What Is Next After A 30% Rally?

[CLICK HERE JOIN OUR LIVE TRADING & TRAINING SESSIONS]( Hello investor, What Is Next After A 30% Rally? Now, what? That’s the question that investors are asking after witnessing an incredible rally of almost 30% from October lows. We will receive a big jobs report this Friday, but we got a preview yesterday where jobs data indicated light softening but still in a historically tight labor market. We also received a mixed bag of corporate earnings results which calmed the bullish sentiment briefly. - “It looks like stocks on Wall Street are taking a breather from the relentless rally,” said Fawad Razaqzada, market analyst at City Index and Forex.com. Fawad Razaqzada, market analyst at City Index and Forex.com (Photo: X) As an example of mixed bag results, Advanced Micro Devices beat 2nd quarter estimates and shared promising news about its AI chip business. But Starbucks fell after missing quarterly sales estimates – a sign of its struggle to maintain sales growth through higher prices. ZoomInfo plummeted by almost 27% after cutting its full-year guidance. Bank of America strategist Savita Subramanian said investors are putting more money into stocks lately and away from bonds. - “Rising equity allocations and falling bond allocations mark a reversal from the bond love and equity hate that built during 2022,” Subramanian said. Remember that bond prices fall when interest rates rise. So, this indicates that investors believe rates are close to the peak and could fall very soon. Is the stock market overbought? Bespoke Investment Group doesn’t think so. The firm pointed out that the S&P 500 increased just 4% over the two-year basis, so the market may be on a normal path. - “That hardly looks like a market that has become unanchored from reality,” Bespoke strategists wrote. Oppenheimer Asset Management’s John Stoltzfus also increased his target for the S&P 500 to 4,900 by the end of the year, implying a 7% gain from now. USA gets a downgrade: Fitch Ratings lowered the U.S.’s long-term foreign currency issuer default rating to AA+ from AAA due to “expected fiscal deterioration over the next three years” and ballooning debt obligations. It also pointed to last-minute resolutions as a loss of confidence. - “In Fitch’s view, there has been a steady deterioration in standards of governance over the last 20 years, including on fiscal and debt matters, notwithstanding the June bipartisan agreement to suspend the debt limit until January 2025,” the ratings agency said. As for debt obligations, Fitch said the general government deficit was projected to reach 6.3% of gross domestic product in 2023 – a massive jump from 3.7% in 2022. - “Cuts to non-defense discretionary spending (15% of total federal spending) as agreed in the Fiscal Responsibility Act offer only a modest improvement to the medium-term fiscal outlook,” Fitch said.  The #1 “Clean Energy Era” Stock To Own With Insane Margins Today’s Stock Pick: Shoals Technologies Group, Inc. ([SHLS]() The solar market is booming amid the worldwide commitment to clean energy. And here’s the key thing – it is happening right now. (Not a speculation.) Just look at the cumulative U.S. solar installations since 2007. It grew from virtually zero in 2007 to over 130,000 in the first half of 2022: (Source: SEIA & Wood Mackenzie) So, what’s driving the growth? People want clean energy, but the cost must be reasonable. Good enough, solar’s cost plummeted by more than 73% in just 11 years, making it an economic no-brainer. Of the wind, solar and other renewables that came online in 2020, nearly 62% of them were cheaper than the cheapest new fossil fuel, according to the International Renewable Energy Agency (IRENA). (Source: SEIA & Wood Mackenzie) Enter Shoals. Most solar equipment are made in China, as they can produce them at insanely low prices. It is difficult for any North American company to compete. However, Shoals found its niche in the electrical balance of systems solutions. It consists of wiring and components for the utility-scale solar system. Once a utility company gets solar panels, they need to wire them all together, set up DC current, and connect them to the grid. All of this connecting requires hiring electricians to perform the task. (Source: Shoals) Hiring a highly-skilled electrician can be expensive. So, Shoals invented products that are so easy to install that it doesn’t require a licensed electrician. It has been a game-changer. The company said it lowers the installation cost by 43%. EBOS component (Shoals’s product category) contributes just 6% of the construction cost for solar projects. That’s small, right? However, the cost of installing EBOS is 36% of the total cost of installing solars. Can you believe it? So, the patented products by Shoals reduce the installation cost by nearly half, making it almost a no-brainer buy for the customers. (Source: Shoals) Moreover, Shoals’s parts are used on about 50% of all U.S. solar capacity currently installed in 2021. That’s a big market share! It is easily the biggest fish in that pond, and its revenue grew by 22% CAGR from 2019 to 2021: (Source: Shoals) There’s no sign of demand cooling down. Shoals recently closed its fourth quarter with record backlog and awarded orders of $4292 million – a phenomenal growth of 43% y-o-y growth. It just signed a 1-gigawatt contract to supply a project that will be one of the largest solar-plus-storage projects in the U.S. when finished. According to CEO Jason Whitaker, its wire management business exploded by five times since last year: - “Relative to a year ago, the opportunity for wire management has increased more than 5x,” said CEO Jason Whitaker. Insane gross margin: Shoals boasts a gross margin of 30%+ in the quarter. Its revenue grew by 36% CAGR since 2019, but its gross profit grew even faster at 40% CAGR. How is it possible? The answer is simple – Shoals can grow without increasing expenses dollar for dollar. That’s called operating leverage, and it may be the most powerful ingredient of massive earnings growth. (Source: Shoals) An opportunity in the EV charging market: It is inevitable that we all will drive electric vehicles in the future. And we will need EV charging stations. Guess what? The pain point is the same. More than half of the cost of an EV charging station is EBOS, and current products require skilled labor. Precisely, it is the same solution that Shoals solves for utility-scale solar power. (Source: Shoals) Shoals just completed its “plug-and-play” product for EV charging stations and entered the market in the second quarter of 2022. The addressable market tripled after the announcements by the Biden Administration and automakers of new incentives for EVs and EV infrastructure, going from 233,272 (Jan. 2021 forecast) to 893,118 (June 2022 forecast): (Source: Shoals) Bottom line: Shoals is a rare company because it offers a category-killing product that could dramatically reduce customers’ costs while offering far superior benefits. With the explosion of the clean energy era, Shoals is the must-own stock.   [CLICK HERE JOIN OUR LIVE TRADING & TRAINING SESSIONS](     © All Rights Reserved, Trade Alliance If you no longer want to receive these messages, you may [click here]( to unsubscribe.