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Will the winning streak for major indices continue? On the one hand, Nasdaq and S&P 500 both closed out Thursday at all-time highs. On the other, the Bureau of Labor Statistics reported that long-term unemployment of ~40% is edging towards a historical peak, leading to fresh uncertainty around the future trajectory of the market. This dynamic coupled with market volatility led by the reddit-fueled stocks like Game Stop (GME), which declined $18 billion in value, is creating further uncertainty in the markets. Fortunately, our AI models are here to help.
Before we dive into this week's trades, we wanted to share that Forbes AI Investor research tool is launching next week. Tired of spending hours finding what stocks and ETFs to trade? Our institutional-grade AI, which is the same technology used by Wall Street pros to ahead, takes the guesswork out of investing and finds actionable stock and ETF ideas every day. Forbes AI investor is the easiest way to discover your next investment. Sign up here to get early access.
Retail brand E.L.F. Beauty Inc (ELF) is the only stock rated Top Short for both next week and the next 30 days. It was assigned Q-Factor Scores of C in Technicals, D in Growth, D to Low Volatility Momentum. Snap Inc (SNAP) has also been rated Top Short next week and has been assigned scores of C in Technicals, D in Growth, F in Low Volatility Momentum and F in Quality Value. Although Snap reported strong fourth quarter earnings on Thursday, the stock dropped early Friday morning before slowly returning to positive territory.
There are three Top Buys for the following week. Fair Isaac Corp (FICO) received scores of A in Technicals, B in Growth, A in Low Volatility Momentum and C in Quality Value. Tennant Co (TNC) earned Q-Factor scores of B in Technicals, C in Growth B in Low Volatility Momentum and A in Quality Value. Lastly, Ttec Holdings Inc (TTEC) was assigned Q-Factor scores of B in Technicals, B in Growth, A in Low Volatility Momentum and A in Quality Value.
For the next 30 days, Yum Brands Inc (YUM) has been rated Top Buy and currently holds Q-Factor scores of D in Technical, C in Growth, A in Low Volatility Momentum and B in Quality Value. Yum Brands recently announced its earnings which had topped estimates of Wall Street analysts. It brought in $1.74 billion in revenue in comparison to the estimated $1.72 billion.
Entertainment company Cedar Fair -Lp (FUN) is back on our list of Top Shorts for the next 30 days with Q-Factor Scores of C in Technicals, F in Growth, C in Low Volatility Momentum and D in Quality Value. Travel and hospitality is still hurting from the pandemic, so it makes sense that this stock continues to earn a Top Short rating.
Our AI models have rated iShares S&P Small-Cap 600 Value (IJS) and SPDR S&P 600 Small Cap Value (SLYV), two small-cap value ETFs, Top Buy for the next week. The two ETFs rated Top Buy for the next month, however, focus on foreign securities. Specifically, iShares MSCI Brazil (EWZ), an ETF that tracks an index of Brazillian equities, and iShares Latin America 40 (ILF), an ETF that primarily focuses on the 40 largest Latin American equities.
The ETFs rated Top Short for the next month are all from different sectors. This includes Utilities Select Sector SPDR Fund (XLU), an ETF that has underperformed the broader market; SPDR S&P Biotech (XBI), an ETF that is likely to be overvalued; and Vanguard Communication Services (VOX), an ETF in which nearly a quarter of its overall net assets is comprised of Alphabet (Class A and Class C).
Some of our favorite options trades this week:
Long Call in our Top Buy Verizon Communications (VZ). Our models highlight Verizon Communications (VZ) as a potential breakout candidate in the underperforming telecommunications industry.
Long Call Spread in Euronet Worldwide (EEFT). Daily Top Buy Idea this week. Indirect way to play the formalization of retail in emerging markets. At current levels, offers an attractive risk-reward payout potential.
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