Brian's Dunks
Stock List
Brian's Dunks
Stock List
Corrected: January 2022 Update
My research, which has been developed over two decades of Wall Street experience, strongly suggests that our Dunks Product can add significant value by supplementing the actively managed part of your portfolio. By highlighting individual stocks with high quality reward risk ratios that over the medium/long-term raise the probability, you can outperform the overall equity market without taking on excessive amounts of risk.
For those who are less risk-averse, we also present some higher-risk, but often higher-reward opportunities that will be included in the Mid-Range Jumper section of the overall Dunks. Both these stock lists are derived by the models and techniques that I have been producing for professional institutional investors since the 1990s. For the first time ever, I am now making it available to retail investors on FSInsight.com.
My investment and selection methodologies are grounded in proprietary quantitative analysis and methods that have not only have stood the test of time but also have been evolving. Please be aware, that because I am using a quantitative model-based method. Therefore, I am not doing extensive fundamental and catalyst analysis on the individual names we land on. You should always do additional due diligence before adding a name to your portfolio to ensure it conforms with your individual risk tolerance and investment goals.
Click HERE to read the intro of Brian’s Dunks
Market Commentary
The equity markets have begun 2022 in shaky fashion as fears of elevated inflation, rising interest rates, and growing concerns that the Federal Reserve is going to be quite aggressive. Although the amount of hawkishness coming from the Street is a bit more than I have expected the move towards pricing in central bank action is what I have been forecasting for quite some time, which would then lead to some negative impact on the overall equity market and cause some intra-market rotations.
Despite my expectations for turbulence, I have been recommending to strategic investors that they stay calm and not become overly bearish. Yes, there will likely be some tactical volatility and a rising probability of a bumpy period during 1H22, but I am suggesting investors keep their focus on the journey to higher highs that I am forecasting for year end and not the shorter-term bumps and wiggles unless of course one has the appetite to be an aggressive tactical trader.
Based on my analysis, I am looking to use any weakness that occurs in the overall market or in my favorite sectors and single stocks names as opportunities to raise exposure. With this being said, there could be some gut wrenching moves and vocal bearish forecasters that may suggest that the end is near, but my research is strongly pointing to a manageable drawdown over a relatively short time period (i.e. less than three months) that reverts back to an unfinished bull market. During periods like these, watch your weightings, remember that things usually take longer to play out until we get important reversal signals, and try to identify what we want to buy when stocks “go on sale”.
Summary
Play: consider increasing exposure
Hold: consider keeping and not adding exposure
Out: consider removing exposure
Dunks
| AMZN | Amazon | PLAY |
| GM | General Motors | PLAY |
| LYV | Live Nation | PLAY |
| PYPL | PayPal | PLAY |
| CCJ | Cameco Corporation | PLAY |
Mid-Range Jumpers
| FANG | Diamonback Energy | PLAY |
| SBUX | Starbucks | PLAY |
| ISRG | Intuitive Surgical | PLAY |
| CME | Chicago Mercantile Exchange | PLAY |
| TSM | Taiwan Semiconductor Corp | PLAY |
Analysis
Dunks
AMZN-1.64% – Amazon (PLAY)
- ASM Indicator: It peaked during 2Q21 and was under pressure until early January when it had a positive inflection from an extreme negative reading, which is contrarian bullish in our methodology. Historically, AMZN has always outperformed 6-12months going forward and this is a major factor in my selecting the stock for Dunks.
- Sector Comments (Consumer Discretionary): Despite relative weakness year to date, the sector remains strategically favorable as its 8-panel is supportive. The likelihood of some challenging relative performance was discussed in my January Sector update, and we continue to view this opportunistically.
- Brian’s Take: The stock along with many names in the CD sector has struggled thus far in 2022. Based on my work, I view the price weakness as chance to get a future outperformer at a more attractive entry point.
- Commentary: Amazon is the undisputed leader in e-commerce and cloud services through its Amazon Web Services segment. We believe the competitive advantage will be hard for peers to catch up to. The company will likely grow at above-market rates as the importance of cloud and e-commerce continues to increase.
GM-0.20% – General Motors (PLAY)
- ASM Indicator: It made a major low in 4/20 and a higher low 8/21 both of which are bullish signals. This key indicator is still rising and has plenty of room to keep going before it reaches an extreme peak that would cause me to likely shift away.
- Sector Comments (Consumer Discretionary): Despite relative weakness year to date, the sector remains strategically favorable as its 8-panel is supportive. The likelihood of some challenging relative performance was discussed in my January Sector update, and I continue to view this opportunistically.
- Brian’s Take: The stock was tactically overbought coming into 2022 and has paused along with general trend for the CD sector. My work indicates that GM is likely to be an outperformer when looking out to midyear and beyond. Thus, I am viewing any tactical price weakness as a chance to raise exposure to a stock with a favorable outlook.
- Commentary: This legacy automaker has pivoted from its Internal Combustion Engine (ICE) centered strategy to become one of the most compelling and potentially rewarding plays on the coming Electric Vehicle (EV) revolution. The company is implementing a rapid and impressive transformation.
LYV-0.49% – Live Nation (PLAY)
- ASM Indicator: It made its extreme negative low in late 3/20, which was my initial buy signal, and had been bullishly stair-stepping its way higher ever since. This key indicator is still rising and has not yet reached elevated level.
- Sector Comments (Communication Services): The sector which was a big underperformer during 2021 has been a marginal outperformer in January. Its overall 8-panel has been weakening which has led me to lower my recommendation, but my work flags opportunities within the space for certain areas including LYV’s sub-industry, Movies & Entertainment.
- Brian’s Take: The stock is a clear beneficiary of reopening and stalls when COVID cases cause economic disruptions. LYV reached tactically overbought levels in 4Q22 and has had a healthy pause over the last several weeks. My work strongly suggests dips should be bought as the stock is likely moving to higher levels during 2022.
- Commentary: This company’s superior scale and operating expertise allow LYV to benefit from the ongoing normalization and return of live events, including concerts.
PYPL0.20% – PayPal (PLAY)
- ASM Indicator: It made its extreme positive peak in 7/21 and consistently fell till it reached a major low in late 12/21, which is a contrarian bullish signal. The uptick in its key indicator strongly suggests that the reward risk ratio for future outperformance is quite favorable.
- Sector Comments (Information Technology): The sector has been hit hard as inflation fears and growing concerns of an aggressive Fed policy shift have dominated early 2022. My work still suggests that the 6-12 month outlook for the sector is favorable as Tech’s 8-panel is supportive notwithstanding tactical volatility and price weaknes.
- Brian’s Take: Many contrarian plays that have begun to look more for favorable for a 6-12 month outlook, including PYPL, AMZN, and SBUX are not yet responding to their ASM upticks. My work suggests that it is just a matter of time as PYPL is down over 40% from its 2021 high, which suggests there is a lot of bad news already in the stock.
- Commentary: This crucial lynchpin of digital commerce has expanded its already dominant position in online payments to include growth opportunities in credit and crypto. We believe as more companies move to online marketplaces, this company will be a key beneficiary.
CCJ0.16% – Cameco Corporation (PLAY)
- ASM Indicator: It has made three bullish lows in an ongoing uptrend since its extreme negative low reached during 1Q20. Its key indicator is rising and not yet at elevated levels suggesting that CCJ’s stock price has further to run.
- Sector Comments (Energy): The sector has been a strong outperformer year to date. My work has been favorable on Energy and although the sector is getting tactically overbought, it is signaling that any tactical weakness can be used to raise exposure.
- Brian’s Take: As interest rates have been rising and Fed policy fears growing, CCJ has paused and is working off its tactical overbought position. With a favorable ASM and an increasing focus of the ESG world towards new nuclear facilities, the fundamental backdrop for uranium is likely to keep a tailwind at the stock’s back.
- Commentary: The energy transition is happening, but what technology will eventually help bring down carbon solutions without sacrificing quality of the grid? Our research and analysis suggest that nuclear energy will become a more essential part of the world’s solution to evolving clean energy needs.
Mid-Range Jumpers
FANG0.43% – Diamondback Energy (PLAY)
- ASM Indicator: It has made two favorable bottoms from negative extreme levels in 1Q20 and 4Q20 that have both proceeded a rally in the stock. The most recent reading is in the midst of a shallow down/up cycle that historically has led to outperformance in the following 6-12 months.
- Sector Comments (Energy): The sector has been a strong outperformer year to date. My work has been favorable on Energy and although the sector is getting tactically overbought, and it is signaling that any tactical weakness can be used to raise exposure.
- Brian’s Take: The stock has had an impressive move higher over the last year and is a bit extended. Thus, it would not be unreasonable to expect a short and shallow price pause/consolidation at some point. Importantly, however, I am expecting its ASM cycle to resume its uptrend and that any tactical underperformance should be viewed opportunistically.
- Commentary: This is a well-managed Energy name that should be able to outperform markets and peers and has a tailwind of being in an attractively valued sector.
SBUX1.46% – Starbucks (PLAY)
- ASM Indicator: It peaked in July 2021 and was under pressure until early January when it had a positive inflection from an extreme negative reading, which is contrarian bullish in our process. Over the last 20years, SBUX has had a high probability of outperforming in the subsequent 6-12 months.
- Sector Comments (Consumer Discretionary): Despite relative weakness year to date, the sector remains strategically favorable as its 8-panel is supportive. The likelihood of some challenging relative performance was discussed in my January Sector update, and I continue to view this opportunistically.
- Brian’s Take: As discussed earlier with PYPL, contrarian plays that have begun to look more for favorable for a 6-12 month outlook, including SBUX, AMZN, and PYPL are still under tactical selling pressure despite their positive ASM inflections. My work portends that the clock is ticking to when SBUX starts to perform better, especially with the stock down nearly 25% from its 3Q21 high, which suggests there is a lot of bad news already in the stock.
- Commentary: SBUX is one of the most geographically diversified Consumer Discretionary stocks, and its deep penetration and considerable pricing power should boost its operating results as economies begin to reopen and move towards normalization during 2022.
ISRG-0.55% – Intuitive Surgical (PLAY)
- ASM Indicator: It has marginally weakened while its green bars have remained stable, which is clear non-confirmation. My expectation remains that its key indicator will roll up and make a bullish higher low within 4-6 weeks supporting my selection of ISRG as a mid-range jumper and outperformance when looking out 6-12 months.
- Sector Comments (Health Care): My work remains neutral for the sector, but continues to highlight divergences between areas I like and dislike. Hence, my analysis sees individual stock picking as the best way of adding alpha within Health Car.
- Brian’s Take: The stock has been hit because of the recent Omicron variant, which is setting up an opportunity to participate in ISRG’s price weakness as its strong medium/longer-term fundamentals are still in place.
- Commentary: The Health Care sector is experiencing healthy disruptions and changes, and ISRG is one of the leading innovators in the space. The firm has products that utilize both robotics and augmented reality to positively impact the industry and get improve results for patients.
CME-1.93% – Chicago Mercantile Exchange (PLAY)
- ASM Indicator: It made a major low during 4Q20 and also a bullish higher low in 9/21, which were both favorable events in our work. This key indicator is still rising and has plenty of room to keep going before it reaches a positive extreme.
- Sector Comments (Financials): The sector has been a strong relative performer during January, but Financials has gotten tactically overbought. Thus, any tactical weakness that may occur should be viewed as an opportunity to raise exposure.
- Brian’s Take: The stock has held up well during the recent market turbulence and is poised for additional gains as its key indicators are quite favorable.
- Commentary: This company is a cutting edge financial services name that is a leader in the burgeoning area of derivatives. CME’s profitability will likely continue to increase as more investors use the firm’s comprehensive product offerings to manage risk.
TSM – Taiwan Semiconductor Corp. (PLAY)
- ASM Indicator: It made its last extreme negative in 1Q19 and has been making a series of bullish higher lows for the last three years and is still strongly rising.
- Sector Comments (Information Technology): The sector has been hit hard as inflation fears and growing concerns of an aggressive Fed policy shift have dominated early 2022. My work still suggests that the 6-12 month outlook for the sector is favorable as Tech’s 8-panel is supportive notwithstanding tactical volatility and price weaknes.
- Brian’s Take: My work remains quite bullish for TSM and expect further outperformance as its ASM is robust. Any price weakness caused by the overall market falling should be used an opportunity to raise exposure in this key semiconductor company.
- Commentary: This company has steadily risen to the top of the pack in the semiconductor industry and maintains a dominant competitive foothold at the leading edge of chip production. In addition, it has considerable pricing power caused by the ongoing semi shortage that will likely help the company achieve superior operating results.
