How to Find Stocks Likely to Outperform

Plus: Undervalued, high quality cyclical stocks; the best dividend funds. [Morningstar](?utm_source=eloqua&utm_medium=email&utm_campaign=newsletter_smartinvestor&utm_content=41751&elqTrackId=31d3ca129d22404c8632cb35db4bf846&elq=4877fb4d24bd458fbb93522b6dd29e04&elqaid=41751&elqat=1&elqCampaignId=19987) [Smart Investor] Smart Investor [Tom Lauricella, chief markets editor]( Connect with Tom on [LinkedIn]( [Tom Lauricella] In this week’s newsletter: - [How to Find Stocks Poised to Outperform]( - [3 Undervalued, High Quality Cyclical Stocks]( - [What to Know About Small-Value Funds]( - [The Best Dividend Funds]( - [Markets Brief: Earnings Heavyweights Microsoft, Tesla, and Others on Deck This Week]( Could it be? Yes it could. Something has us off to a quiet start to the year. As we noted last week, that something has been reassuring pieces of economic news, especially [on inflation](. And so far, fourth quarter earnings season hasn’t produced any shockers. We’ll have more to say about earnings in a bit, but with a respite from the stock and bond market craziness of the past year, we can take a step back and think about how to best find stocks that can outperform over the long term. As Lauren Solberg reports, there’s a combination that has a [remarkable long-term track record]( strong competitive advantages, aka economic moats, and low valuations. Regular readers will know we often write about highly cheap, “moaty” stocks, and for good reason. Solberg highlights just how well this pairing has done over the years and explains what may be behind that outperformance. It’s a great read. (Oh, and this past week, [Morningstar upgraded Apple]( to “wide” moat.) Also this week, John Rekenthaler wrote about an often-overlooked corner of the stock market: small value. In his column, John explores small value’s outperformance relative to the rest of the stock market, and from there, whether there’s an advantage to going the route of small-value index funds or actively managed small-value funds. You can find the [takeaway here](. As for other investment opportunities, we’ve highlighted a handful of options this past week. First, we screened for moaty cyclical stocks (see, there’s that moat designation) trading at cheap valuations. With all the concerns about recession, there’s a lot of them, but [we drill down into three](. Next, Susan Dziubinski [screens for the dividend-focused funds]( and ETFs with the highest Morningstar ratings. And lastly, as promised, we’ve got lots of earnings coverage this week. There’s a [recap of Netflix’s]( strong showing, Procter & Gamble’s [resiliency in the face of inflation pressures]( and why we expect Schwab to show strong earnings growth despite a rough Q4. On the flip side, we are [growing less optimistic]( about the prospects for Palantir. There’s lots more earnings news out this coming week, and [we offer a preview here](. [How to Find Stocks Poised to Outperform]( [How to Find Stocks Poised to Outperform]( Wide moats plus low valuations have been a winning combination. Lauren Solberg [Read More]( Share: [facebook]( [twitter]( [linkedin]( ADVERTISEMENT [media]( [media] Markets and the Economy [Markets Brief: Earnings Heavyweights Microsoft, Tesla, and Others on Deck This Week]( [Markets Brief: Earnings Heavyweights Microsoft, Tesla, and Others on Deck This Week]( Netflix shows solid subscriber growth and airline tailwinds grow. Jakir Hossain [3 Undervalued, High Quality Cyclical Stocks]( [3 Undervalued, High Quality Cyclical Stocks]( The bear market has left a large number of cyclical stocks trading at attractive prices. Margaret Guidici [What to Know About Small-Value Funds]( [What to Know About Small-Value Funds]( Should investors just index? John Rekenthaler [The Best Dividend Funds]( [The Best Dividend Funds]( These mutual funds and ETFs invest in dividend stocks and earn high ratings from Morningstar in 2023. Susan Dziubinski [10 Undervalued Dividend Stocks for 2023]( [10 Undervalued Dividend Stocks for 2023]( These dividend stocks have attractive yields and are cheap, to boot. David Harrell [3 Top Growth Stocks to Buy and Hold in 2023]( [3 Top Growth Stocks to Buy and Hold in 2023]( The long-term outlooks for these companies solid—and their stocks are cheap. Susan Dziubinski Chart of the Week [Netflix’s Q4 Earnings Show a Comeback in Subscriber Growth]( [Netflix’s Q4 Earnings Show a Comeback in Subscriber Growth]( The streaming-video company is succeeding but at a higher cost; the stock is fairly valued. Sandy Ward [Read More]( Share: [facebook]( [twitter]( [linkedin]( Earnings [Procter & Gamble Earnings Show Resiliency but Stock Overvalued]( [Schwab’s Long-Term Uptrend Expected to Endure Despite Disappointing Q4]( [Cutting Palantir Stock Fair Value Estimate as Strategic Missteps Create a Plethora of Problems]( [Fortune Brands Completes Cabinets Spinoff; Shares Are Attractively Priced Amid Positive Catalyst]( [Raising Apple Stock’s Fair Value Estimate to $150]( [Strong Execution and Favorable Industry Fundamentals Support United Airlines’ Bullish 2023 Outlook]( [Bank of America Beats Fourth-Quarter Earnings; Net Interest Income Outlook is Disappointing]( [Wells Fargo’s 2023 Outlook Shows That the Net Interest Income Boom May be Over]( [Top Pick BlackRock Posts Positive Flows and Asset Gains in Q4 but Records Lower 2022 Revenue and Profits]( [Solid Q4 2022 Earnings for JPMorgan; 2023 Outlook Is Good]( Listen Now Get the latest investing insights and market updates with [Morningstar’s podcasts]( available on your iPhone, iPad, Android, PC, or smart speaker. 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