Adding November Plays To The 20/20 Watch List

This week’s mid-term elections could be a major catalyst for stocks in different industries.

Meanwhile, we’re working our way through earnings season.

Many companies are giving guidance for what to expect next year. And these reports are driving stocks higher and lower.

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That’s why I thought this this weekend would be a good time to send you a copy of my updated 20/20 Watch List.

The list is a curated selection of specific stocks — meant to help you see investment opportunities more clearly. (Hence the 20/20 Watch List name).

I just finished updating the list.

My hope is that this will be a great resource for you as we head into the end of the year.

Below are a few of the adjustments I made over the weekend:

Bull Plays

The broad stock market typically performs well following mid-term elections. Plus, the overall market is relatively oversold and due for a bear market rally.

Stocks in the bullish section of my watch list look like great buy candidates heading into the end of the year.

Below are some of the changes I made to the bullish plays this weekend.

Stocks I removed from this list:

  • BABA – Chinese stocks still carry too much risk. President Xi has consolidated his absolute power. Private companies operating in China are vulnerable.
  • PANW – Shares are breaking sharply lower after disappointing earnings from competitors. Investors are moving capital out of high-growth / high-valuation stocks in today’s rising interest rate environment.

Stocks I added to this list:

  • GLD – Gold has historically been a good hedge for inflation. The strong dollar has pressured gold this year. Any weakness for the U.S. dollar could kick off a strong rally for gold.
  • TLT – Long-term treasury bonds have traded sharply lower thanks to the Fed’s interest rate hikes. As higher rates stress the economy, the Fed is expected to slow its pace of rate hikes. This could kick off a rally for oversold bonds.

Bear Plays

We’re still in a bear market. Which means many stocks are still vulnerable and could trade sharply lower.

Tech stocks and growth companies are the most vulnerable plays here. That’s because during challenging economic periods, investors move cash out of these speculative plays and into more stable investments.

Consider buying put contracts on stocks included in this category.

Stocks I removed from this list:

  • CVNA – Shares of CVNA have dropped to single digits and the company’s market cap is now under 1 billion. While the stock could certainly trade lower, there are better bearish opportunities for us to track with more room to drop.

Stocks I added to this list:

  • NFLX – The streaming video company has expanded throughout the world, but now has fewer growth opportunities left. The stock is once again expensive compared to earnings and vulnerable.

Income Plays

I have a favorite strategy for collecting investment income. This approach involves selling put contracts for stocks I would be willing to buy.

Most people don’t understand how this strategy works.

Below are some changes I made to my list of stocks for this strategy:

Stocks I removed from this list:

  • CF – The stock price is now above $105. Since each put contract represents 100 shares, the higher stock price makes it difficult for us to use CF as a put-selling income play.

Stocks I added to this list:

  • ROST – The discount retailer has been able to buy excess merchandise for low costs. ROST is perfectly situated to offer value for customers looking for relief from today’s high inflation.

I hope you find this watch list helpful. 

Please let me know if you find these stock tips helpful. And here’s to growing and protecting your wealth!

Zach


More By This Author:

Inflation is Here to Stay — Just Look at the Stats
America’s Energy Crisis: Only 25 Diesel Days Left!
When The Market Is Choppy, Look For Relative Strength

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