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This week, Zacks Chief Equity Strategist and Economist John Blank, PhD discusses:

• The top stocks in the Computers and Technology sector. John surveyed this sector last year, but things move extremely rapidly in this sector, so he has put together a new two-part review for 2024. This week, John looks at stocks in four industries in the sector: Electronics, Electronics-Semiconductors, Computer Software-Services, and Computers-Office Equipment.

• As John has done in previous analyses, he defines “top” stocks in three ways: by market capitalization, by number of analysts following the stock, and by largest percent change in F1 EPS estimate (the most important element used in assigning a Zacks Rank to stocks).

• With this framework, John then examines key metrics for leading the Computers and Tech stocks, and he reveals some fascinating stories by examining data trends, including Revenue F12M, Reinvestment Rates, Net Margin TTM %, Cash Flow Yield %, Enterprise Value/Sales and many others. He looks at big, well-known names like Microsoft (MSFT), Adobe (ADBE), and Nvidia (NVDA) as well as less familiar but intriguing companies such as Pure Storage (PSTG), Generac (GNRC), IonQ (IONQ), and Ballard Power Systems (BLDP), and many, many more.

This week, Zacks Equity Strategist Mayur Thaker, CFA, discusses:

• The increasing probability of a recession. Mayur shares why it may be time to allocate to our defense-oriented Earnings Certain Proxy Portfolio, a recession-resistant portfolio built to provide low-volatility and durable earnings growth through all macroeconomic environments.

• Mayur provides a look into rising economic risks, including job openings per unemployed hitting fresh cycle lows, the high valuation risk of the S&P 500, rising layoff announcement trackers, and increasing market volatility. He also shares that cyclical companies, such as banks, materials, and industrial companies, have collectively been in an earnings recession for four quarters.

• To wrap up the discussion, Mayur suggests now is the time to get defensive with the Earnings Certain Proxy and why he thinks it will outperform over the next 12 months. He also shares the four pillars of quality—a characteristic of all companies in the Earnings Certain Portfolio. Don’t miss this week’s strategy call to get the latest analysis of our current volatile market.

This week, Zacks Chief Equity Strategist and Economist John Blank, PhD discusses:

• An analysis of the top 6 stocks in 4 key sectors: Autos-Tires-Trucks, Basic Materials, Construction, and Industrial Products. This review is designed to help with portfolio construction and asset allocation.

• Similar to John’s recent series of top stocks in various sectors, in this review he uses four criteria to identify the top stocks: market capitalization, Zacks Rank (largest percent change in F1 EPS estimate), number of analysts following the stock, and the criteria for all three. He will also look at variance and covariance, correlation, and portfolio metrics based on various weights assigned to the 6 stocks.

• Using this framework, John then examines performance metrics for the top stocks in these sectors. Tickers he discusses include names like Tesla Inc (TSLA) Paccar Inc (PCAR) in Autos-Tires-Trucks, Linde PLC (LIN) and Vale SA (VALE) in Basic Materials, Sherwin-Williams Co (SHW) and Comfort Systems USA, Inc. (FIX) in Construction, and Ball Corp (BALL) and Cintas Corp (CTAS) in Industrial Products. Don’t miss this essential review for portfolio building and allocation from Zacks’ Chief Equity Strategist!

This week, Zacks Equity Strategist Mayur Thaker, CFA, discusses:

• The rising economic risks that indicate it may be time to allocate to our defense-oriented Earnings Certain Proxy Portfolio, a recession-resistant portfolio built to provide low-volatility and durable earnings growth through all macroeconomic environments. Some portfolio members include Check Point Software, Novo Nordisk (NVO), and Mettler-Toledo (MTD).

• Mayur then looks at data that suggests an increasingly high probability for a downturn or recession in the months ahead. From S&P valuations hovering to near extreme readings, negative earnings estimate revisions for cyclical sectors, and household employment coming to a halt, Mayur indicates the probability of a recession is likely to unfold.

• To wrap up the discussion, Mayur shares the four principles companies must meet to be considered a quality company with high earnings durability. Watch this week’s strategy call for the latest analysis of our current volatile market.

This week, Zacks Chief Equity Strategist and Economist John Blank, PhD discusses:

• Top stocks among Conglomerates, defined as corporations composed of several different, independent businesses. In a conglomerate, one company owns a controlling stake in several smaller companies, all of which conduct business separately and independently. John notes that some conglomerates are incredibly profitable, and in this presentation, he will show which ones look the strongest.

• As John has done in recent analyses, he defines “top” stocks in three ways: by market capitalization, by number of analysts following the stock, and by largest percent change in F1 EPS estimate (the most important element used in assigning a Zacks Rank to stocks).

• With this framework, John then examines key metrics for leading Conglomerates stocks, focusing on revealing data including Revenue F12M, Reinvestment Rates, Net Margin TTM %, Cash Flow Yield %, Enterprise Value/Sales and many others. Tickers he discusses range from familiar brands like Hitachi Ltd (HTHIY) and 3M Co (MMM) to less well-known names such as Carlisle Companies, Inc (CSL), Bunzl plc (BZLFY), Star Equity Holdings Inc (STRR), to name just a few. Don’t miss this in-depth analysis of conglomerates from Zacks’ Chief Equity Strategist!

This week, Zacks Equity Strategist Mayur Thaker, CFA discusses:

• The macroeconomic signs that indicate it may be time to allocate into our defense-oriented Earnings Certain Portfolio (ECP). First, Mayur outlines the ECP investing thesis. The ECP family of portfolios include high-quality, recession-resistant companies that are durable, moat-protected, low volatility, with steady earnings growth. ECP members include Clorox (CLX), Novo Nordisk (NVO), J M Smucker (SJM), American Tower (AMT), to name just a few.

• Mayur then looks at data that suggests an increasingly high probability for a downturn or recession in the months ahead. From household employment to the unemployment rate, permanent job losers to job openings (JOLTS), as well as many other labor metrics, Mayur shows that while a recession isn’t a certainty, it is a growing probability.

• To wrap up this discussion, Mayur offers a plan of action to recession-proof your portfolio. He presents 4 indicators he is watching to know when it’s time to go defensive. The first 2 have already happened, but he recommends remaining long on risk assets for now. When the other 2 indicators are triggered, go full-blown defensive with the Zacks Earnings Portfolio. Don’t miss this important and timely analysis of our current volatile market.

This week, Zacks Chief Equity Strategist and Economist John Blank, PhD discusses:

• Top stocks in the Construction sector, a huge and worldwide area of the economy that encompasses just two industries, Building Products and Construction—Building Services. As John has done in recent analyses, he defines “top” stocks in three ways: by market capitalization, by number of analysts following the stock, and by largest percent change in F1 EPS estimate (the most important element used in assigning a Zacks Rank to stocks).

• Using this framework, John then examines key metrics for these leading names, using Zacks charting to illustrate comparisons of the most relevant trends for these companies. To point out strengths and weaknesses among these stocks, he looks at metrics ranging from Revenue F12M, Capital Expenditures, Net Margin TTM %, Price to Sales F12M, EBIT TTM, Cash Flow Yield %, and other measures.

• Because he uses these 3 types of screening metrics, John’s review of “top” players includes both larger and relatively smaller companies, and both familiar and less well-known names. Among the tickers he discusses are EMCOR Group, Inc. (EME), KB Home (KBH), Weyerhaeuser Co (WY), CRH plc (CRH), Martin Marietta Materials Inc.(MLM), Sherwin-Williams Co (SHW), Toll Brothers Inc. (TOL) and many others. Don’t miss this in-depth industrial stock analysis from Zacks’ Chief Equity Strategist!

The views of John Blank, PhD are not necessarily the views of Zacks Investment Research.

This week, Zacks Equity Strategist Mayur Thaker, CFA discusses:

• Applying the Shiller P/E Ratio (also known as the CAPE Ratio) to stocks in the Earnings Certain Portfolio (ECP) to improve the portfolio’s already strong downside protection. Mayur manages the Zacks ECP family, and in this video he shows how he uses Shiller to provide a clearer view of valuations of the companies in his portfolios.

• Mayur points out that bear markets are the result of two factors: earnings decline and P/E multiple compression. To find companies that can withstand a downturn, he looks for durable businesses that exhibit earnings linearity as well as other elements of quality. But even with steady earnings, P/E multiple compression can still lead to valuation risk. The question becomes, how do you minimize this risk?

• This is where the Shiller P/E Ratio comes in. It can help you find recession-resistant businesses (like virtually every name in the ECP) that may be trading at recession-level P/E multiples (i.e., cheap). Mayur provides examples of these types of companies, including ECP members J. M. Smucker Company (SJM), 3M Company (MMM), Henry Schein, Inc. (HSIC), and others. Watch this week’s video to learn how the Shiller P/E Ratio can provide a more accurate picture of a company’s valuation.