Hope you had a good weekend.
Last week marked the continuation of the market’s (expected) pullback, with most indexes posting weekly losses. This was despite inflation data showing continued deceleration – and the likely end of the Fed’s hiking cycle.
But beneath the story of the broader pullback though are signs that market leadership may be changing.
So far, it’s been tech – especially AI-related tech stocks – that have been leading the rally.
Those stocks are now pulling back, so the question is – which sector will produce the winners of the next leg up?
The best way to do this, in my view, is to look at which stocks are defying the market pullback and continuing to rise.
And if they have enough momentum to defy such a strong pullback, then there’s a good chance that they can continue their rise through this week as well.
Array Technologies, Inc. (ARRY)
Despite the word “technologies” in its name, Array is actually a solar company – and one that saw its stock soar by over 30% last week. The catalyst for this surge was an earnings report that absolutely crushed investors’ expectations.
The consensus estimate was earnings per share of $0.19, while the actual came in more than double that at $0.47 per share. And although it lowered full year revenue guidance (due to certain projects being moved to 2024), it estimated higher profitability for the year.
Solar stocks in general have struggled for the past couple years (though they’ve handily beat the S&P 500 over the past five). Now that tech is retreating, it could be their time to shine again. And Array Technologies could be the one leading the pack.
Celsius Holdings, Inc. (CELH)
Energy drink maker Celsius Holdings is an incredibly powerful stock – defying the market with an 18% gain last week.
As you might have expected, the big pop last week was due to a blowout earnings report where the company achieved the highest quarterly revenue of all time – plus a whopping 10% increase in its gross profit margin from 39% to 49%. A lot of this was Pepsi’s 8.5% equity investment in Celsius paying fruit, with Pepsi now serving as Celsius’ preferred global distribution partner.
But when you zoom out, this looks like just another stop for Celsius on the way to greater heights. The stock is up 74% this year and over 700% in the past three years. The wind is in its favor – and no market pullback looks like it can stop this energy drink juggernaut.
Alarm.com Holdings, Inc. (ALRM)
With the mainstream media constantly highlighting news of criminal activity, it’s perhaps not surprising that home security provider Alarm.com is seeing rising sustained demand. Its stock popped by 19% last week after its latest quarterly earnings report handily outperformed consensus estimates. The company also raised its full-year guidance.
Prior to this jump, Alarm.com’s stock has been flat this year, lagging the market. But with its recent stock price jump, we could see the stock continue its strong upward trajectory – at least for the near term.
To your wealth,
Felix @ Ace of Investing
