12:00 TUESDAY – Stock Market Report #113 – 5/4/21
by Robert Holman | The Defensive Advisor | www.defensiveadvisor.com
INSIDE (2-minute read): Current market rating, a free offer, and why I purchased and sold AZO.
MARKET … remains bullish, overbought and overvalued. My rating opinion remains 8.0 (0 - 4 is bearish, 5 is neutral, 6 - 10 is bullish). The Market will most likely continue moving sideways-up, with volatility.
ECONOMY AND MARKETS … Earnings were fantastic last week, better than expected, and price increases for many companies were grand. However, those that did not have encouraging guidance suffered. The primary worries remain inflation and interest rates. The future looks encouraging for the both the economy and stock prices. Certain sectors will benefit more than others.
WHY I PURCHASED AZO (and sold it 4/22/21) … I purchased AZO believing individuals working from home due to Covid would have more time available to fix-up their cars. However, the stock soon got stuck in a trading range from 12% below to 4% above our purchase price (approximately). With the economy reopening, it broke into higher ground on an expected increase in driving activity (mileage thesis versus time thesis) and began setting recurring new highs.
An “underperform” rating from a BoA analyst, with a price target less than current market price, triggered the sale – such bearish reports usually (but not always) effect other analyst rating reports over time. There are a number of other analysts who are still bullish on the stock, but I just felt it was time to move on to better opportunities. AZO produced an overall return of 19% in about 7 months. Acceptable, but not as good as hoped for.
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