Chart of the Day: Earnings Seasonality and Triple Play Streaks
10-Year 10-Baggers
Peter Lynch’s 1989 book One Up On Wall Street introduced investors to the word “ten bagger,” which represents an investment that appreciates by 10x (1,000%) its initial purchase price.
Today we wanted to highlight the stocks that have been “ten baggers” over the last ten years. In the Russell 1,000, 33 names are up more than 1,000% since April 12th, 2013. Over the same 10-year period, the S&P 500 tracking ETF (SPY) is up 211%. As shown below, NVIDIA (NVDA) is up the most with a gain of 8,833%, followed by Tesla (TSLA) at 6,304% and then Plug Power (PLUG) at 5,477%.
There are 16 Technology stocks on the list of 33 ten baggers, which is the most of any sector. Other Tech stocks on the list include AMD, Enphase Energy (ENPH), Broadcom (AVGO), Fortinet (FTNT), Lam Research (LRCX), and even the two largest stocks in the US – Apple (AAPL), and Microsoft (MSFT). Netflix (NFLX) is also another notable on the list with a gain of 1,266%.
Some other notables include Industrials stocks like Axon — the maker of Tasers and police body cameras, Industrials stocks like Builders FirstSource (BLDR) and Old Dominion Freight (ODFL), and Vince VcMahon’s World Wrestling Entertainment (WWE), which is set to be bought by Endeavor Group (EDR).
Stocks that are already up 1,000%+ over the last ten years seem unlikely to repeat that over the next ten years. The obvious next question is: which stocks will be ten baggers over the next ten years? As Peter Lynch instructed, you’ll have to do your research!
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Bespoke’s Morning Lineup – 4/12/23 – Here it Comes and There it Goes
See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week trial to Bespoke Premium. CLICK HERE to learn more and start your trial.
“Simple can be harder than complex: You have to work hard to get your thinking clean to make it simple.” – Steve Jobs
Below is a snippet of content from today’s Morning Lineup for Bespoke Premium members. Start a two-week trial to Bespoke Premium now to access the full report.
Investors took an optimistic tone heading into the release of March CPI with futures marginally higher. Headline CPI came in at 0.1% m/m which was less than the 0.2% forecast. Core CPI increased by 0.4% which was right in line with forecasts. On a y/y basis, headline CPI was 5.0% versus estimates of 5.1% while core increased by 5.6% which was right in line with consensus forecasts. The immediate response in the futures market was higher equities and much lower yields as the 2-year drops back below 4%.
CPI reports have become increasingly important in the eyes of market commentators in the post-COVID environment. From an outsider’s perspective, you would think that these are the most important days of the month. Looking at the actual data, though, CPI reports may not necessarily be as impactful as you would originally think.
The chart below compares the S&P 500’s median daily percentage change on all market days versus CPI days for three different periods. First, for all days since 2000, the S&P 500’s median daily change is the same for all days versus CPI days (0.55%), so we can consider that the baseline. Since the start of 2020, when COVID first started showing up in the headlines, the S&P 500’s median daily percentage move on all days has been 0.74% versus 0.59% on CPI days. In other words, in the post-COVID world, the S&P 500 has been less volatile on CPI days versus all market days.
Where the stock market has become more volatile on CPI days is since November 2021 when Fed Chair Powell retired the term transitory. From then until now, the S&P 500’s median daily change has increased to 0.88% while on CPI days, it has risen to 0.95%. So, yes CPI reports have taken on an added significance, but they may not be as impactful as you would think from the headlines. CPI day or not, in the post-COVID world and even more so in the post ‘transitory’ world as the Fed aggressively hiked rates, the market has become more volatile on all trading days. This morning, the CPI report is the most important release of the year so far, but by this afternoon, it will have faded well into the rearview mirror.
Our Morning Lineup keeps readers on top of earnings data, economic news, global headlines, and market internals. We’re biased (of course!), but we think it’s the best and most helpful pre-market report in existence!
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The Closer – Eurozone Megacaps – 4/11/23
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Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we check in on the largest European stocks providing notes on each name in the Euro Stoxx 50 ETF (FEZ) (pages 1 -4). We also recap today’s 3 year note auction.
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Daily Sector Snapshot — 4/11/23
Industry Performance and CPI
Tomorrow’s release of March CPI is expected to show headline inflation cooling to 5.1% on a y/y basis from 6.0% in February. In the table below, we break down the average performance (in basis points) of each of the 24 industry groups in the S&P 500 on days of CPI releases since 2000 based on how the headline reading came in relative to expectations. There have been some notable shifts in reactions among groups to CPI reports in the pre and post-COVID (February 2020) periods. For example, in the pre-COVID period, the three best-performing industry groups on days when CPI was stronger than expected were Real Estate, Banks, and Semis. In the post-COVID period, though, these three industry groups have been among the market’s worst performers on CPI beats with all three averaging one-day declines of at least 69 bps compared to the S&P 500’s average decline of 62 bps. Interestingly, the disparity is a lot less apparent when we compare pre and post-COVID performance on days when CPI is weaker than expected.
To further illustrate this shift and how it has been much more notable on days when the CPI is stronger than expected, the scatter chart below compares industry group performance on CPI days in the pre and post-COVID periods when the headline reading comes in better and worse than expected. Starting with weaker-than-expected CPI days (red dots and red trendline), the trendline is positively sloped as groups that tended to perform best on weaker-than-expected CPI days are generally still performing the best while the industry groups that lagged on weaker-than-expected CPI days still tend to lag in the post-COVID period. The performance dynamic on stronger-than-expected CPI days (green dots and trendline), however, is the complete opposite as the trendline is negatively sloped indicating that the best-performing groups pre-COVID have tended to be the weakest in the post-COVID period and vice versa.
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Chart of the Day – Analysts Have Been Increasingly Pessimistic On These Three Sectors
Bespoke Stock Scores — 4/11/23
Inflation Concerns Continue to Ease
In an earlier post, we mentioned the record-low reading in the percentage of small businesses perceiving now as a good time to expand. As for what these firms perceive to be their most pressing issues, inflation continues to be the single most prevalent answer at 24%, albeit the gap has narrowed dramatically. Quality of labor is now only a single percentage point behind inflation at 23%, and when combined with cost of labor, the two issues account for over a third of small businesses’ biggest problems. From a historical standpoint, inflation, quality of labor, and cost of labor all remain elevated and account for a massive share (58%) of the most pressing issues facing small businesses.
The four percentage point drop month over month in the percentage of respondents reporting inflation as their biggest issue is the largest decline since January when it fell six percentage points. As a result, the category is only down to the lowest level since January 2022 which remains well outside the range of pre-pandemic readings. In other words, inflation has improved compared to last July when it was top of mind for 37% of small businesses, but it is still nowhere near a non-issue.
Picking up some of those losses has been government-related concerns. This series has historically held a political bias in which under Republican administrations, small businesses are less concerned with red tape and taxes and vice versa during Democratic administrations. With the surge in inflation concerns during President Biden’s tenure, this index has remained historically low but has begun to rise more recently as inflation has improved.
Another area to see a rise in firms reporting it as their biggest problem has been poor sales. While the reading is far from flying, it has begun trending higher now accounting for 5% of responses in March. That pairs with the index for actual reported sales changes which have remained firmly negative for nearly a year now. When poor sales turn into the biggest problem for a small business, you know times are really tough, which is why we’ll be watching this reading closely in the months ahead. For now, the reading is still extremely low, which is a good thing.
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Small Business Outlook Cratering
Small business optimism continued to decline in March with the headline index from the NFIB falling from 90.9 down to 90.1. That headline reading was actually better than the consensus forecast of 89.3, but it was still in the bottom decile of the indicator’s historical range dating back to 1986.
Looking across individual categories, breadth was weak in the report with only three indices moving higher month over month, three going unchanged, and all the others falling. As with the headline number, many categories are historically depressed in the bottom decile of readings, including some record lows.
That record low was in the percentage of respondents reporting now as a good time to expand. Only 2% reported now as a good time to expand, down 4 points month over month. While the reading has been at the low end of its historical range for much of the past year, March’s reading matched the historical low from March 2009.
Given the small business outlook for the economy has soured, fewer firms are reporting plans to increase hiring or capital expenditures. In fact, the index for capex plans fell to 20, which alongside March 2021, is the lowest reading since the spring of 2020. Similarly, hiring plans are at new lows for the post-pandemic period.
One factor likely impacting business plans has been financial conditions. The most pronounced decline of any category last month was a record 4-point decline in the availability of loans. While the reading has been rolling over for some time, that drop leaves the index at the lowest level since December 2012.
Have you tried Bespoke All Access yet?
Bespoke’s All Access research package is quick-hitting, actionable, and easily digestible. Bespoke’s unique data points and analysis help investors better visualize underlying market trends to ultimately make more informed investment decisions.
Our daily research consists of a pre-market note, a post-market note, and our Chart of the Day. These three daily reports are supplemented with additional research pieces covering ETFs and asset allocation trends, global macro analysis, earnings and conference call analysis, market breadth and internals, economic indicator databases, growth and dividend income stock baskets, and unique interactive trading tools.
Click here to sign up for a one-month trial to Bespoke All Access, or you can read even more about Bespoke All Access here.