How to Draft All-Star Fantasy Stock Picks BY LUCAS DOWNEY, CONTRIBUTING EDITOR, TRADESMITH DAILY September is all about football season. And the NFL’s biggest fans are about to start their fantasy leagues. We even spun up a fantasy league in the office, and I joined for the first time ever. In fantasy, everyone’s gunning to draft the highest-ranked players based on their historical individual stats. A winning formula starts with choosing an all-star running back and wide receiver… or a quarterback with the ability to connect on deep passes. What I’ve found is, building the best rosters comes down to one word: statistics. Said simply, drafting players with a proven track record of on-the-field success is the smart way to build the best fantasy team. And constructing an elite stock portfolio should use the same data-driven approach. Similar to picking players with lots of touchdowns or chunky yard plays, investors rack up portfolio “points” by owning companies that constantly grow their revenues and earnings… that’s the on-the-field success for elite stocks. Today, we’ll drill down on one of my favorite all-star stocks worthy of this year’s draft. By focusing on these three easy data-points, you’ll separate this season’s contenders from the pretenders… Three Data Points to Discover All-Star Stocks If I asked you to list the greatest stock investments of all-time, maybe you’d tell me McDonald’s (MCD), ExxonMobil (XOM), or possibly semiconductor juggernaut Nvidia (NVDA). These incredible businesses with iconic brands may occupy very different industries. But what made them some of the best investments ever boils down to their ability to produce more and more earnings each and every year. So, they actually have a lot in common, viewed through that lens. When you focus on the handful of companies with a healthy, expanding, highly profitable business… you narrow your stock-picking list greatly. The company I’m profiling today to illustrate this is superstar star healthcare giant Eli Lilly (LLY). As a reminder, back in January I made the case how Eli Lilly was the one superstar health care stock to own for 2024. Even with the price more than 60% higher this year, I still love the name… and here’s why. Founded in 1876, this pharmaceutical powerhouse has grown into one of the largest companies on earth due to its blockbuster GLP-1 drugs, Mounjaro (for Type 2 diabetes) and Zepbound (for weight loss). With a market cap approaching $900 billion, this drugmaker could soon join the exclusive $1 Trillion Club. Like MCD, XOM and NVDA, LLY’s accelerating growth has meant huge gains for investors. On a five-year basis, LLY has gained a whopping 737% vs. the S&P 500’s 92% gain: 
A chart this strong clearly must have powerful fundamental drivers behind it. And Eli Lilly has some of the biggest revenue and earnings growth you’ll find for a company of this size. That’s the #1 quality of an elite stock – growing sales and net income. If business is booming and management does a good job of making sure profits flow to the bottom line, odds are the stock price is going to head up and to the right. In Eli Lilly’s case, popular GLP-1 drug Mounjaro saw Q2 2024 global revenue jump to $3.09 billion from $979.7 million a year earlier. Zepbound, its GLP-1 weight-loss medication introduced in December, saw revenues hit $1.24 billion in Q2. When you tally LLY’s annual sales and net income since 2020, it’s clear how well business has been doing. In 2020, sales stood at $24.54 billion while net income clocked in at $6.19 billion. Fast-forward to 2024, and estimates peg revenue at $45.78 billion, with net income expected to surge to $14.66 billion: 
That graphic illustrates the fundamental qualities of a great potential investment and why LLY stock has risen so fast over the years. Now that we know how to spot a booming business with profitable growth, let’s take elite stock-picking to the next level… You see, shareholder value is just as key as profitability. And one powerful way that Eli Lilly rewards stock investors is through continual dividend raises. Growing dividends are a huge part of equity returns. So, when a company routinely ups its payout to shareholders year after year, it puts money in your pocket… in fantasy-football jargon, it puts points on the board. That’s why the #2 quality of an elite stockis a steadily growing dividend. In 2018, Eli Lilly served up $2.25 in dividends per share. It’s grown this payout every year since, with 2024 estimated to see $5.20 in payouts: 
Folks, that’s a 15% compound average growth rate (CAGR)… monster on-the-field performance. Now that we know profits + dividend growth are two easy stats to isolate for your stock-picking draft, let’s now zero-in on how to spot these outlier stocks in real time. As you’ll know if you’ve been following TradeSmith Daily, I spent years on institutional trading desks handling large order flow for hedge funds and pension funds. I learned the power of supply and demand firsthand: When an institution looks to take a stake in a stock, it tends to do so gradually – taking days or even weeks to complete. That continual demand can press stocks higher and higher, day after day. When you combine healthy accumulation signals alongside elite quality stocks, your playing field gets super narrow… only the best of the best stocks make the cut. So, it’s no surprise the #3 quality of an elite stockis continual institutional sponsorship. Now, no one outside that institution is able to be 100% certain that the institution is getting involved in a stock… But with many years of experience, there are footprints you can spot. When shares trade on unusual volume and the share price increases, you can bet Big Money investors are getting involved. And when these institutional footprints appear on top-ranking stocks, a clear all-star profile emerges. Below are the institutional footprints pressing LLY’s stock higher since 2018. Each green bar indicates Big Money buying activity in LLY (while the company sported a top-notch fundamental score) in our Quantum Edge system: 
As I like to say, this formation is the stairway to heaven. Only the best companies have a chart like this… the Tom Bradys of the stock market. And at TradeSmith we have a great piece of software that allows you to spot and rank any U.S.-listed stock each and every day. Our Quantum Score encompasses the fundamental health of a company including earnings and revenue growth, plus its technical picture – including institutional ownership. Readings between 70 and 80 are the go signal… indicating a top draft choice that isn’t too overheated. And LLY sits right in the green buy zone, with a 77.6 Quantum Score: 
As fantasy-football season kicks off this week, fill up your roster with top-performing athletes on the stats leaderboard. Use that same winning formula for picking elite stocks, too. Eli Lilly is one of many top outlier companies sporting revenue and income growth, a growing dividend, and Big Money buying. This is the process that Jason Bodner uses in his Quantum Edge Pro newsletter (with model portfolio). By joining today, you’ll get access to his Quantum Score – the strategy that beats the market 7 to 1, as Jason explains in this free presentation. That’s the cheat sheet for finding today’s best draft picks. Regards, Lucas Downey
Contributing Editor, TradeSmith Daily | 
Tidak ada komentar:
Posting Komentar