The Trump Rally. We all know it. We can see it in the charts. It is based on expectations.
- Spending on infrastructure
- Tax reform
- Easing of business, environmental and financial regulations
Since November 8th, the markets have been on an absolute tear.
- S&P + 7.25%
- DOW + 10.40 %
- NASDAQ + 8.99%
So, do we all hop on board the rally train? Is it too late? With the indexes and many stocks at all-time highs, many folks are beginning to wonder if we are due for a pull back. The chartists in my investment club certainly think so.
With so many charts looking like this:
It is easy to see why folks are waving the warning flags.
But I believe potential winners can be found in any market. You just have to know how to look for them.
With this Trump administration doing so many different things, I started thinking about the constraints of my search.
This is what I came up with.
A USA based company that:
- Does little international business.
- Exposed to the full USA tax rate. This would also mean benefiting from proposed reductions.
- Not dependent on international trade or directly impacted by tariffs or immigration or offshoring work.
- And, since the up and coming economic demographic includes millennials, a company with a good mobile presence or crowd sourcing platform.
- And was not at all time or 52week highs.
This was my initial screen.
|ABAX||Abaxis, Inc.||Healthcare||Medical Laboratories & Research|
|ANET||Arista Networks, Inc.||Technology||Diversified Computer Systems|
|BSTC||BioSpecifics Technologies Corp.||Healthcare||Biotechnology|
|CTSH||Cognizant Technology Solutions Corporation||Technology||Business Software & Services|
|DORM||Dorman Products, Inc.||Consumer Goods||Auto Parts|
|ELLI||Ellie Mae, Inc.||Technology||Application Software|
|EPAM||EPAM Systems, Inc.||Technology||Information Technology Services|
|EXLS||Exlservice Holdings, Inc.||Services||Business Services|
|FIZZ||National Beverage Corp.||Consumer Goods||Beverages – Soft Drinks|
|GRUB||GrubHub Inc.||Technology||Internet Information Providers|
|ICUI||ICU Medical, Inc.||Healthcare||Medical Instruments & Supplies|
|INGN||Inogen, Inc.||Healthcare||Medical Instruments & Supplies|
|LMAT||LeMaitre Vascular, Inc.||Healthcare||Medical Instruments & Supplies|
|MEET||MeetMe, Inc.||Technology||Internet Information Providers|
|NEOG||Neogen Corporation||Healthcare||Diagnostic Substances|
|PETS||PetMed Express, Inc.||Healthcare||Drug Delivery|
|REGN||Regeneron Pharmaceuticals, Inc.||Healthcare||Biotechnology|
|SCMP||Sucampo Pharmaceuticals, Inc.||Healthcare||Drug Manufacturers – Other|
|SEIC||SEI Investments Co.||Financial||Asset Management|
|SLP||Simulations Plus, Inc.||Technology||Business Software & Services|
|SPSC||SPS Commerce, Inc.||Technology||Application Software|
|SSD||Simpson Manufacturing Co., Inc.||Industrial Goods||Small Tools & Accessories|
|SYKE||Sykes Enterprises, Incorporated||Technology||Information Technology Services|
|VEEV||Veeva Systems Inc.||Technology||Healthcare Information Services|
|WBMD||WebMD Health Corp.||Technology||Healthcare Information Services|
Interestingly enough, one of the companies on this list was just mentioned in an IBD feature article which fits the criteria to a tee.
The “I-want-it-now” millennials are pushing more services online, and GrubHub has the largest online food ordering platform in the U.S.
It also fits what they call “A Favored Trump Trade” idea. Here is why. Nearly all its business is conducted in the U.S. and, consequently, GrubHub is currently swallowing a tax rate of approximately 40%.
Credit Suisse estimates a 5% reduction in their effective tax rate would drive 10 cents to 12 cents of incremental earnings per share on an annual basis.
Currently the stock is working on the right side of a consolidation pattern and is showing good strength in it’s recovery attempt.
With a quarterly report right around the corner, this is definitely one I am adding to my watch list.
Note: I am not currently invested in nor do I plan on investing in stocks mentioned in this post within the next week. They are simply ideas for further research.
What other stocks do you see fitting well into this new world order?