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Wall Street’s Best Digest | February 18, 2021

Here is your February Wall Street’s Best Digest issue 838.

Now that we have the presidential inauguration and former president’s impeachment behind us, let’s hope we can get onto the business of business for 2022! Almost 45 million in the U.S. have now been vaccinated against COVID-19, and we can almost see past the pandemic to a time when we can all get back to some semblance of ‘normality.’

Although, some of the trends that surfaced during the pandemic are sure to be with us for many years to come, including more remote workers, Zoom meetings, and home remodeling. Fortunately, for us, those trends should continue to make us money!

For now, the markets are holding up well; there are rumblings of an economic recovery on the way, and both investors and our investment pros remain bullish, as you’ll see in our Advisor Sentiment Barometer, as well as our Market Views.

This month, our Spotlight Stock is the largest commercial mortgage REIT, who managed to remain profitable during the pandemic. My Feature article further highlights that industry as well as some of the unique properties of the REIT.

We offer a host of Growth stocks this month, spread across the automobile, steel, infrastructure, marijuana, online dating, and airline industries. In Growth & Income, you’ll find opportunities in the music publishing, rental, retail, and homebuilding sectors.

Next, Financial stocks are finally beginning to gain ground, and here we include ideas from the insurance, investment, and commercial banking areas. Healthcare brings us two biotech stocks. And in technology—which is continuing to shine—our contributors like semiconductors, hardware, navigation tech, e-commerce, and telecom.

This month, while Utilities have not yet made their mark on 2021, we have one midwestern company that looks very interesting. We also offer you a couple of Low-Priced stocks to put some zing in your portfolio. And our REITs & Preferred Stocks section include companies from the commercial and data center sectors, as well as a preferred issue from an investment bank.

Lastly, our Funds & ETFs are well-diversified, with ideas in healthcare. Utilities, materials, yield, airlines, and small cap arenas.

I wish you a healthy and prosperous ‘rest of the winter’, and look forward to your feedback and questions. My address is

Happy Investing,

Nancy K. Zambell
Editor and Chief Analyst
Wall Street’s Best Digest

Market Views 838

Despite yields near zero, total assets in money market funds have never been greater, which we think bodes very well for stocks, given previous asset spikes in 2000 following the bursting of the Tech Bubble and in 2008 after the brunt of the Global Financial Crisis damage.

The Fed’s latest projections call for a much less severe recession (2.4% decline in real GDP) this year, and a significant recovery of 4.2% GDP growth in 2021 and a decent 3.2% expansion in 2022 , while the Fed Funds rate will likely remain near zero through 2023.
John Buckingham, The Prudent Speculator,, 877-817-4394, February 15, 2021

Real GDP increased in the fourth quarter of 2020 and we expect the recovery to continue throughout 2021. The Fed is doing everything that it can to support the ongoing recovery. It moved the Fed Funds rate to the zero lower boundary and started the quantitative easing asset purchase program expanding the Fed’s balance sheet at a rapid pace of $120 billion per month. The inflation rate remains well below the Fed’s 2% target rate and the pace of improvement in the unemployment rate has slowed down recently. We are optimistic that the pace of job growth will accelerate in the months ahead as we make further progress distributing vaccines.
Robert M. Brinker, CFS, Brinker Fixed Income Advisor,, 303-688-2555, February 2021

Could go Either Way
The Buffett Indicator says stocks are overvalued, but supportive monetary and fiscal policy may change the equation.

Strong earnings have kept valuation from outpacing price levels.

The market may not be overdue for a correction, either. It’s near the average multiyear bull market of the past 70 years.

But margin debt-to-GDP is at a record high, which usually precedes a crash. Put differently: high prices usually precede low ones. Translation: stocks fluctuate.
Jason Kelly, The Kelly Letter,, February 14, 2021

Spotlight Stock 838

Starwood Property Trust, Inc. has been a tremendously stable dividend payer, and an outstanding stock to acquire during stock market corrections. Over the years, it has become my largest Dividend Hunter position.

The finance REIT’s primary business is the origination of commercial property mortgages. As one of the largest players in the field, Starwood focuses on making large loans with specialized terms.

The scale gives the company a competitive advantage over banks and smaller commercial finance REITs.

This table from a recent presentation shows the revenue and income breakdown of the portfolio assets and earnings:

Starwood Portfolio Breakdown

In recent years, Starwood has acquired what is now the largest commercial mortgage servicing firm in the nation. That arm of the business handles servicing, foreclosure workouts (for fees), and the packaging of smaller commercial mortgages into mortgage-backed securities. Over the last few years, Starwood has acquired selected real properties, including apartments, regular office buildings, and medical office campuses.

Starwood also has invested in residential mortgage and infrastructure lending. Real Estate Investing and Servicing (REIS) includes CMBS Investing, Special Servicing, and CMBS Loan Origination.

For the first three quarters of 2020, Starwood reported core earnings per share of $0.55, $0.43, and $0.50, respectively. The second quarter included the height of the pandemic crisis. During that time, Starwood reduced new investments and built up $800 million cash on the balance sheet. The core earnings still provided 90% coverage of the dividend, and the dividend was again fully covered in the third quarter. Starwood has paid a $0.48 per share quarterly dividend since the 2014 first quarter, working out to 28 consecutive dividends paid to STWD investors.

Why I continue to like Starwood:

I view the Starwood dividend as one of the most secure in the high-yield stock space. Starwood Capital, a real estate-focused private equity company with over $60 billion of assets under management, manages the REIT. Starwood Capital is a 2,200 person global organization, and Starwood Property Trust taps into that reach and expertise to find highvalue commercial mortgage prospects and other investments.

Billionaire Barry Sternlicht, as CEO of both Starwood Capital and Starwood Property Trust, has often repeated his commitment to building Starwood to sustain its dividend. Sternlicht and the upper management team own more than $100 million of Starwood. Sometimes I get questions confusing Starwood Property Trust (which we own) and Starwood Capital (which we do not). They are separate companies. Starwood Property Trust is not the hotel ownership company associated with Starwood Capital.

Accumulating shares around $20 makes an attractive long-term investment. As I noted above, over the last almost seven years, I have been buying Starwood during market corrections and share price pullbacks.

I hope you think of Starwood as a long-term investment, with which you will take advantage of opportunities to average down your cost and increase your dividend income stream.

Recommendation: Accumulate shares of STWD around $20.
Tim Plaehn, The Dividend Hunter,, January 2021

Starwood Property Trust, Inc. (STWD):

52-Week Low/High: $7.59 - 26.07
Shares Outstanding: 284.69 million
Institutionally Owned: 53.61%
Market Capitalization: $6.121 billion
Dividend Yield: 8.93%

Why Starwood:

Leader in commercial mortgage space

Active acquisition strategy

Healthy dividend coverage


Feature Article 838

Our Spotlight Stock, Starwood Property Trust, Inc. (STWD) is the largest commercial mortgage Real Estate Investment Trust, holding a $17 billion diversified portfolio of first mortgages and mezzanine loans, ranging from $50 million to $500 million. It is headquartered in Greenwich, Connecticut, has offices in New York, London, and San Francisco, and operates in both the U.S. and Europe.

Commercial mortgage REITs tend to be less sensitive to government policy and involvement than residential mortgage REITs since their loans are sourced, originated, and maintained by private companies rather than government agencies.

According to Brad Thomas, editor of iREIT, and one of our Wall Street’s Best Digest’s contributors, notes that commercial REITs are of two types:

“A pure balance sheet lender originates or purchases loans for their own balance sheet and holds these loans on their balance sheet (although they may sell participation units in the loans to diversify some of the risks). Blackstone Mortgage Trust (BXMT) and Apollo Commercial Real Estate Finance (ARI).

“A balance sheet/conduit lender originates and/or purchases loans for its own account (balance sheet) or to be sold into a securitized vehicle such as CMBS (conduit). Ares Commercial Real Estate (ACRE), Ladder Capital (LADR) and Starwood Property Trust are all conduit lenders.

“Balance sheet lenders originate loans with the intent of holding them on their books. Balance sheet/conduit lenders originate loans for both their own books and to sell into securitized markets such as CMBS.”

As you can see from the below graph, commercial vacancy rates increased in 2020 (due mostly to the pandemic and the remote working trend). But NAREIT says that trend should reverse for two reasons:

  1. There is not a large new supply of buildings being completed.
  2. The long-term leases for most types of commercial real estate help buffer the impact of a crisis that came on very quickly but whose rebound also began with little delay.

Starwood Property Vacancy Rates

And as Tim Plaen of the Dividend Hunter—the contributor of our Spotlight Stock—noted, Starwood has managed to be profitable even during the coronavirus pandemic, increasing its third quarter earnings 8% sequentially and 6% year-over-year. The majority of the company’s loan portfolio consists of first mortgages, averaging a loan-to-value ratio of 60-65%, which gives the REIT a nice cushion during uncertain economic periods.

Starwood has competitive advantages due to its varied investment stratgegies, its size, and strong balance sheet. And during the trying times of 2020, the REIT did not restructure its debt by taking on costly capital and it did not cut its dividend, like some of its peers.

The company was founded in 1991 by Barry Sternlicht, and according to its website, Starwood has:

  • Current assets under management in excess of $60 billion
  • Acquired over $110 billion of assets overthe past 29 years across virtually every major real estate asset class
  • Seasoned senior team that has been together for over 20 years with an average of 29 years of experience
  • Extensive public markets expertise, having guided IPOs for 8 leading companies
  • The investment flexibility to shift between real estate asset classes, geographies and positions in the capital stack as risk-reward dynamics evolve over cycles

The REIT will release its fourth quarter and full year 2020 financial results on February 25, 2021. The company is expected to earn $0.48 per share on revenues of $272.43 million. It’s a buy now at a discounted level that doesn’t fairly value its future potential.

Growth 838

O’Reilly Automotive, Inc. (ORLY)| Daily Alert January 27
Auto parts retailers have traditionally done well in recessions as customers choose to repair cars instead of replacing them. Furthermore, stimulus payments have put more money in the pockets of consumers and boosted sales.

O’Reilly has become one of the largest automotive parts aftermarket retailers in the U.S. The company’s 2020 sales are expected to be over $11 billion.

O’Reilly claims to be the first company to have run a “dual market” strategy in the auto parts aftermarket, launching it approximately 25 years ago. It aims to provide excellent service and timely procurement of parts for both the Do-It-Yourself (DIY) customer, about 55% of sales, and professional service providers, which contribute the remaining 45% of sales.

Even after years of consolidation, the retail automotive parts aftermarket remains relatively fragmented. O’Reilly has a history of acquiring smaller chains to help fuel its growth and we expect this to continue, though at a slower pace.

Strong 2020 performance will make for a challenging comparison in 2021 but we believe the drivers for growth over the next several years remain intact. Combining expected 3%-4% same-store sales growth with new store growth and acquisitions, we expect total sales growth of approximately 6%.
Doug Gerlach,, 1-877-33-ICLUB, February 21, 2021

ArcelorMittal (MT) | Daily Alert February 5
ArcelorMittal is a steel giant that’s ready to capitalize on bullish trends already set in place. Arcelor is the world’s largest integrated steel and iron ore mining company, with operations in 60 countries.

The company has 11 state-of-the-art research facilities. Engineers are currently active in more than 100 research projects, including 3D printing for use in the automotive and building sectors.

In 2019, Arcelor engineers printed the first steel bridge. The structure was installed in 2020 to span the Oudezijds Achterburgwal canal in Amsterdam.

According to a press release in 2020, Arcelor managers entered into a $1.4 billion agreement to sell its U.S.-based steel operations to Cleveland-Cliffs Inc. (CLF). Arcelor will continue to operate mills in Canada and Mexico. Shareholders are left with a well-managed business with huge leverage to any uptick in the global economy.

When Arcelor reported third-quarter financial results in November, sales swelled to $13.3 billion, up from $10.9 billion in Q2. Operating income reached $718 million, up significantly from a $252 loss reported three months previous. For perspective, the company earned $297 million in Q3 2019.

Savvy investors should use any near-term weakness as a buying opportunity.
Jon Markman, Pivotal Point,, 1-800-291-8545, January 27, 2021

Arcosa, Inc. (ACA) | Daily Alert February 10
Investors who are looking for a modestly conservative stock with both growth and value attributes should take a closer look at Arcosa.

The company, which has a market cap of around $2.7 billion, caught my eye because of its end market exposure to infrastructure and clean energy, both of which should be strong markets in a recovering economy. I’m also impressed by the strength Arcosa’s stock has shown since it spun off from Trinity Industries (TRN) in November 2018, and I like that the small cap stock generates huge EPS numbers.

Even with the pandemic, revenue over the last twelve months (ending September 2020) was up 11%. Analysts see full-year 2020 revenue up by 12%, to $1.9 billion while adjusted EPS should be up 7%, to $2.52. Arcosa pays a small dividend of $0.20 per year.

In the near term, I expect Arcosa to focus on its construction and energy divisions, with projects related to the 5G telecom buildout and renewable power distribution making headlines.

With ACA currently trading 11% below the all-time high of 64, which was recorded on January 14, it appears the window of opportunity to start new positions is open. The estimated Q4 2020 earnings date is on February 26.
Timothy Lutts, Cabot Stock of the Week,, 978-745-5532, February 1, 2021

Aphria Inc. (APHA) | Daily Alert February 12
Cannabis stocks could be one of the top investments of 2021.

Senate Democrats say cannabis reform will be higher priority.

Aphria Inc. cultivates, processes, produces, markets, distributes, and sells medical cannabis in Canada and internationally. The company offers pharmaceutical-grade medical cannabis, adult-use cannabis, and cannabis-derived extracts and derivative cannabis products under the Solei, RIFF, Good Supply, Aphria, P’tite Pof, and Broken Coast brands. It serves patients and consumers through distributors and online.
Ian Cooper, The Cheap Investor,, February 4, 2021FIRST

Fisker Inc. (FSR)| Daily Alert February 17
While Tesla has about an 80% market share of U.S. electric vehicles sales, competitors are coming alive, from giants like Ford to smaller, more niche players that are now being largely overlooked by the market.

Fisker is merging into a SPAC (Special Purpose Acquisition Company) brought public by FS KKR Capital. Its first car is the Ocean, a mid-priced SUV with modern, upscale styling and flair, and full of recycled materials and the latest gadgets.

I like this company and stock for five reasons.

First is its price point, starting at $37,500, which seems to me to be a sweet spot for a midsized five-person EV SUV. Second, Fisker has logged over 10,550 reservations for the Ocean and has $1 billion in the bank to fund its launch in the second half of 2022 with an estimated volume in 2025 of 250,000 units. Third, I like its Apple-like model of outsourcing the production of the EV to Magna much like Apple lets Foxconn assemble the iPhone while keeping 38% profit margins. Fourth, the company is going completely digital from sales to servicing, which will translate into lower costs.

Finally, unlike many other EV-related SPACs, FSR shares have not yet moved significantly beyond the SPAC IPO price.

Carl Delfeld, Cabot Global Stocks Explorer,, 978-745-5532, February 4, 2021

*Match Group, Inc. (MTCH)
This is traditionally a boom time for The Match Group.

It owns But you might not realize that over the past few years it’s also acquired or developed OK Cupid, Tinder, Plenty of Fish, Our Time, and a host of other smaller, more niche dating sites.

Match owns 25% of the online dating world—more than twice the share of its next-closest competitor, eHarmony.

Investors generally don’t act until they see results in the next quarterly statement. So, the new sign-ups that Match catches with its Valentine’s Day promos (up to 60% off), the likely increase in interest, born by pandemic loneliness and boredom, and the ever-increasing share of life that has moved online—including flirting, won’t be seen immediately in Match’s stock price. It will be a few months.

But I’m confident this will be a great quarter for Match. It wouldn’t shock me at all if it turns out to be the best one yet.
Ian Wyatt & Ryan Cole, Ian Wyatt’s Million Dollar Portfolio,, February 5, 2021

*Alaska Air Group, Inc. (ALK)
Alaska Air’s stock has made another move higher on its quest to get back to pre-pandemic levels in the five weeks since last month’s issue went to press. And though it remains to be seen whether the stock will be able to hold onto the gains in the weeks ahead, given Alaska’s strong balance sheet and where we seem to be at in terms of customers being willing to start flying again, it would not surprise at all to see it consolidate here in the $55 range for awhile, and then make a final run back to the $60-$70 range to “complete the cycle.” I am raising the buy limits and adding a few more shares to both Portfolios this month, and ALK is now a strong buy under $50 and a buy under $60.
Nate Pile, Nate’s Notes,, 707-433-7903, January 15, 2021

Growth & Income 838

Warner Music Group Corp. (WMG) | Daily Alert January 26
Through your shares of Warner Music Group, you’re buying into one of the world’s leading music entertainment companies. Its record labels include Atlantic Records, Warner Records, and Elektra Records. Musicians selling under these labels include Bruno Mars, Lizzo, Ed Sheeran, Cardi B, Katy Perry, Madonna, Metallica, Neil Young and Led Zeppelin.

The company also owns Warner Chappell Music, a music publishing company representing more than 80,000 songwriters and composers.

Warner Music’s recorded music business accounts for 86% of its overall revenues. Its music publishing business generates the remaining 14%.

In the three months ended September 30, 2020, Warner Music’s revenue was virtually unchanged at $1.126 billion, compared to $1.124 billion a year earlier. Music publishing sales fell 2% to 169% million. However, that was offset by a 1% rise in recorded music sales to $958 million.

Earnings in the latest quarter fell 84.0%, to $20.0 million, or $0.04 a share, from $125.0 million, or $0.25. The decline was mostly due to accounting charges on debt refinancing and foreign tax-credit adjustments. Warner Music has a strong balance sheet: it holds cash of $553.0 million, and its $3.1 billion in long-term debt is a low 16% of its market cap.

The company recently started paying dividends. Investors received the first regular quarterly payment of $0.12 a share on September 1, 2020.

Warner Music is a Power Buy.
Patrick McKeough, Power Growth Investor,, 888-292-0296, February 2021

Rent-A-Center, Inc. (RCII) | Daily Alert January 29
Rent-A-Center (Rated “B-”) offers a wide range of products on a lease-to-own basis. It does so through approximately 1,950 company-owned stores and another 460 -franchised locations in the U.S., Mexico, and Puerto Rico.

Unlike higher-end retailers, Rent-A-Center primarily caters to a credit-challenged customer base.

Furniture and accessories are Rent-A-Center’s biggest product category, at around 41% of sales, followed by consumer electronics at 25% and appliances at 23%. The company is also expanding its third-party “fintech” business via the ramping up of its Preferred Dynamic platform and its December acquisition of Acima Holdings LLC for $1.65 billion. The moves allow customers at non-Rent-A-Center stores to receive a set amount of purchasing power via apps on the Apple, Inc. (AAPL, Rated “B-”) or Google platforms.

Third-quarter results show the company is pretty much firing on all cylinders. Adjusted profit per share more than doubled to $1.04 from 47 cents in the year-earlier period. Sales climbed 9.6% to $712 million.

There’s a lot to like here for income-seeking investors. Rent-A-Center just raised its quarterly dividend by almost 7% to 31 cents per share.
Mike Larson, Safe Money Report, 1-877-934-7778,, January 2021

Big Lots, Inc. (BIG) | Daily Alert February 4
Big Lots is a closeout retailer with stores across the United States. The company sells furniture, food, home goods, toys and electronics aimed at providing great value to customers by offering a broad assortment of products that are results of production overruns, cancellations, liquidations, or other supply chain disruptions.

It boasts a generous (and we think likely to grow) dividend yield; sports a small market capitalization of $1.6 billion and benefits from the shift towards a work-from-/stay-at-home economy.

The stock has soared mightily off of the March lows, but a 20%+ pullback from the August peak had us intrigued. True, analysts expect revenue of $5.8 billion and EPS in the $6.00 range for each of the next two years, but a forward P/E ratio below 8 and a whopping $400 million remaining on a recently announced repurchase program make us buyers today.
John Buckingham, The Prudent Speculator,, 877-817-4394, January 5, 2021

M.D.C. Holdings, Inc. (MDC) | Daily Alert February 9
Home builders are benefitting from high prices and extremely tight inventory of new homes nationwide. Denver-based M.D.C. Holdings owns the Richmond American Homes brand, which is one of the top 15 home builders in the United States, with a major presence in Colorado, Florida, Las Vegas, Maryland, Northern California, Northern Virginia, Phoenix, Salt Lake City, Seattle, Southern California, and Tucson, Arizona.

Revenue in 2021 is expected to grow 29% to $4.99 billion, with earnings up 38% to $7.06 per share, giving the stock a forward price-earnings ratio of 7.4, which is 15% below its five-year average P/E. MDC also trades at substantial discounts to its five-year average multiples of enterprise value-to-EBITDA and price-to-cash flow.

MDC reports earnings on Tuesday, and there is an ex-dividend date on February 9 for a cash payout of $0.40 per share, plus a special 8% dividend paid in stock so that you will receive two additional shares of stock for every 25 that you own. Nancy’s Note: MDC handily beat earnings estimates of $1.73 by posting EPS of $2.19.
John Dobosz, Forbes Dividend Investor,, 212-367-3388, January 30, 2021

Financials 838

Chubb Limited (CB) | Daily Alert January 22
Chubb Limited is a global provider of insurance products covering property and casualty, accident and health, reinsurance, and life insurance. Chubb operates in 54 countries and is the world’s largest publicly traded property and casualty insurer.

Consensus estimates call for the company to earn about $6.91 per share this year, and to go to about $11.44 per share next year. Chubb has paid dividends to investors since 1984, and has increased its payments for twenty-eight consecutive years. During the past ten years, it has increased its dividends at an annualized average rate of 11.15%, and its quarterly payment is $0.78.

Its current Price to Forward Earnings ratio (P/E Forward—a measure of valuation based on projected Earnings) is 13.59. Its Price to Book ratio (P/Book) of 1.23 is 58.86% below the US Market Index. Its Price to Sales ratio (P/Sales) of 2.00 is 19.03% below the Market, and its Price to Cash Flow (P/Cash Flow) of 8.06 is 49.97% below the index. Technically (from the chart’s perspective) CB also looks attractive, trading 23.3% below its all-time high), while it is forming a long double-bottom base pattern, between $168 and $87 approximately, in which $87 is acting as a strong technical support level.
Vita Nelson,, 914-925-0022, January 5, 2021

Jefferies Financial Group Inc. (JEF) | Daily Alert February 1
Jefferies (formerly Leucadia) is the largest independent mid-market investment bank in the U.S., with major positions in equities, convertibles, and corporate debt. It also owns Berkadia, a commercial mortgage joint venture with Berkshire Hathaway. Other assets include wealth management businesses, real estate company HomeFed, foreign exchange dealer FXCM, and Linkem, an Italian wireless telephone business with over 500,000 customers.

Having reached a five-year high at $24 in January 2020, Jefferies share price halved in the March pullback. It has since recovered strongly, reaching an all-time high of $27 this month on the back of excellent results.

For the 2020 fourth quarter (to Nov. 30), Jefferies recorded record revenues of $1.6 billion. Operating income was a record $406 million, and net earnings of $307 million ($1.11 per share) also set a record.

For the full fiscal year, the company recorded records across the board. Revenues were $5.2 billion, operating income was $1.2 billion, and net income was $775 million ($2.65 per share). The results were driven by very strong underwriting and trading performance.

Jefferies raised its quarterly dividend by 33% to $0.20 per share. The company also repurchased 42.1 million shares for $813 million, equivalent to a price of $19.29 a share.

Jefferies is a Buy. The shares are selling at a 32% discount to its book value of $37.65 a share and a 7% discount to its tangible book value. With a one-third increase in its dividend and with its strong performance from its investment banking activities, the shares are good value.
Gavin Graham, in Gordon Pape’s Internet Wealth Builder,, 1-888-287-8229, January 25, 2021

Signature Bank (SBNY) | Daily Alert February 15
Today, we’ve identified a fast-money stock that has been moving higher as a result of several major tailwinds. Those tailwinds are the upcoming fiscal stimulus, an economic return to normalcy due to the COVID-19 vaccine and improvement in the number of case counts and death rates and the rising tide of higher Treasury bond yields.

That stock is Signature Bank. The New York-based commercial bank offers a wide range of business and personal banking products and services, mainly to customers in New York and the surrounding regions.

SBNY shares have been on a tear as of late. In fact, just since the start of this very young 2021, shares are up 40%. That’s a huge fast-money ride, but it is by no means over yet, in our opinion.

Fundamentally, SBNY recently posted fourth-quarter earnings that bested expectations, with earnings per share of $3.26, a record high. And, that metric was up more than 18% from the fourth quarter of 2019. Most impressively of all, the bank grew its net interest income (a bank’s overall profit on loans), by about $56 million in Q4 vs. the same quarter a year ago, and we expect that growth, as well as loan growth, to continue to sustain earnings growth.

So, let’s buy Signature Bank at market, with a protective stop at $154.00.

For those willing to take a bigger bet, we recommend you buy the SBNY June 2021 $200.00 call options (SBNY210618C00200000) at market. The call options last traded for $13.10 and expire on June 18.
Mark Skousen & Jim Woods, Skousen & Woods Fast Money Alert,, Eagle Financial, 300 New Jersey Ave. NW, Suite 500, Washington, D.C. 20001, February 8, 2021

Healthcare 838

*Vaxart, Inc. (VXRT)
Vaxart announced preliminary data from its initial Phase 1 study of VXA-CoV2-1 (n=35) showing that its oral COVID-19 tablet vaccine candidate was generally well-tolerated, and immunogenic as measured by multiple markers of immune response to SARS-CoV-2 antigens. The data met the primary and secondary endpoints with improved safety and immunogenicity vs placebo resulting in strong T-cell (CD-8) and IgA antibody responses, but failed to show an IgG antibody response.

Vaxart expects to broaden its COVID-19 vaccine development plans, with efforts that could include:

VXA-CoV2-1 in COVID-19 naïve subjects: Vaxart will conduct Phase II studies to evaluate optimal dosing schedule, and to then assess efficacy against COVID-19

VXA-CoV2-1 in previously vaccinated or exposed subjects: like the other vaccine makers, VXRT investigating single dose boosting protocol to broaden and strengthen immune responses

The bottom line is the vaccine will proceed to the next stages of development with the goal of Phase III data in early 2022. We also expect the vaccine to attract funding from multiple sources going forward as it provides the answer to many of the current vaccine problems including logistics and the only vaccine that may be effective against the explosion of mutations and variants that have already lowered vaccine effectiveness rates to the mid-40s.

VXRT is a BUY under 15 with a TARGET PRICE of 30.
John McCamant, The Medical Technology Stock Letter,, February 4, 2021

*Gilead Sciences, Inc. (GILD)
Gilead Sciences, Inc. is a research-based biopharmaceutical company that discovers, develops, and sells medicines in the areas of unmet medical needs in HIV/AIDS, liver diseases, hematology/oncology, inflammation/respiratory diseases, and others.

Wealth Advisory Earnings Grade: B+

TWA Bottom Line: Gilead is up a little this month. With vaccines being distributed, all the COVID-related excitement around this stock has disappeared (like we hope the virus will). But we’re not concerned about that. We didn’t invest in Gilead for its COVID treatment; we invested in it for its groundbreaking viral therapies, its solid pipeline of new treatments, and its rockstar CEO.

We invested in Gilead because it’s a turnaround story, not a COVID story. Revenues are growing again, and the company is investing more into R&D to bring new drugs to market faster.

Gilead Sciences is a “Buy” anywhere under $80. The 12-month target is $95.
Jason Williams, The Wealth Advisory,, 877-303-4529, January 2021

Technology 838

Ultra Clean Holdings, Inc. (UCTT) | Daily Alert January 25
Ultra Clean Holdings shares look timely, reflected by their high Quadrix scores for Momentum (91), Earnings Estimates (93), and Performance (77). For the 12 months ended September, per-share profits nearly tripled, while sales jumped 27%.

That pace of recent operating momentum may be unsustainable, but Ultra Clean should have a long runway of growth ahead. With industrywide semiconductor-equipment sales projected to rise 15% in 2020, bellwethers Applied Materials and Lam Research appear increasingly bullish on the industry’s 2021 prospects, noting that customer optimism should support more growth.

Analysts expect Ultra Clean to increase per-share profits 8% in 2021 on 9% higher revenue.

Despite surging 36% over the past three months, Ultra Clean shares still look attractively valued from virtually every angle. With a Value score of 71, the stock trades at 13 times trailing earnings, well below its industry median of 25. At 10 times estimated 2021 earnings, the stock offers a 44% discount to industry peers. If its trailing P/E rises to 16 and Ultra Clean merely meets the low 2021 profit estimate of $2.77 per share, the shares would rally to $44 over the next 14 months. Ultra Clean is a Best Buy.
Richard J. Moroney, CFA, Upside,, 800-233-5922, January 4, 2021

Seagate Technology plc (STX) | Daily Alert February 8
For fiscal 2Q21 (calendar 4Q20), Seagate reported revenue of $2.62 billion, which was down 3% annually and up 13% sequentially. Non-GAAP earnings for fiscal 2Q21 totaled $1.29 per diluted share, down 5% year-over-year from $1.35 but up $0.26 sequentially.

For all of FY20, revenue of $10.51 billion was up 1% from $10.39 billion in FY19. Non-GAAP earnings totaled $4.96 per diluted share, up 3% from $4.80 in FY19.

For fiscal 3Q21, Seagate forecast revenue of $2.65 billion, +/- $200 million, for a range of $2.45-$2.85 billion. It also projected non-GAAP EPS of $1.30, +/- $0.15, for a range of $1.15-$1.45. We note that Seagate is a serial under-guider and over-deliverer.

Given Seagate’s persistent better-than-expected results, as well as favorable demand trends in the mass storage space, we are raising our FY21 non-GAAP earnings forecast to $5.17 per diluted share from $4.87. We are also raising our FY22 forecast to $5.85 per diluted share from $5.44. Our FY21 and FY22 forecasts are fluid and subject to revision. Our long-term EPS growth rate forecast for STX is 10%.

As industry demand recovers, Seagate will for the first time meet an accelerating demand and pricing environment with a portfolio aligned with growing market opportunities, rather than with the client end market that formerly dominated. We are reiterating our BUY rating with a 12-month target price of $75.
Jim Kelleher, CFA, Argus Weekly Staff Report,, 212-425-7500, January 29, 2021

Garmin Ltd. (GRMN) | Daily Alert February 16
Garmin provides navigation, communications, and information devices built around global positioning system (GPS) technology. Products are used in the auto, aviation, marine, outdoor, and fitness markets.

The company soundly beat earnings estimates in the last four quarters, with earnings estimates trending higher over the last 90 days. The stock’s price action has been quite bullish, with the shares pushing to new highs in recent trading. To be sure, the company’s markets are very competitive, which lends some risk to these shares. Nevertheless, strong operating momentum, a great-looking chart, and a dividend yield of nearly 2% give these shares plenty of appeal for the year-ahead.

Garmin is part of Computershare’s DirectStock online plan. Minimum initial investment is $25. Alternatively, you may authorize monthly automatic deductions of at least $10 from your bank account to fund your initial investment. Subsequent investments are a minimum $10. Each dividend reinvestment will entail a transaction fee of 5% of the amount reinvested, up to a maximum of $5 plus $0.05 per share. Each recurring optional cash purchase using funds that are automatically deducted from your checking or savings account will incur a transaction fee of $2.50 plus $0.05 per share. All sales will entail a transaction fee of $25 plus $0.12 per share. To enroll, visit
Charles B. Carlson, CFA, DRIP Investor,, 800-233-5922, February 2021

*Jumia Technologies AG (JMIA)

52wk H. 67.67 52wk L. 22.20

The African provider of E-Commerce has been surging by 180%+ since October 2019 when allegation of fraud surfaced. Sinking from the intraday high of 22.50 in August 2019 (22-18) to (17-15) to (10-8). Reversal since October 2019 (9-12) gapping up (15-17.50) to (20-24) to (25-30) to (30-36) to (35-46) gapped-up (45-56) to new high of 67.67.





Joseph Parnes, Shortex Market Letter,, 800-877-6555, February 3, 2021

*IDT Corporation (IDT)
Since 2010, IDT has spun four different businesses into independent public companies. If you include all the value that has come from IDT in the form of tax free spin-offs, the stock has generated a compound annual return of ~50% since 2010.

IDT’s strategy is to harvest cash flows that are generated from its legacy telecommunications business to fund innovative and high-margin technology focused businesses. In its fiscal year, IDT was able to harvest $30MM from its mature business to invest into its high-margin, high-growth tech businesses in the Fintech and Unified Communications as a Service areas.

The Fintech assets consist of BOSS Revolution, which allows money transfer app allows customers to transfer money safely and quickly back to friends and family in other countries, and National Retail Solutions, a point-of-sale network with 12,000+ terminals.

In the last quarter, revenue grew 111%. Ultimately, this business will be spun off to IDT shareholders.

Unified Communications as a Service includes Net2phone, a worldwide leader in the voice-over-IP industry. It enables companies to move their voice-over-IPO systems to the cloud and get rid of wires and machinery that is usually needed for a phone system.

I’m valuing IDT’s legacy business at a draconian multiple (6.0x free cash flow). For IDT’s fintech assets, I believe Square and Clover (Australian company) are the best comps. For Net2pay, the best comps are RingCentral, LogMeIn, and Vonage.

Adding up the value, I arrive at my fair value estimate of $33 per share, implying significant upside.
Richard Howe, CFA, The Stock Spin-off Investing Newsletter,, 617-750-7454, February 10, 2021

Utilities 838

*MDU Resources Group, Inc. (MDU)
MDU Resources scores in the top 30% of our research universe for returns on assets, equity, and investment. Operating profit margins are also trending higher, the result of strong pricing and lower energy costs. MDU runs a construction business alongside its electric and natural-gas utilities. MDU looks positioned to get a boost from President Biden’s $2 trillion plan to invest in infrastructure and clean energy. MDU could especially benefit from projects involving airports, rail, electricity, or surface transportation, such as bridges.

MDU has grown its dividend in 30 straight years, including a modest 2% increase in 2020. MDU is a Long-Term Buy.
Richard Moroney, CFA, Dow Theory Forecasts,, 800-233-5922, January 25, 2021

Low-Priced Stocks 838

MIND C.T.I. (MNDO)designs, develops, markets, supports, implements and operates real-time and off-line convergent billing and customer care software solutions. Its customer base is diverse and includes some of the largest companies in the world; no customer accounted for more than 10% of total revenues.

It’s uncommon for a company that is growing via acquisitions to have a healthy balance sheet, but MNDO’s assets outweigh its liabilities 3.5 to 1.

Since 2003, it has distributed aggregate cash dividends of $4.78/share. MNDO pays an annual dividend with the most recent amount being $0.24, outweighing the average annualized return of the Russell 2000 Index since 2000.The dividend alone is enough incentive to hold MNDO long-term as long as it remains consistent despite the various market challenges from COVID-19.

MNDO has been on our radar for quite some time but has only recently reached sufficient bottom-line growth.The company has very strong fundamentals, making it a safe investment in a challenging market. The extremely high dividend yield is enough to attract long-term investors, but the high institutional ownership is even more reassuring.
Faris Sleem, The Bowser Report,, 757-877-5979, February 2021

*American Shared Hospital Services (AMS)
AMS provides turnkey technology solutions for advanced radio surgical and radiation therapy services. AMS is a world leader in providing Gamma knife radiosurgery equipment , a non-invasive treatment for malignant and benign brain tumors, vascular malformations, and trigeminal neuralgia (facial pain). The company also offers proton therapy, and the latest IGRT, IMRT and MR/LINAC systems.

Insiders own 40% of the shares. The company has buyout potential as a result of consolidation of the industrial segment.

AMS offers traders the option of a scalp or for long-term investor types the long term appreciation potential from either organic growth, acquisition or buyout.

AMS is a cheap stock and could easily be worth 2-3X the current share price.
William Velmer, S.A. Advisory,, 949-922-9986, January 31, 2021

REITs & Preferred Stocks 838

SL Green Realty Corp. (SLG) | Daily Alert January 28
SL Green owns commercial properties in New York. It’s in charge of nearly 100 buildings there, with a combined total of 41 million square feet between office and retail properties.

Funds from operation (FFO) came to $1.75 per share in the third quarter, flat year over year. All things considered, flat FFO generation is by itself a notable accomplishment, considering the extremely difficult environment for both office and retail real estate to begin 2020.

Same-store net operating income increased 2% yoy, and it maintained an occupancy rate of 94.2%. SL Green collected 96.9% of total billings for office, 70% of billings for retail and 92.6% of total billings for the quarter. This has helped the company generate positive cash flow, even in 2020, which has helped the company continue to reward shareholders.

SL Green is a shareholder-friendly company. Not only does the company pay a monthly dividend, it also recently raised its monthly dividend by 2.8%. In addition to that, it also tacked on a special dividend of $1.6967 per share.

In addition, SL Green separately announced a $500 million increase to its stock buyback authorization, bringing its total for repurchases to $3.5 billion. Considering the entire market cap is less than $5 billion, the share buyback will likely be a significant boost to FFO-per-share growth moving forward.
Ben Reynolds & Bob Ciura, Sure Dividend Newsletter,,, 800-531-0465, January 21, 2021

Digital Realty Trust, Inc. (DLR) | Daily Alert February 3
I like Digital Realty Trust and I like it now. Data centers are a growing business. Earnings and the stock should continue to benefit from that fact, as they always have. The stock tends to bounce up and down on an upward trend and it’s at a low point now. DLR fell below the 50-week moving average. Every time that has happened over the past several years, the stock has come back and rallied strongly. With a beta just 0.11, it doesn’t really care what the overall market does as well. And I’m not afraid to own it if the market turns south. BUY.
Tom Hutchinson, Cabot Dividend Investor,, 978-745-5532, January 27, 2021

Stifel Financial Corp. (SF-PC) | Daily Alert February 21
Stifel Financial Corp.; 6.125% Fixed Rate, Non-Cumulative Perpetual; Par $25.00; Annual Cash Dividend $1.53125; Current Indicated Yield 5.45%; Call Date 06/15/25 at $25.00; Yield to Call 3.15%; Pay Cycle 3m; Ratings, Moody’s NR, S&P BB-; CUSIP 860630870

Stifel Financial Corp (SF) is a St. Louis-based, global wealth management and investment banking company. Its diversified financial services are offered through its primary broker-dealer subsidiary, Stifel, Nicolaus & Company, a full-service investment banking and brokerage institution. The company provides its financial services across the retail sector, as well as to institutions and corporations.

This 6.125% preferred issue may be redeemed on 06/15/25, or anytime thereafter, at par plus any declared but unpaid dividends.

SF reported 3Q 2020 adjusted net income of $120.5 million or $1.59 per share, exceeding analysts’ $1.33 estimates. Third quarter net revenue rose 7.5% to $883.3 million, reflecting increased client activity. Bottom line results rebounded from early 2020 on the back of much improved market conditions, leading to considerably higher asset prices. We expect operating revenue and net results to maintain traction in 2021, as the economy continues its steady improvement.

Dividends on this preferred stock are qualified and taxed at the 15%-20% rate. This investment is suitable for medium-risk, taxable portfolios. Buy up to $28.25 for a 5.42% current yield and a 3.01% yield to call.
Martin Fridson, CFA, Income Securities Investor,, 800-472-2680, January 2021

Funds & ETFs 838

Vanguard Health Care Fund Investor Shares (VGHCX) | Daily Alert February 2
The objective of the Vanguard Health Care Fund is to provide long-term capital appreciation. This task falls upon Wellington Management Company, who is the subadvisor on the fund. Wellington is a globally integrated firm serving clients around the world. As of this writing, the company manages over $1 trillion for 2,300-plus clients.

For this fund, Wellington looks to invest in those innovative firms with differentiated products or services. Valuation also plays a role in stock selection as they search for attractive valuations relative to that company’s growth prospects. It is this stock selection that drives the industry exposures or weights. In other words, the fund takes a bottom-up approach.

Not only is this fund diversified by industries, it is also geographically diversified. This global fund will typically be invested 20-30% in foreign stocks, but per its prospectus it can go as high as 50%.

As of 11/30/20, the portfolio had roughly 40% invested in pharmaceuticals, 18.5% in biotech, and close to 17% in health care equipment to round out the top three industries. Relative to the benchmark (MSCI All Country World Index Health Care) pharmaceuticals and biotech are over-weights, with health care equipment an underweight. It’s no surprise that pharmaceutical companies are heavily factored into the top names. VGHCX will hold roughly 90-100 names.
Brian W. Kelly, Moneyletter,, 800-890-9670, January 2021

Utilities Select Sector SPDR Fund (XLU) | Daily Alert February 11
Utilities tend to be a defensive sector of the market and historically have seen gains during the “Worst Six Months,” May through October.

With over $12 billion in assets and ample average daily trading volume, SPDR Utilities is a top choice to consider holding during Utilities’ seasonally favorable period. It has a gross expense ratio of just 0.12% and a relatively attractive yield.

XLU could be bought on dips below $61.70. This is around halfway between its projected monthly pivot point and monthly support. Based upon its 15-year average return of 7.7% (excluding dividends and trading fees) during its favorable period mid-March to the beginning of October, set an auto-sell price at $73.10. If purchased an initial stop loss of $55.53 is suggested.
Jeffrey A. Hirsch, Stock Trader’s Almanac,, 800-762-2974, February 4, 2021

*Invesco S&P 500 Equal Weight Materials ETF (RTM)
The Invesco S&P 500 Equal Weight Materials ETF invests in the common stocks that comprise the S&P 500 Equal Weight Materials Index. That Index, as well as this ETF, rebalances holdings quarterly to equalize their values. Calendar rebalancing ensures a greater degree of evenly weighted diversification which adds stability and safety to a portfolio. This practice often provides a superior performance because it offers exposure to many stocks that are underweighted in most other portfolios and are therefore targets for new capital.

Management expenses are also low because it is automatically managed, without the added costs of highly-paid advisors. The annual expense ratio of RTM is a very low 0.4% of assets.

The average P/E ratio of RTM’s portfolio is 24 based on trailing twelve-month (TTM) earnings and 19 based on forward earnings expected in 2021. Both measurements are below those of the market as a whole as measured by the S&P 500 stock index.

RTM has consistently had Morningstar’s highest ratings of 4 and 5 stars over various periods during the last 10 years.

For ten years through the end of 2020, RTM returned a compounded annual return of 11.6%. For the five years through the end of 2020, RTM returned a compounded annual return of 15.2%. In 2020, RTM had an investment return of 24.2%.
Gray Cardiff, Sound Advice,, 800-825-7007,February 1, 2021

*DoubleLine Yield Opportunities Fund (DLY)
DoubleLine Yield is managed by the “New Bond King,” the super smart Jeffrey Gundlach. This closed-end fund seeks to achieve its investment objective of a high level of total return with an emphasis on current income by investing in a portfolio of different income investments. DLY may invest in debt securities and other income-producing investments of issuers anywhere in the world, including in emerging markets, and may invest in investments of any credit quality.

According to DoubleLine, the fund was initially tilted towards credit securities within the securitized space, with a lower weight to global corporate credit securities. However, throughout any market cycle, Gundlach and his team have the flexibility to allocate more capital to the traditional corporate credit market. These portfolio shifts are typically done gradually over time using a long-term approach.
Jim Woods, Successful Investing,, 1-800-211-4766, February 5, 2021

*U.S. Global Jets ETF (JETS)
U.S. Global Jets ETF is cleverly called JETS. It is really mostly tracking the airlines which have suffered greatly due to the pandemic. I believe the airline industry will make it back with some help from past and future stimulus bills.

JETS traded around $30 pre-COVID offering potential 35% upside. During the pandemic the airlines have cut costs and reduced the size of their fleets by retiring older less efficient aircraft and the number of models in the fleet, thereby increasing operating efficiency. So, they will emerge leaner with higher margins than before.

Trips by air generally last a couple hours and the airlines have shown how the airflow in planes is well designed to prevent the spread of virus. There is also now a mask MANDATE on airplanes which the airlines and unions begged for… and some serious pent up demand. Now flight attendants have the teeth to require unruly passengers to mask up, get off the plane, or be greeted by law enforcement at the gate. As COVID recedes, Jets should climb.
Tom Bishop, BI Research,, January 27, 2021

*VictoryShares US Small Cap High Div Volatility Wtd ETF (CSB)
VictoryShares US Small Cap (CSB) focuses on smallcap dividend paying stocks. Surprisingly, its portfolio overweights financial services and industrials, and underweights tech and healthcare. VictoryShares returned 11.4% last year and averaged 9.5% annually over three years.
Harry Domash, Dividend Detective,, 866-632-1593, February 5, 2021

Updates 838

*SELL B&G Foods, Inc. (BGS) | Daily Alert February 3
Updated from WSBI 834, October 15, 2020

These are strange days indeed for packaged food company B&G Foods’ stock. I honestly don’t know if the stock will continue to forge ever higher for a while, or if it will come crashing down in 5 minutes. But I’m not going to stick around to find out. I’m content to take the 80% profit here instead of speculating about what these pajama boys might do next. SELL.
Tom Hutchinson, Cabot Dividend Investor,, 978-745-5532, January 27, 2021

*SELL ICON Public Limited Company (ICLR)
Updated from WSBI 826, February 20, 2020

We are dropping ICON from the Buy and Long-Term Buy lists. The stock’s Overall score has dropped to 46, hurt by subpar ranks for Momentum, Value, and Earnings Estimates. Although ICON’s operating momentum may rebound in 2021, the stock trades at a lofty 26 times estimated year-ahead earnings, above the median of 23.5 for S&P 1500 Index health-care stocks.
Richard Moroney, CFA, Dow Theory Forecasts,, 800-233-5922, February 8, 2021

*SELL Companhia de Saneamento Básico do Estado de São Paulo - SABESP (SBS)
Updated from WSBI 836, December 17, 2020

Companhia de Saneamento Basico do Estado de Sao Paulo - SABESP shares went sideways again this week and I have lost patience with this stock. Despite its monopoly power and low valuation, I’m moving this company to a sell. MOVE FROM BUY A HALF TO SELL
Carl Delfeld, Cabot Global Stocks Explorer,, 978-745-5532,January 28, 2021

*SELL Phillips 66 Partners LP (PSXP)
Updated from WSBI 829, May 21, 2020

Phillips 66 Partners, L.P. was not very positive about its operations on its conference call following the earnings report. We got our distribution and suffered a bad week, but we will not linger. The stock violated our 10% trailing stop, resulting in its removal from this week’s portfolio.
John Dobosz, Forbes Dividend Investor,, 212-367-3388, January 30, 2020

*SELL Anthem, Inc. (ANTM)
Updated from WSBI 831, July 16, 2020

We are removing Anthem from the Buy and LongTerm Buy lists after the health insurer posted decent Decemberquarter results but issued soft guidance for the coming year. Anthem’s December-quarter earnings per share slumped 35% to $2.54 excluding special items but squeezed past the consensus by a penny. Total revenue cimbed 16% to $31.82 billion, ahead of the consensus of $30.83 billion. Medical membership rose 5% to 42.9 million, driven by growth of 22% for Medicaid and 11% for Medicare.

For 2021, management expects per-share profi ts to exceed $24.50, implying at least 9% growth, but that outlook falls well short of the consensus of $25.24 at the time of the announcement. The shares fell on the results, extending their weakness in 2021.
Richard Moroney, CFA, Dow Theory Forecasts,, 800-233-5922, February 1, 2021

*SELL 1/3 AbbVie Inc. (ABBV)
Updated from WSBD 322, July 3, 2019

AbbVie is a fantastic company longer term. But it is likely near the high point of the near-term range. With the market high and looking wobbly, it’s not a bad time to take a third of the position off the table and lock in a solid profit. We can always buy that third back if and when the stock behaves in a way consistent with the recent pattern and pulls back for a little while. SELL 1/3
Tom Hutchinson, Cabot Dividend Investor,, 978-745-5532, January 27, 2021

Investment Index 838

WSBD 838 Index

WSBD 838 Funds

The next Wall Street’s Best Digest issue will be published on March 18, 2021.