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The U.S. stock market rebounded on Tuesday, following testimony from Chair Powell at his Senate confirmation hearing. Investors liked what he said, implying that the three anticipated quarter-point rate increases, which could start in March, would likely be enough to quell inflation (along with a hoped-for return to normal supply conditions).

The dark clouds of persistent inflation and high interest rates continue to hover over the market. But with a record amount of capital on the sidelines and little to no movement in most stocks over the last two-plus years, I’m optimistic that better days are ahead, assuming the inflation/Fed clouds eventually part. Thus, I continue to seek out companies that are essentially growth stocks at value prices. And today, we add another one to our portfolio in the form of a big-name company that’s benefitting greatly from a return to normalcy in a post-Covid world … but whose shares are trading at barely half their pre-pandemic peak.

Enjoy!

Many of our stocks are following the market’s lead and trading sideways. I have no rating changes in today’s update, but several of our holdings reported earnings over the past week.

This Weekly Update includes earnings updates and expectations on all our portfolio companies. I have no rating changes this week, and most of our holdings are acting quite well.

My value approach seems contrary to the thinking of most investors, but I believe selling when the market is high and buying when the market is low makes sense.

Remain bullish, but don’t get too aggressive. Growth stocks and the market are still in uptrends, so we’re sticking with a heavily invested stance, but many leaders have wobbled of late, the number of stocks hitting new highs has dried up a bit and earnings reports are coming up for a ton of names.

The standout action this week has been in tech stocks, and it hasn’t been good. With the Nasdaq starting off the week with a big drop and large-/mega-cap leaders like Amazon (AMZN), Microsoft (MSFT) and Netflix (NFLX) moving materially lower as the week progressed it has felt somewhat disheartening to those with heavy tech exposure.

How quickly the market can change directions as one week we are on the verge of a steep decline, and the next week the indexes explode higher. This last week fell into the big winner camp as the S&P 500 gained 5.35%, the Dow rallied 5.07% and the Nasdaq added 6.61%.

The good times for the bulls continued as the S&P 500 rose for a fifth consecutive week, its longest such streak since November 2021, and it was also the best week for the S&P 500 since March.

Current Market Outlook


Three weeks ago, the major indexes were on their knees and very few stocks were in good shape. But there’s been a steady improvement in the overall evidence since then, and while it’s not 1999 out there, the picture looks pretty good—the intermediate-term trend has returned to the bullish side of the fence, while many individual stocks (growth and otherwise) show constructive action. We’ve even seen a big pickup in the number of names hitting new highs (multi-month high in NYSE new highs on Friday)! Short-term, the steady up-move in the market and many stocks could easily bring a pullback or some hesitation, but there’s no question the rubber-meets-the-road evidence has improved greatly, which is what counts most to us. We’re nudging our Market Monitor up to a level 7 in today’s issue.

This week’s list has a bunch of good-looking charts from a variety of sectors. Our Top Pick is Marvell Technology (MRVL), which is helping to lead the recent charge in chip stocks.

Stock Name	Price	Buy Range	Loss Limit
Abercrombie & Fitch (ANF)	16.55	15.5-16.5	14-14.5
Fastly (FSLY)	126.61	118-129	105-108
Marvell Technology Group (MRVL)	43.51	42-45	38-39
Paylocity (PCTY)	188.72	178-188	160-164
Penn National Gaming (PENN)	64.89	62-66	56-58
Roku, Inc. (ROKU)	221.62	215-222	194-198
Synnex Corp. (SNX)	150.56	145-152	131-135
Tesla, Inc. (TSLA)	441.83	435-448	392-400
TG Therapeutics, Inc. (TGTX)	30.49	29-31	26-27
United Rentals, Inc. (URI)	198.89	194-202	175-178

Current Market Outlook


Looking at just the major indexes, things couldn’t be better right now. The S&P 500 and Nasdaq are both at all-time highs, while growth stocks look good for the most part. But a peek below the surface reveals that some crosscurrents still abound. There’s still an above-normal amount of Nasdaq stocks making new 52-week lows, while new highs aren’t as expansive as they could be—especially given the strength of the leading mega-cap names. Meanwhile, only around half of S&P stocks are above the 50-day line, and the advance-decline line could be stronger. That said, we’re still seeing lots of nice setups in growth stocks, and while we likely haven’t seen the end of earnings-related volatility, the latest earnings season has been mostly kind to growth stocks. We’re moving our Market Monitor to a level 6 but are keeping our eyes open for what comes next.

This week’s list includes a nice mix of sectors, including a few that have had spectacular earnings reactions. Our Top Pick is Trane Technologies (TT), an HVAC company benefiting from the return-to-office trend.

Stock Name	Price	Buy Range	Loss Limit
Arvinas, Inc. (ARVN)	95	92-96	84-85
ASML Holding (ASML)	754	730-748	685-700
AutoNation (AN)	116	114-116.5	104.5-107
BioNTech (BNTX)	286	275-286	250-257
Dropbox (DBX)	31	30-31	29-29.5
HCA Healthcare (HCA)	246	240-246	220-225
Morgan Stanley (MS)	97	94-97	88-90
PTC Inc. (PTC)	151	148-152	137-140
Snap Inc. (SNAP)	76	75-77	68-69
Trane Technologies plc (TT)	200	196-201	185-188

Current Market Outlook


After a couple of horrid weeks for growth stocks, we’ve seen a ray of light lately, as many found solid support with some volume beginning to show up in some stocks as they rally, an early sign that big investors are engaged. Thus, we’ll chalk it up as a nice first step, and definitely a change from the recent carnage, but we still need to see more—many indexes are now doing more chopping than rising (the overall intermediate-term trend is basically neutral at this point), and most of the action in recent days has been among stocks that took the biggest hits (and thus still have a ton of overhead to chew through). Don’t get us wrong, we’re intrigued by what we see—it could prove to be the early stages of a change in character for growth stocks after three months in the outhouse—but the bulls still have more to prove before we meaningfully increase our exposure.

This week’s list remains mixed, with lots of turnaround and cyclical situations, but with a few growth-y issues too. Our Top Pick is Analog Devices (ADI), which has come back to life after a three-month rest thanks to great earnings, huge cash flow and a pending acquisition.

Stock Name	Price	Buy Range	Loss Limit
Acuity Brands (AYI)	180	176-181	162-165
Analog Devices (ADI)	163	159-164	145-148
Avery Dennison Corp. (AVY)	219	215-220	197-200
Blackstone Group (BX)	91	86-89	79-81
Children’s Place (PLCE)	95	90-93	80-82
EOG Resources, Inc. (EOG)	80	78-81	70-72
EPAM Systems (EPAM)	485	465-475	425-430
Owens Corning (OC)	105	101-104	92-94
Progyny (PGNY)	59	54.5-57.5	48-50
Roblox Corporation (RBLX)	89	85.5-89.5	73.5-76.5

The market remains under pressure in the short-term, for all the well-publicized reasons, but long-term, the market trend remains up, and many of our stocks are acting well. Today’s recommendation is a repeat, a stock we made money in last year that subsequently had a big correction and is now ready to run again. And it’s got a great story, too!

Emerging market stocks remain in an uptrend, though like most stocks around the globe, a little resting wouldn’t be uncalled for after the recent run-up. Even so, with our Emerging Markets Timer still green, we’re looking to add exposure at opportune times.
Tonight, I see two opportunities—one from the less-followed area of Southeast Asia, and one from China, as one of our watch list stocks is being upgraded to buy. Many of our recommendations are making solid progress, and I’m optimistic both of these can be leaders going forward.

Our market timing indicator is positive and our stocks are doing well. We’re heading into earnings season with a powerful wave of momentum providing the power. In this issue I do a little basic review of earnings season and list all the firm dates for companies we own. I also have a new/old stock that boasts very strong numbers and will be reporting in a couple of weeks.

It can be easy to watch a short-term run-up in IPO stocks and feel like you missed out, but it often pays to give newly issued shares time.

Avalara (AVLR) shares are rising today after the company beat expectations and gave a solid outlook for the rest of the year. Maintaining at buy.

With mortgage rates below their recent highs and an ongoing housing shortage, the future is looking bright for homebuilders, and this luxury builder is my favorite way to play it.