For Savvy Investors, Chaos Will Lead to Profits Dear Reader, If one word were to describe the first quarter of 2022 it would be chaos. Fortunately, our Growth Investor stocks are benefitting from “Chaos Theory.” Chaos Theory implies that small disruptions can result major changes... And right now, we are experiencing inflation surging to its highest levels in 40 years and stagflation that has lowered the standard of living for Americans and the entire world. While it appears to me that inflation peaked in March, I believe it will remain elevated in the summer months. In the meantime, our Growth Investor stocks are anticipated to continue to prosper from wave after wave of both food and energy inflation. In today’s Market360, I’m going talk about the chaos we’re experiencing right now… and share the types of opportunities that will profit in the current market environment. A Chaotic 2022 So far this year, two of the seven FANNAG stocks have been de-fanged with both Facebook/Meta Platforms (FB) and Netflix (NFLX) crashing over disappointing sales results as well as poor guidance (I’ll share an in-depth review of the FAANG’s earnings in Saturday’s Market360, so stay tuned for that!). The NASDAQ 100 (QQQ) stocks have also suffered as investors sold QQQ in the wake of Facebook’s and Netflix’s disappointments. Tuesday saw an almost 4% drop in the NASDAQ ahead of big tech earnings this week, retesting its March 14 low. Since this retest occurred on light trading volume, it is a sign that the selling pressure is being exhausted. While the tech wreck continues, the Federal Reserve is anticipated to raise key interest rates 0.5% higher at its May Federal Open Market Committee (FOMC) meeting. This rate hike is fully anticipated by Wall Street and may help to cool inflation somewhat. At a recent International Monetary Fund (IMF) panel, Fed Chairman Jerome Powell said: It is appropriate in my view to be moving a little more quickly. We make these decisions at the (FOMC) meeting and we’ll make them meeting by meeting, but I would say that 50 basis points will be in the table for … May. If credit remains available to consumers, it is very possible that the Fed could engineer a soft landing and avoid a recession as key interest rates rise. Lastly, Russia remains the big elephant in the room. Although the Russia-Ukraine war is now concentrated in the East and along the Caspian Sea, Russia continues to launch cruise missiles at Lviv and Kyiv to terrorize Ukrainian citizens. Furthermore, Russia recently flew two TU-160 nuclear bombers over Ukraine that were escorted by fighter jets to further terrorize Ukrainian citizens. Clearly, the Russian invasion of Ukraine is not over and threatens to draw in NATO countries. And it’s affecting the global supply chain. Without even diving into what it has done to oil, the fact that Russia was a major nickel supplier was just one of the catalysts behind soaring prices for lithium-ion battery components. Another factor was rising demand for electric vehicles (EVs), especially in China and Europe. Between Russia’s commodity ban by Western nations, plus more supply chain disruptions from the Shanghai COVID-19 shutdown, what else can go wrong? The probability of a Russian debt default is rising, which could trigger the U.S. seizing more assets which would likely lead to an escalation of the war past Ukraine… As I said, it’s been a chaotic first quarter. And, at least in the foreseeable future, it appears it will remain that way. With the 2022 first-quarter earnings season underway, investors are on the edge of their seats. How will everything that happened over the last few months affect company bottom lines? As investors, we can worry about it or profit from them. I vote we profit. The good news is our Growth Investor stocks will likely continue to profit from inflation and much of the chaos in the world. How to Profit from the Chaos While the S&P 500 is experiencing decelerating sales and earnings – due largely to more difficult year-over-year comparisons – my Growth Investor stocks continue to profit from inflation and are characterized by accelerating sales and earnings growth. The most amazing characteristic associated with our Growth Investor stocks is that they are trading at only 13.5 times median forecasted earnings and a 42.5% average annual dividend increase. This is thanks largely to the energy and shopping stocks on our Growth Investor Buy List. Furthermore, the analyst community has revised their consensus earnings estimate 19.8% higher in the past three months. So, I am hopeful that we can beat the fourth quarter’s average earnings surprise of 11.9%! More specifically, my average Growth Investor stock is now characterized by 53.7% annual sales growth and 396.8% annual earnings growth. This month I am adding five stocks, including two energy-related stocks and one chemical company that is profiting from surging PVC prices. The bottom line is inflationary pressures peaked in March and will continue to decelerate in the fall as global energy demand ebbs. In the meantime, our Growth Investor stocks continue to prosper and remain an oasis in the current chaotic environment! I will go further in detail in tomorrow’s Growth Investor Monthly Issue for May. Join me at Growth Investor today so you can read the issue while it’s still hot off the presses! Sincerely, | .png)
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