Is it Time to BUY HEAVILY? | The Weekly Investor Playbook

How are we doing community and welcome back to another video. I'm actually on vacation this week, but still keeping up with the markets and the market had a bit of a hiccup over the course of the past week as we've seen fear levels increase, but it's not all bad because just this week, check this out. I got nominated by creators agency as a top 50 content creator and they break out by category. So there were 11 investing creators and as you can see on your screen, I was one of them. So really excited stuff and a big thank you to you for following and enjoying my content. Now for today's video and this is going to be a big one. We have a lot to cover on what's going on in the market. What are some key earnings reports and what to look ahead in the week coming, but before we do as always show your appreciation by smashing that like button down below. I appreciate it and it really helps with the growth of this channel. Now as investors, we know that the stock market goes through cycles and when we see sell-offs or pullbacks in the market, sometimes they're warranted and sometimes they're just seemingly rotational. But in terms of the market cycle, we always start with hope and we work our way up to the top which is euphoria and then fall back down into things like anger, depression, disbelief and it all starts and wraps back around with hope. But when I use the word rotational unlike using a warranted sell-off, that alludes to well the economy is still doing fine. Maybe investors are just taking some profits in some areas that might be stretched aka technology, but they're not just going to the sidelines and sitting there and racking up higher amounts of cash. No, they're putting that money back to work in areas like industrials, in areas like energy and health care and things like that and that could be a good indication that hey, things are still decent in the economy and the stock market. On your screen now, you can see the 11 different sectors within the S&P 500 and over the course of the past month, it's pretty split. Six sectors are up, five sectors are down. Now it's important to understand waiting because six sectors being up with a few of them up meaningfully like energy up 11%, health care 7% and financials up 5%, why Why the S&P 500 down over the past month, albeit slightly? It has to do with sector weightings. The S&P 500 is a market cap weighted index. And when you look at the sector weightings here, you can see that technology is the top by a very large margin. Technology now makes up nearly 40% of the S&P 500. It has largely become a technology heavy investment, followed then by financials and then communication services. So, when you look over the past month and you see things like technology, communication services, two of the worst performing sectors, it makes sense that the S&P 500 is down. But is it reason to panic? Is this the start of a bigger sell-off, or is this a buy the dip opportunity and a rebound could be in store? Before I answer that question, let me thank today's video sponsor, which is Seeking Alpha. Seeking Alpha is where I get a lot of the data that you're seeing in today's video. They have three great subscriptions to choose from. The first being Alpha Picks, which gives you multiple strong buy picks per month. Premium, which is the subscription that I utilize, where I get access to some great research and data sets. And third is the biggest one, which is Pro, where you get the most advanced data you could ask for. But best of all, when you use my link down in the description below, you can try it all out completely free for 7 days. So, give Seeking Alpha a try today. So, getting back to the markets and when we look at the headlines and we see the S&P 500 down, the Nasdaq down, the triple Qs down, it brings up a level of fear and potential panic, especially for younger retail investors. And not just young folks, but folks that are maybe less experienced. So, I want to try and help you in today's video and these are the topics that we are going to be covering. I'm going to be touching on the state of the market, going into some detailed reports. Then we're going to jump into a few earnings reports that give us more insight to how the market is doing and then touch on a few of my portfolio stocks and a few stocks that I rate a buy and a strong buy in the week ahead. And again, I started this brand new video format, The Weekly Investor Playbook, just a few weeks ago. So, in the comments section down below, let me know your thoughts on giving these market updates in a playbook for the week ahead. I would love to hear from you down below. All right, so a second ago we talked about the S&P 500 and all the indices down over the course of the past month or so. And when we look at that, it makes perfect sense that the fear and greed levels are also increasing. Retail investors don't like seeing red. And as you can see on your screen here, the fear and greed index has fallen back into the fear region. However, let me tell you why I'm not here to panic. And although I'm not going to be panicking, there are still reasons to be concerned. So, don't let me act like it's all roses and sunshine here. Because we are going through an escalation period with between the US and Iran war. It was for a little while de-escalation. It wasn't perfect and and nothing was going on, but now it seems like things are once again ramping up and we're all in a a full-fledged war again. That has impacts on oil. That has impacts on transportation. So, higher oil prices don't just impact energy companies. It's a broad spectrum and all of that has inflationary impacts in a negative manner. That brings back into the equation higher interest rates, higher inflation, higher interest rates all impact future earnings. So, I'm not going to sit up here and act like it's all perfect. But with that being said, one of the things that I like to check to see is the market really turning over, is to compare the S&P 500 to the RSP, which is the equal weight S&P 500. All 500 companies equal weight across the board. Again, the S&P 500, the sister fund, is a market cap weight. And when you see all of those technology stocks in the top 10 and technology in general accounting for nearly 40%. That has a big sway on the overall index. But when I see RSP, you could see this is a equal-weighted fund that's actually up over 1% the past month. So, that tells me investors are selling things like technology, communication services, and they're putting that money to work as I alluded to at the beginning of this video. Looking here at the sector breakdown for RSP, industrials is the largest. There's just more industrial companies in the market, followed then by technology and financials. So, tech instead of making up nearly 40% in the S&P 500, only makes up 15% here in RSP. But, if we were looking at a market where S&P 500's down meaningfully, RSP is down meaningfully as well over a longer period of time, that would give me more sense of concern about the market in general and the road ahead. But again, that's not what we're seeing. S&P 500's down slightly, RSP is actually up over 1%. So, now let's actually do a economic check and see how is the economy doing based on some recent reports that we got. How are jobs doing? How's the jobless claims? How are retail sales? So, when we look at these things, jobs are still on stable footing. No real concerns as of the latest jobs report. Weekly jobless claims don't represent any red flags. In fact, the number of Americans filing for unemployment this week was the lowest since 1969 and continuing claims hit a six-week low. In terms of retail sales, those were solid in the last month and continued to climb higher even when you exclude things like autos and gas, which are big expenses. So really, when we look at the economic activity, things aren't stellar, they're okay. And when the economy is okay and jobs are okay, not stellar, not red flags, just okay, stocks can still perform quite well. Now, a lot of those reports I just referenced there, jobless claims, the jobs report, and looking at retail sales, those are government-issued reports. But, there's other ways to look at the health of the economy through the help of earnings. And one of the leading indicators that I like to look at is how is the transportation industry doing? And railroads give us a great indication because if you think about it, everything really needs to be ordered and transported. Even technology companies that are building out these big data centers, building out these big lithography machines that they're ordering from ASML and things like that. Transportation can give us a huge indication, especially on near-term, how were earnings over the course of the past quarter and how were earnings expected to be. And a key thing I like to hone in on is what is volume doing. So, over the course of the past week, we just had the two largest railroads here in the US, Union Pacific and CSX, just give us an update on their latest report and guidance. Let's take a look. So, let's first start with Union Pacific, which has had a solid past 12 months and is the largest railroad company. And looking here, we can see Union Pacific earnings saw operating revenues grow 12%. And if you look to the right, one of the key drivers was the 2.25% uptick in volume. Well, that's obviously great to see, but let's keep going. And what you see here is the fact that management increased their guidance. Well, why did they do that? Look at the first item listed, meeting increased customer demand with strong service. Okay, well, that that looks great. Now, let's take a look at CSX, which is up 50% over 50% the past 12 months and the second largest railroad. CSX during the latest quarter reported record revenues driven by 6% increase in, there's what I'm looking for, volume. Management states the company managed substantial volume growth while maintaining a consistent focus on safety and productivity. In terms of forward guidance, we see it again, management alluding to solid earnings growth driven by growth we continue to see in volumes. Now, let's check. So, both of those right there are great indicators that, hey, the economy is still on solid footing because management teams wouldn't be placing orders that need to be transported if they didn't believe the economy was still on solid footing. They would collapse and pare back some of their investing. So, that's a look at the railroads. We looked at government reports and private reports. Now, we've looked at public companies and what they're seeing and all of it is pointing back to the economy being on stable footing. Now, let's transition to a couple of portfolio stocks that recently reported earnings in my portfolio, Alphabet and ServiceNow. Let's begin with Alphabet, which is the largest position in my portfolios. But, beginning with Alphabet, the stock that has been part of the mega cap sell-off where we're in the midst of right now and the stock is down roughly 10% over the course of the past month. In the latest earnings, they reported handily beat expectations. 17% growth from search, 15% growth subscriptions, 13% growth from YouTube ads. But, look at that cloud number, which is just unbelievable and yet another sign the AI trade is alive and well. Over 80% growth in cloud. That was the key number that we were focusing on as investors. So, that sounds great, Mark, but why did the stock fall? Number one, it's had a great run and some investors are looking at it saying this valuation makes sense, which I think it's seemingly fine. But, again, it's my largest position, so I'm not going to jump out and buy right here quite yet, but this pullback is getting me somewhat intrigued. If you have no position, this looks like a solid company that has a long runway of growth. But, another reason the company was down was because right here, they yet again increased their CapEx spending budget, which to me was a given. It's been talked about heading into it. Prior guidance had the company spending 185 billion at the midpoint. That number is now closer to 200 billion. So, short-term, folks are looking for a quick ROI on all of this invested capital the company has been doing over the course of the past 12 months. This isn't a short-term thing. This is a long-term growth. This is a company that is seeing crazy demand. They are out of capacity, which is why they're reaching out to the likes of a Nebia and a CoreWeave I ran and companies like that to increase that capital. A company with a long runway of growth and a great management team. Now, let's have a look at another portfolio stock, which is one I talk a lot about on this channel, probably more than any other creator I've seen, and that is going to be ServiceNow, stock ticker NOW. And during this earning season so far, we've seen a lot of software companies that have actually been getting hit pretty hard. But again, ServiceNow is sticking out from the crowd, and one I continue to believe is a great buying opportunity. Not all software companies will win, but this is a company with mission-critical AI and a wonky but effective CEO. The company just reported their latest earnings results, which again, plenty of software stocks are getting hit, and they reported a double beat with EPS of 90 cents, revenues of nearly 4 billion, growing the top line by nearly 25%. That doesn't sound like a company where AI is eating its lunch. ServiceNow is utilizing AI to enrich its own business and its clients, serving as the AI control tower. The company, whose guidance is still calling for more than 20% subscription growth for the year, 31% operating margins, and in the near 20% growth in RPOs, or remaining performance obligations. This is a company still growing at a solid clip and trading like its growth is in the single digits. I love Alphabet. I love everything about it. But again, it's my largest position. I believe in the week ahead, at the top of your list or towards the top, you should take a hard look at ServiceNow, adding that to your portfolio. The valuations are very compelling based on the growth this company is giving you. So, those are a look at two portfolio stocks. Again, earning season is still just getting started. The week ahead is jam-packed with huge companies reporting, pivotal AI companies, and companies that will give us more updates on the health of the consumer. Meta, Microsoft, Amazon, and Apple are all on the docket next week. Boeing is one I own. Robinhood and SoFi I'll be watching closely. Mastercard will give us a consumer update. Who has more insights than credit card companies? And a slew of others that could have big impacts on the AI trade could be Qualcomm, Bloom Energy, and ARM, just to name a few. So, a lot to get through and I'll be updating in real time inside of my investing Discord community. So, make sure you get joined using that link down in the description below. Thanks again for joining again. Let me know your thoughts on this weekly investor playbook. What you like about it, what you don't like, and that thanks again for joining. Make sure you smash that like button and we'll see you next week. Take care. >> [music]