Our weekly Stock Scores report is Bespoke’s ranking of all S&P 1500 stocks based on our proprietary Fundamental, Technical, and Sentiment ratings.  A large number of data points go into each category.  For our Fundamental rating, we of course look at valuation measures and growth expectations to rate every stock relative to other names in its industry group.  For our Technical rating, we look at the stock’s upside (or downside) price momentum, relative strength, overbought/oversold levels, and more.  Finally, for our Sentiment Rating, we look at analyst sentiment and short interest levels among other things.

In order for a stock to rank at the top of our list, it must rank highly across all three categories with strong fundamentals, technicals, and sentiment.  This is a “fusion” approach to stock selection that many investors have adopted in recent years.

A boring old Utilities company — Southwest Gas Holdings (SWX) — came in as one of the top stocks this week with a total score of 83.51 (out of 100).  The company operates in the Southwestern US states like Nevada and California. On a technical basis, the stock scored perfectly and price action today is confirming this as it has risen 1.76% up to all-time highs. For most of this year, the stock has been trending sideways in what is a longer-term uptrend.  In early May, the stock fell below this range but found nice support at its 200-day moving average and then bounced.  In the past week, it again pulled back to find support at the 50-DMA from where it has reached its current levels.

In addition to a strong technical picture, the fundamentals are solid as the stock is valued cheaply by several measures as shown below.  With this cheaper valuation, Southwest Gas also has higher sales growth around 13% YoY compared to an average of 9.64% for other gas utilities. On top of all of this, SWX has paid out a consistent and increasing dividend for the past decade since the financial crisis. The dividend currently sits at 2.48%, which is a bit below average for a utility but again has been growing at a solid pace, rising 5% last year alone.  If you would like to view our full Stock Scores report and see where stocks you own rank, start a two-week free trial to Bespoke Premium today!

After the weakest ADP Private Payrolls report (in terms of the actual reading and relative to expectations) in close to a decade earlier this morning, investor anxiety heading into the ISM Services report for May was understandably high.  While economists were expecting the headline index to decline slightly from 55.5 down to 55.4, it actually saw a modest increase rising to 56.9.  On a combined basis and accounting for each sector’s share of the overall economy, the May ISM Composite PMI rose from 55.2 up to 56.4.

As you might recall, tariffs were a major issue in the commentary section of the ISM Manufacturing report, and while they were also an issue in the commentary section of the Services report, it wasn’t as prevalent.  As shown in the graphic below, the issue only showed up in four of the ten comments, and in one of them it was saying that the issue of tariffs “doesn’t seem to matter.”

While the headline reading of the ISM Services report showed a m/m increase, breadth in this month’s report wasn’t particularly strong. Of the index’s ten subcomponents, six showed m/m declines in May and eight showed y/y declines.  One positive outlier, though, was Employment, which increased from 53.7 up to 58.1.  It figures that on the same day we saw the weakest ADP Private Payrolls report in nearly a decade, that we would also see the largest m/m increase in the Employment component of the ISM Services report in two years.  Really clears things up!  Start a two-week free trial to Bespoke Institutional to access all of our research and interactive tools.

Equities’ massive rally in yesterday’s session was exactly what the major index ETFs needed to work off the extreme oversold levels they have been sitting in or around for the past week. Currently, none of these ETFs are sitting at extreme levels, though, 11 are still oversold.  For most, these oversold levels are actually teetering on neutral after yesterday’s 2%+ rally! The three mid-cap ETFs have actually moved into neutral territory.  All three of these have outperformed in the past week with gains well over 1%.  No other index ETF comes close to these gains.  On the other end of the spectrum, the Nasdaq (QQQ) is still sitting 1.48% lower than 5 days ago and is the only one of the group to be more oversold than it was last week (as seen through the red dot, rather than green, in the Trading Range section of the Trend Analyzer).  Start a two-week free trial to Bespoke Institutional to access our Trend Analyzer, Chart Scanner and much more.

Using our Chart Scanner tool to pan through the charts of these same ETFs, most of the major indices are still sitting in short-term downtrends, though, yesterday’s surge helped to lift some slightly above the downtrend lines or at least to the top of these downtrend channels.  Another interesting technical point to make: over the past few sessions, several of these ETFs including the Total Stock Market ETF (VTI), the S&P 500 (SPY and VOO), Nasdaq (QQQ), Russell Mid Cap (IWR), Russell 1000 (IWB), and S&P 100 (OEF) have found support around lows from a pullback earlier in the year when the market ran up to prior resistance at last year’s highs before the sharp December sell-off. Some like IWR and IWB have also found support at their moving averages.  Others like the Core S&P Mid-Cap (IJH), the Core S&P Small Cap (IJR), and the Micro-Cap ETF (IWC) have fallen through these levels recently and now sit at the lower end of the range from last fall.

Chip-maker Ambarella (AMBA) is trading up 9% after reporting an earnings triple play after the close of trading last night.  An earnings triple play occurs when a stock beats consensus EPS estimates, beats revenue estimates, and raises forward guidance.  While EPS beat by 7 cents ($0.01 vs. -$0.07 est.), revenues managed to just barely beat by $180,000 ($47.2 million vs. $47.02 estimates).  But…a beat is a beat.

Ambarella is certainly in the sweet spot of the semiconductor space it seems.  The company was only founded 15 years ago in 2004, but its low-power/high def chips are key for tech products like video security, advanced driver assistance systems, fully autonomous driving, and robotics.

Bespoke Institutional subscribers have access to our popular Earnings Explorer tool.  One of the sections of the tool allows you to search for individual stocks to see historical earnings results for the company.  Below is a snapshot of AMBA pulled directly from the Earnings Explorer.  As shown, AMBA has historically beaten EPS estimates 100% of the time since it went public in 2012.  This quarter’s EPS beat was the company’s 27th in a row!  Talk about consistency.  In terms of sales, the company has a 96% beat rate, which means it has only missed sales estimates once in twenty-seven quarterly reports.

While AMBA has no problem beating EPS and sales estimates, it lowers guidance quite often.  In just the last ten quarters, AMBA has lowered guidance eight times.  Prior to this quarter, AMBA had lowered guidance for five quarters in a row.  That’s what makes this quarter’s report so impressive.  Instead of lowering guidance as the company usually does, it raised guidance this time around.  This is only the second time that the company has raised guidance on a quarterly report since it went public.  As highlighted in the table below, the last time AMBA raised guidance on November 30th, 2017, it opened higher by 8.5% and then continued to trade higher by another 5.3% from the open to the close.  Its full-day change that day was +14.3%.  Again, AMBA is set to gap higher at the open this morning by about 9%.  Will the same trend of intraday buying that happened the last time AMBA raised guidance occur once again today?  We’ll find out soon enough.  Start a two-week free trial to Bespoke Institutional to unlock our Earnings Explorer tool and much more.

Equities roared back to life in Tuesday’s session as the major indices regained all of Monday’s losses and then some with the S&P 500 seeing its second strongest day of the year.  Breadth was pretty strong among sectors as all but one, Real Estate (XLRE), finished the day higher.  The Technology Sector (XLK) rose the most, surging 3.34%. This is only one day after a rout of tech giants (like Alphabet (GOOGL) and Apple (AAPL) in response to government investigations) dragged on XLK to finish the day just below the 200-DMA. Names like Facebook (FB) similarly dragged on the Communication Services sector (XLC) for the same reasons, but these losses were mostly made up for on Tuesday. Semis were a major factor in Tuesday’s tech rally as names like Advanced Micro Devices (AMD) and Nvidia (NVDA) rose as much as 7%.  Materials (XLB) were the second best performing sector of the day as breadth in the sector was very strong with DowDuPont (DD) being the only S&P 500 Materials stock to be lower at Tuesday’s close. After gapping up to just above the 200-DMA, XLB rose further taking out the 50-DMA and finishing the day 2.81% higher.  In addition to taking out the moving averages, XLB also broke out of its recent short term downtrend in dramatic fashion. Industrials (XLI) similarly saw a break out of its downtrend. Other cyclicals, the Financial Sector (XLF) and Consumer Discretionary (XLY), also performed well with both rising 2.71%.  XLF’s chart has a similar pattern to XLB with Tuesday’s opening price sitting at the 200-DMA and finishing above the 50-DMA while also breaking out of its downtrend.

While cyclicals were bid up, defensives underperformed. The Consumer Staples sector was the best performing of the defensives as it rose 0.91%. Utilities (XLU) also managed to finish in the green, but it only rose 8.5 bps.  Granted, Utilities finished well off of the day’s lows.  Intraday, the sector had briefly dipped all the way below the 50-DMA.  Finally, as previously mentioned, Real Estate (XLRE) was the only sector to move lower on the day, finishing down 0.55%.  Similar to XLU, Real Estate finished off of the day’s lows near the 50-DMA.  Start a two-week free trial to Bespoke Institutional to access our interactive Chart Scanner tool and much more.