruptions. But for some, that hasn’t been the case, and the stocks may be starting to respond. Nucor is a good example: The firm is a leading steel company, with #1 or #2 market share in North American structural, cold finish, merchant bar, rebar, plate and SBQ bar steel. Business has gone ballistic this year, including last week’s pre-announcement of Q4 earnings in the $7.70 per share range, which is larger than any year for the firm since at least 2014. But the real story is about 2022—in May of this year, analysts saw 2022’s earnings retreating all the way to $4 per share or so, but today, Wall Street thinks the upcoming year will see north of $17 (!!!), and that guesstimate continues to rise as demand remains strong and prices remain elevated, with increased infrastructure spending and manufacturing activity likely to keep things buoyant. Plus, this isn’t just about a reasonable valuation (seven times trailing earnings) but what management is doing with those earnings—it’s hiked the dividend a couple of times this year (now a 1.7% annual yield) and has been buying back a ton of stock (34 million shares through mid-December, more than 10% of the company; 13.5 million shares in Q4 alone), not to mention using some cash to help business down the road (building a new rebar mill, acquiring a majority interest in a steel joint venture, adding new line at its Kentucky plate mill, etc.). It’s not changing the world, but with earnings staying at nosebleed levels for much longer than most thought possible, buyers should remain interested.

Technical Analysis

NUE had a monster rally through early June, but that basically marked the start of a long consolidation (shares did hit new highs in August but quickly turtled). The net result was that the stock hasn’t done anything for seven months even as earnings went through the roof. But recent action has been more encouraging, with eight weeks up in a row after the September bottom, a few weeks of tight closes and then, last week, some solid accumulation. If you’re aggressive, you could start a position here.

Market Cap$33.3BEPS $ Annual (Dec)
Forward P/E7FY 20194.23
Current P/E7FY 20203.31
Annual Revenue$31.5BFY 2021e23.79
Profit Margin20.6%FY 2022e17.31

Qtrly RevQtrly Rev GrowthQtrly EPSQtrly EPS Growth
($M)(vs. yr-ago-qtr)($)(vs.yr-ago-qtr)
Latest qtr10.3109%7.28987%
One qtr ago8.89103%5.04999%
Two qtrs ago7.0225%3.10213%
Three qtrs ago5.263%1.29148%

Weekly Chart


Daily Chart


Stock 7

Seagate Technology (STX)

PriceBuy RangeLoss Limit

Why the Strength

Seagate is a top producer of hard disk drives (HDDs), which many assumed would be made obsolete by smaller, faster NAND flash technology. But as data storage needs keep rising, HDDs still play an important role in the memory market, thanks to a significant cost advantage for bulk storage. Seagate made some waves when it recently unveiled technology that combines hard disk drives with the popular nonvolatile memory express (NVMe) protocol that connects various computing components to a host. (Previously, the NVMe protocol could only be used with solid-state drives that use NAND flash technology.) But the main driver behind the strength was Seagate’s start to fiscal 2022, which featured solid revenue growth, significant profit expansion and higher free cash flow generation. In Q1, the company reported estimate-beating revenue of $3.1 billion that rose 35% from a year ago, as mass capacity revenue topped the $2 billion mark for the first time thanks to demand from cloud data center customers and strength in the video and image applications markets. Per-share earnings of $2.35 exceeded expectations by 14 cents, driven by secular demand for the company’s mass capacity storage options and “solid execution” on its cost reduction plans. Total hard disk drive revenue was up 34% and 5% sequentially, with HDD shipments increasing 39% and 4% sequentially, and the firm achieved a fourth consecutive quarter of sales growth in its enterprise and OEM business. Wall Street is now looking for a whopping 50%-plus earnings bump this fiscal year (ending next June). A recent 5% quarterly dividend increase (2.7% yield) and a reasonable valuation (15 times earnings) ties a nice bow on the story.

Technical Analysis

The rocket-ride in STX began last November, when shares blasted off on the general optimism surrounding that time. Shares more than doubled before running out of steam in May, peaking around 105, then corrected for the next five months before finding support at the 40-week line at just below 80. The October report accounts for last month’s launch to new highs, and the last few weeks of tightness is rare, positive action in the face of such a hectic environment. The market is obviously a question mark, but we’re OK with a nibble around here.

Market Cap$23.3BEPS $ Annual (Jun)
Forward P/E11FY 20204.95
Current P/E15FY 20215.64
Annual Revenue$11.5BFY 2022e8.88
Profit Margin17.5%FY 2023e9.34

Qtrly RevQtrly Rev GrowthQtrly EPSQtrly EPS Growth
($M)(vs. yr-ago-qtr)($)(vs.yr-ago-qtr)
Latest qtr3.1235%2.35153%
One qtr ago3.0120%2.0067%
Two qtrs ago2.730%1.487%
Three qtrs ago2.62-3%1.29-4%

Weekly Chart


Daily Chart


Stock 8

Silicon Laboratories, Inc. (SLAB) ★ Top Pick

PriceBuy RangeLoss Limit

Why the Strength

Silicon Labs (covered in the November 1 report) is a fabless designer and manufacturer of semiconductors and other silicon devices that provide wireless Internet of Things (IoT) solutions. Notably, Silicon has completed the sale of its infrastructure and automotive business to Skyworks Solutions, providing Silicon with $2.75 billion in cash in a bid to make the company leaner. The deal also allows Silicon to narrow its focus on providing IoT chips for industrial equipment makers and smart home devices. In its latest move to further this strategy, the company just launched a first-of-its-kind 3D virtual smart home platform that self-guides users through various smart home solutions, protocols and ecosystem connections for home security, automation and health. (The platform paints a full picture of an integrated smart home and features the company’s latest IoT programs and products.) Moreover, Silicon’s newest product—Z-Wave 800 system-on-chips and modules—was released last week, powering Silicon’s Z-Wave smart home and automation ecosystem. Silicon also just announced a partnership with cloud-based diagnostics firm Memfault to integrate enhanced development and operations management tools with Silicon Labs’ EFR32 and EFM32 devices. Going forward, management guided for fourth-quarter midpoint sales of around $200 million (up 5% from the prior quarter), with per-share earnings predicted around 55 cents. The company also recently completed a Dutch auction in which it repurchased around 9% of its total shares outstanding as part of a shareholder return plan. All told, it’s a unique chip-related story.

Technical Analysis

After hitting the skids in March and falling from a then-record peak around 160 to 120 in May, SLAB turned a corner and rallied back to its highs by August. It underwent a second dip, again falling below the 40-week line, but established a higher low near 135 in October. As it turned out, this was a major launching pad for an explosive, earnings-induced move to record levels after the late-October earnings report—and, best of all, SLAB has remained perched near its highs despite the market’s maelstrom. If you want in, start small and use a stop near the 50-day line.

Market Cap$7.91BEPS $ Annual (Dec)
Forward P/E86FY 20193.22
Current P/E88FY 20200.06
Annual Revenue$756MFY 2021e1.96
Profit Margin8.3%FY 2022e2.30

Qtrly RevQtrly Rev GrowthQtrly EPSQtrly EPS Growth
($M)(vs. yr-ago-qtr)($)(vs.yr-ago-qtr)
Latest qtr18539%0.34-53%
One qtr ago17048%0.16N/A
Two qtrs ago15834%0.91N/A
Three qtrs ago24311%0.840%

Weekly Chart


Daily Chart


Stock 9

Tandem Diabetes (TNDM)

PriceBuy RangeLoss Limit

Why the Strength

Medical device maker Medtronic received a warning letter last week from the FDA over its risk assessment, reporting and recall systems. That spurred traders to buy up shares of competitor Tandem Diabetes, which makes insulin pumps for controlling diabetes. Problems at Medtronic help Tandem in part because about a quarter of American diabetes patients annually are eligible for an insurance-funded replacement pump, providing an opening to grab market share. Half of Tandem’s current users came onboard after having switched from using a Medtronic pump or one from Insulet (another competitor). However, there’s plenty of reason to buy Tandem besides Medtronic’s stumbles. The company expects 2021 sales to come in around $690 million, some 37% higher than last year, having posted four straight quarters of consensus beats. Worldwide, managing diabetes with pumps is a growth market. Just 35% of Americans have pumps, with the rest still using daily injections, and the percentage of pump users is even lower in the rest of the world, at 10% to 20%. That means Tandem has plenty of room to grow from its base of 300,000 customers, the vast majority of whom have Type 1 diabetes, an autoimmune disorder in which the body doesn’t create the insulin hormone. Tandem tends to be an innovator, too, rolling out technologically advanced pumps like the t:slim X2, which is smaller than competitors’ products, offers a color touchscreen, a rechargeable battery and remote update capability. Future products will include mobile apps and the athlete-focused t:sport pump. The fourth quarter is the most important quarter for Tandem because of the insurance turnover. Analysts expect sales to touch $199 million with EPS of 21 cents.

Technical Analysis

TNDM shook off a year’s worth of bearishness in late July, rallying nearly 40% in three months, a period that saw good momentum and was bolstered by inclusion in the S&P MidCap 400 index. The omicron and inflation double whammy to growth stocks that started in mid-November briefly hit the stock (144, down to 122 in two weeks), but shares quickly found support, with Medtronic’s issues helping TNDM move to new price and RP highs late last week. If you want in, consider a small position on dips with a tight stop under 130.

Market Cap$9.23BEPS $ Annual (Dec)
Forward P/E193FY 2019-0.42
Current P/E493FY 2020-0.56
Annual Revenue$661MFY 2021e0.30
Profit Margin3.2%FY 2022e0.75

Qtrly RevQtrly Rev GrowthQtrly EPSQtrly EPS Growth
($M)(vs. yr-ago-qtr)($)(vs.yr-ago-qtr)
Latest qtr18045%0.09N/A
One qtr ago17258%0.06N/A
Two qtrs ago14144%-0.08N/A
Three qtrs ago16855%0.22450%

Weekly Chart


Daily Chart


Stock 10

Vulcan Materials Company (VMC)

PriceBuy RangeLoss Limit

Why the Strength

Vulcan Materials is a cousin stock to Martin Marietta Materials, which we wrote about last week—Vulcan is actually the nation’s largest producer of construction aggregates, which is the crushed stone, gravel, sand and slag that are the building blocks of just about all things construction. As we wrote last week with Martin, the attraction of aggregates is that demand and pricing (by 3% to 5%) increase almost every year (in all but the worst economic environments), and with construction and infrastructure spending picking up, it’s a great bet that trend will continue. Vulcan also plays in some other areas like asphalt, concrete and cement, which have historically made up just a small part of business (in Q3, aggregates made up 96% of the total), though that could change going forward as the firm recently completed its acquisition of U.S. Concrete, offering increased scale, cross-selling and geographic reach. Management is optimistic the buyout is well-timed as the Feds embark on their most expansive infrastructure spending package since the interstate highway system in the 1950s. As for the numbers, they’re solid, with revenue growth accelerating nicely in Q3 and EBITDA (a better measure of profitability than earnings for Vulcan) up 4% despite cost pressures. Next year, Wall Street sees 23% revenue growth (helped by U.S. Concrete) and similar EBITDA growth, with the top brass stating they expect “favorable dynamics to continue, leading to attractive price growth.” Long story short, the wind should be at Vulcan’s back for many quarters to come.

Technical Analysis

VMC’s choppy advance finally ran into a wall in early May just above 190, leading to a six-week correction that took shares down 16%. The rally after that failed, with a retest of the lows (and the 40-week line) in October. But the action has improved since then, with marginal new price highs before Thanksgiving, a three-week pullback and then a bounce off the 50-day line. Impressively, VMC has held firm in recent days, too—the market will have a big impact, but the stock looks like a decent risk/reward here if you want to start a position.

Market Cap$27.2BEPS $ Annual (Dec)
Forward P/E33FY 201914.10
Current P/E42FY 20204.70
Annual Revenue$4.53BFY 2021e4.99
Profit Margin13.6%FY 2022e6.29

Qtrly RevQtrly Rev GrowthQtrly EPSQtrly EPS Growth
($M)(vs. yr-ago-qtr)($)(vs.yr-ago-qtr)
Latest qtr1.5216%1.54-1%
One qtr ago1.363%1.57-2%
Two qtrs ago1.072%0.6947%
Three qtrs ago1.18-1%1.07-67%

Weekly Chart


Daily Chart


Previously Recommended Stocks

Below you’ll find Cabot Top Ten Trader recommended stocks. Those rated HOLD are stocks that traded within our suggested buy range within two weeks of appearing in the Top Ten and still look good; hold if you own them. Stocks rated WAIT have yet to dip into our suggested buy range … but can be bought if they do so within the next week.
Those stocks rated SELL should be sold if you own them; they will no longer be listed here. Finally, Stocks in the DROPPED category are those that failed to trade within our buy range within two weeks of our recommendation; that’s not a bad thing, we just never got the price we wanted. Please use this list to keep up with our latest thinking, and don’t hesitate to call or email us with any questions you may have. New recommendations each week are in bold.

DateStockSymbolTop PickOriginal Buy RangePrice as of December 20, 2021

12/13/21Advanced DrainageWMS127.5-131.5124
11/29/21A.O. SmithAOS78.5-81.579
11/8/21Arista NetworksANET515-535134
12/13/21Capri HoldingsCPRI61-63.559
5/10/21Devon EnergyDVN25-26.538
11/15/21Diamondback EnergyFANG107-11299
12/6/21Dollar TreeDLTR130-135136
4/26/21Floor & DécorFND109-113120
10/25/21Ford MotorF15.4-16.219
11/8/21KLA Corp.KLAC395-410386
12/13/21Knight Swift Transp.KNX58.5-60.558
12/13/21Lam ResearchLRCX660-680661
12/6/21Martin MariettaMLM408-420422
12/6/21Marvell TechMRVL79.5-82.584
11/29/21MP MaterialsMP43-45.542
11/8/21ON SemiconductorON56.5-59.561
8/30/21Palo Alto NetworksPANW440-455530
9/13/21Pure StoragePSTG25-2632
11/15/21Seagate TechSTX100-104105
11/1/21Silicon LabsSLAB182-192196
12/6/21Toll BrothersTOL68-7167
11/29/21WillScot MobileWSC37-3839
None this week
11/1/21Enphase EnergyENPH220-232179
10/11/21Goodyear TireGT18-1919
11/15/21Livent Corp.LTHM28-3022
10/11/21Pioneer Nat. ResourcesPXD187-192173
11/29/21SAIA Inc.SAIA327-342301

The next Cabot Top Ten Trader issue will be published on January 3, 2021.