[TradeSmith Daily]( Our Stock Screener Just Uncovered These 3 Under-the-Radar Profit Opportunities
On Tuesday, momentum stocks briefly regained their footing. Shares of Carvana Co. (CVNA) shot up 26.11%, while Wayfair Inc. (W) popped 18.45%. Naturally, CNBC paraded money managers across the screen who claimed these growth stocks were now value plays. But these talking heads are living in a different reality. Even with that huge rally, shares of Carvana are down more than 93% from their highs. Wayfair is down more than 86%. Donât fall into the trap of thinking that these stocks look cheap and fit the bill as value stocks. Investors still face real headwinds that are unlikely to recede in the coming months. So rather than rely on talking heads to make investment decisions, today weâre going to help you focus on the fundamentals — reliable indicators that will help you find the companies with the strength to withstand the current adverse conditions. One of the things weâre looking for is stocks that pay a dividend of about 3%. With a recession looming, earning a dividend can help you put much-needed extra cash in your pocket. Weâre also looking for stocks with a healthy trading volume, low volatility, and an upward trajectory. These are all tried-and-true indicators. With the help of our proprietary Screener tool, weâve identified three investments that meet these criteria to a T. These are picks you likely wouldnât have found on your own — but thatâs the beauty of using data to drive your decisions. Itâs not about emotion. Itâs about the cold, hard facts that are going to make you money. RECOMMENDED LINK [Sell this stock now (#1 most popular retirement stock)](
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[Click here to watch now]( Letâs take a look at the first opportunity our algorithm uncovered… 1. The Tech Giant That Lost Its Way
International Business Machines Corp. (IBM) has been an afterthought as an investment in the tech sector over the last several years. Itâs the story of a tech giant that lost its way. Just look at how the IBM stock price has performed over the last five years compared to that of Microsoft Corp. (MSFT) and Apple Inc. (AAPL).
From the chart, you can see that while Microsoft and Apple both saw gains nearing 300% — 283.26% and 296.45%, respectively — IBM lost 5.48%. But few are paying enough attention to the companyâs turnaround story: IBM has stopped trying to be all things to all people and is instead focusing its business in key areas. IBM spun off its managed IT infrastructure services into a new publicly traded company, Kyndryl Holdings Inc. (KD), and has shifted its focus to being a top-tier service provider for hybrid cloud computing platforms. A hybrid cloud platform gives companies the option of storing their information on a public cloud, on on-premises infrastructure, and on private clouds for more sensitive information, like financial records. This setup offers its customers flexibility for communication and collaboration while also offering more security because not all of a companyâs information is stored in one location. Turning its attention to this area of the market was a smart move for IBM. The global workforce is in the middle of a “Great Reshuffling.” After the pandemic, working from home became the new normal. About half of Americaâs full-time workforce reports having a job that can be done remotely, according to a recent Gallup poll. And folks arenât ready to give that up — of those respondents, 54% of employees currently working from home would leave their job if they were asked to go back into the office. That means demand for hybrid cloud solutions like what IBM offers is only going to rise. And it seems to have paid off for IBM: The companyâs hybrid cloud revenue was $20.8 billion between May 2021 and May 2022, which was a 17% year-over-year increase. Twenty billion dollars is no small sum, especially considering that the hybrid cloud market brought in $56 billion in revenue in 2020. With the market expected to reach $145 billion in revenue by 2026, IBMâs sizable stake positions it for future success. In addition to those increasing sales, IBM offers a hefty dividend yield of 4.8%.
2. A Steady American Staple
For over 125 years, J.M. Smucker Co. (SJM) has been a staple for the American consumer. While the company is best known for its delicious jams and jellies, it also manufactures several coffee brands as well as a robust line of pet foods, including 9Lives, Kibbles ân Bits, Meow Mix, and Milk-Bone. Coffee still accounts for the majority of Smuckerâs annual sales, but its entrance into pet foods in 2015 (through the acquisition of Big Heart Pet Brands) has been a significant boost to the companyâs bottom line. Weâre talking another $3 billion in net sales â from $5.7 billion in 2015 to $7.8 billion in 2016 — and that number has remained consistent around the $8 billion mark ever since. Like IBM, SJM is one of those steady-Eddie stocks that isnât going to give you triple-digit percentage gains in a year, but it also wonât keep you up at night. More importantly, consumer goods stocks tend to perform well during recessions. Historical data shows Americans tend to cut back on discretionary spending during a recession — things like cars or furniture — but food spending remains relatively unchanged. SJM has benefited from this trend: From a technical standpoint, the monthly chart below for the stock exhibits a nice steady uptrend outside of one blow-off top in 2017.
And to top it all off, this steady stock earns you a 3% dividend. RECOMMENDED LINK [Buy Alert For $2 Coin](
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3. A Southern Utility Behemoth
Atlanta-based Southern Co. (SO) is one of the largest utilities in the U.S., with capacity of 46,000 megawatts, 200,000 miles of transmission and distribution lines, and more than 80,000 miles of natural gas pipeline. If you live in Alabama, Georgia, or Mississippi, chances are youâve heard of this utility behemoth. While recessions reduce energy demand slightly, stocks in this sector tend to hold up well due to consistent power needs and the dividends they pay out, which are supported by heavy cash generated from operations. Take a look at the chart below, which looks at the price (including dividends) of Southern Co. from 1990 until the present.
TradeSmith Finance
It shows the SO stock price at $0.69 on Jan. 1, 1990, and the growth itâs seen since then — landing at todayâs price of $71.75. Thatâs an increase of nearly 104 times from a simple utility stock. Most folks donât operate on a 32-year investment horizon. But this monthly chart does a great job of showing the effects of compound interest over time. Consider if you had invested $10,000 back then — your original investment would be worth more than $1 million today. Now, these are just three of the dozens of opportunities found through our TradeSmith Finance screener. This incredible tool allows you to comb through stocks using not only basic search parameters such as P/E ratios and volume but also TradeSmithâs proprietary strategies and stock health indicators. To learn more about the key market signals that you should be focusing on right now, check out [this video from our Senior Analyst Mike Burnick](. Team TradeSmith P.S. The momentary glimmer of hope that cut through the headwinds this week got us thinking about other ways to spot potential market movers that could deliver rich profits. Even ones that could quadruple your money. But thereâs one group of stocks that could multiply 10x, 20x, or even 30x or more. [Click here]( to hear Senior Analyst Mike Burnick explain how to find it. Best of TradeSmith
The chart below represents the best-performing open positions over the last two years, as recommended by our software.
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