Saturday, June 10, 2017

"This stock market in the USA reminds me of a stage in the Tour De France race. These 15 so called "FANG" hyper-growth stocks are the lead out group and I am waiting for the Peloton of Value stocks to pull them back in by the end of the race"

Dow Jones Industrial Average 21,271.97 (UP) Week ending 06-09-2017
S & P 500 Averages  2431.77 (UP)

One of the great joys of my summer season for the past few years has been watching the Tour De France - Cycling Race, now it it's 104th year. There are so many varied individual and team strategies going on all at the same time during the race, and it kind of reminds me of the stock market. Options, ETF's, Short-sellers, Sectors and Individual stocks all pulling in different directions on different news and with different motivations. 

The current US markets this year remind me a lot of a Tour stage race, with a small breakout group of sunshiny and much beloved growth stocks with even higher PE ratios running out to a big lead. These guys can do no wrong and everybody is piling on the bets.

It is my thinking though that just like in a stage race, this "peloton like" group of stocks following them, will in time,  pull them back in on total return %. There are many good value stocks that have not run up at all this year and some are even down a bit. In fact 60% of the S&P gain this year are created buy this "Nifty Fifty" like small group of front-leading stocks. 

So here is a few of the "Peloton" stocks that I like right now:

Devon Energy Corp. (Symbol DVN, $32.66), A shale oil driller.

Hudson Technologies Inc. (Symbol HDSN, $8.56),  in the refrigerants business.

TREX Co. Inc. (Symbol TREX,$65.47),  a manufacturer of wood alternative decking materials.

Synchrony Financial (Symbol SYF, $28.72), Consumer Financial services, credit card and payment solutions.

So let's watch this one play out. I would avoid those high flying stocks out front, and stick with the companies with the low PE's and a margin of safety.

Oh, and make sure to get ready for July 1st, 2017 for the real Tour De France which starts in Dusseldorf this year.

Have a good month of June.