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A Big Change Is Coming For The Markets And How To Get Ready

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The market is off to a solid start this year.

It’s also been a volatile, and uneven start. But solid nonetheless.

Although, some portfolios may look more solid than others based on which stocks you got into. One look at the indexes and you can see just how uneven the gains have been: the Dow is up 7.8%, the S&P is up 5.8%, the tech-heavy Nasdaq is only up 2.8%, while the small-cap Russell 2000 is up 12.4%.

Quite frankly, some may find the market downright frustrating this year, especially if your portfolio was overweighted in tech/Nasdaq stocks.

Frustrating because tech could do no wrong last year. And frustrating because we’re supposed to see the best full-year GDP growth rate in 33 years. This year was supposed to be a cakewalk, not a challenge.

Don’t get me wrong, there are plenty of investors handily beating the market.

But too many are underperforming.

One of the reasons why so many people are not seeing the kinds of returns they want is because they don’t know of new stocks to get into. Even though the market has begun rotating into different stocks and different industries, they find themselves stuck in the same stocks, because they don’t know of anything better to get into instead.

And for some, it’s because their knowledge or ‘universe’ of familiar stocks is relatively small and this limits their opportunity of getting into better ones.

Which Half Are You In? 

Not only are the indexes performing unevenly.

Stocks within the indexes are performing markedly different as well.

For example, more than half of the companies in the S&P are beating the index and showing positive returns this year. But that means nearly half of the stocks in the S&P are underperforming the Index.

Even ‘good’ companies like Amazon; they’re down -6.2%. Or Costco; which is down -7.2%. Or even Apple; down -9.9%. So what gives?

I don’t single these out so you can feel bad if you have them. But instead, to stop and think about ‘why’ you have them.

Nobody invests so they can underperform the market. But if you are -- why? You don’t have to. If you’re underperforming the market, that means you have more of these types of laggards in your portfolio than leaders. And more than likely, you’re in the wrong industry. 

How the Other Half Lives 

Of course, there are a lot of big names beating the S&P too. Take Western Union, or Tyson Foods, or Home Depot for example. All are outperforming the S&P with gains of +13%, +15% and +18% respectively.

But now let’s move outside of the S&P.

Did you ever hear of a company called Ultra Clean? What if you did? It has outperformed the market by gaining +77.9% since the start of the year. Or Rocky Brands? They’re up +91.3%. Or Olympic Steel? Up by +129%. (By the way, these are all Zacks #1 Rank stocks.)     

There are hundreds and hundreds of stocks producing fantastic gains that many people may never have even heard of. And in industries they haven’t even considered.

What about you? How many times have you heard about a stock or read about a stock that skyrocketed – only to think to yourself; “if only I knew about that stock ahead of time, I would have been in that.”

Continued . . .

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The Rotation Has Begun

Now more than ever, you need to know which stocks and industries will be in favor, and which ones won’t.

Because whether you realize it or not, the market is getting ready to make a big change.

The bull market should continue. But this next leg up is going to look and feel different.

Why? Because we are getting ready to see an unprecedented amount of pent-up economic demand meet an unprecedented amount of stimulus money.

Since the pandemic began, more than $5 trillion in stimulus has been passed. Then add in the $3 trillion in infrastructure spending coming down the pike ($2 trillion just announced, and another $1 trillion to be announced in April). All of that money should send the economy and stocks soaring.

But then you have the looming tax hikes to pay for it all. And those will touch everyone and every business in some way, shape, or form.

And that’s why the great rotation has begun.

Certain stocks and industries will benefit more than others from the historic spending that will soon be upon us.

While other stocks and industries will feel the sting of the tax hikes more than others.

For example, growth stocks, which typically includes tech, are usually more at risk when taxes go up. And that’s one of the reasons why tech has underperformed this year, as portfolio adjustments are made.

The point is, the market leaders of last year are unlikely to be the market leaders this year.

And you need to know where the money will flow next.

Expand Your Universe and Pick Better Stocks 

Fortunately, knowing which industries to get into, and how to pick new and better stocks, is easier than you think. And you don’t have to reinvent the wheel.

• For example, stocks with a Zacks Rank #1 Strong Buy have beaten the market in 26 of the last 32 years, with an average annual return of 24.7% per year. That’s nearly 2.5 x the S&P, with an 84% annual win ratio. And when doing this year after year, that can add up to a lot more than just two and a half times the returns.

• Stocks in the top 50% of Zacks Ranked Industries outperform those in the bottom 50% by a factor of 2 to 1? There's a reason why they say that half of a stock's price movement can be attributed to the group that it's in. Because it's true. And now more than ever as the rotation has begun.

Once you know what to look for, and how to pick better stocks, it can transform your portfolio.

You don’t need to turn yourself into an analyst to beat the market. Just focus on what works.

Stock Picking Secrets of the Pros

Whether you’re a growth investor, or a value investor, prefer fast-paced momentum stocks, or mature dividend-paying income stocks, there are certain rules the experts follow to maximize their gains.

This applies to large-caps and small-caps, biotech and high-tech, bitcoin/blockchain, marijuana, ETF’s, stocks under $10, stocks about to surprise, even options, and everything in between.

Regardless of which one fits your personal style of trade, just be sure you’re following proven profitable methods and strategies that work, from experts who have demonstrated their ability to beat the market.

The best part about these strategies and stock picks is that all of the hard work is done for you. There’s no guesswork involved. Just follow the experts and confidently start getting into the right stocks in the right industries on your very next trade. 

The Pros’ Best Picks for Today

Here’s an easy way to find them:

Download our just-released Ultimate Four Special Report.

It highlights 4 stocks with strong fundamentals that are hand-picked by our experts to have the biggest upsides for Q2.

Now that stimulus checks are hitting the bank accounts of millions of Americans, the economy is on the brink of significant growth. Top analysts predict 2021’s GDP will come in at the fastest pace in over 30 years.

The market is primed to surge in these conditions  and these 4 stocks are predicted to jump sooner and climb higher than others:

Stock #1: Specializing in personal finance and consumer service brands, this Midwest-based company recently saw very strong earnings in Q4 with nearly $1B more in revenue than expected.

Stock #2: This leading international manufacturer of semiconductors, flat panel LCDs, and solar cells reported exceptional first-quarter fiscal 2021 results in addition to a robust outlook for the rest of the year.

Stock #3: With five powerful segments, this stock is showing major earnings strength compared to the rest of the industry. The stock has more than doubled since October.

Stock #4: Combining innovative, groundbreaking technology with decades of experience, this large-cap pharmaceutical company boasts consecutive earnings growth for over 36 years.

I suggest you beat other investors to the punch and download this Special Report today. Opportunity ends Sunday, April 4.

See our Ultimate Four stocks now >>

Thanks and good trading,

Kevin

Kevin Matras serves as Executive Vice President of Zacks.com and is responsible for all of its leading products for individual investors. He invites you to download Zacks’ newly released Ultimate Four Special Report before this weekend’s deadline.



 

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