Select Page

It's gotten quiet out there. Tariff talk has receded completely into the background and the CBOE Volatility Index or "VIX" has flattened out nearly a month after its most recent spike. Time for our stocks to come into their own.

If you needed evidence that the BMR universe can thrive under conditions like these, the numbers make the most compelling argument of all. Since the trade war heated up at the beginning of May, the S&P 500 is still down 1% from record territory. Our recommendations have rallied 2% over that period, gaining ground where the broad market faltered.

Furthermore, that progress has come in the face of significant retreats for the gigantic stocks at the top of the Silicon Valley food chain. Apple, Amazon, Alphabet and Facebook have led the market down in the last six weeks. (Microsoft, on the other hand, kept moving up.)

However, smaller Technology stocks are doing extremely well. Our Technology portfolio is up 8% since early May, led by Roku (up 63% over the period) and Shopify (up 21%), and Spotify (up 7%), Twilio (up 8%), Workday (5%) and Square (4%). Elsewhere in our universe, the Aggressive group is mixed but the high-tech wins like Anaplan (20%), Okta (25%) and Paycom Software (6%) far outweigh the retreats. PayPal is up 4% over the period. Universal Display is up 10%.

These moves argue against the conventional wisdom that Wall Street is actively fleeing high-growth stocks that carry high multiples. This isn't a safe haven bid at all. If anything, our more "defensive" recommendations in Healthcare and Real Estate have lagged behind their aggressive counterparts. Good old Johnson & Johnson is up a fraction of a percentage point since the market as a whole peaked. Exact Sciences, which isn't even profitable yet but has huge prospects, has soared 10%.

We'd like to take a little time today to celebrate a few of our biggest recent successes, the stocks rallying hard enough to cushion all the weakness the rest of the market has to throw our way. Alteryx, for example, soared 9% yesterday to $104 as the last Wall Street firms who were reluctant to recommend the stock admit that it's stronger than they suspected.

A few days ago one of those firms in particular still said Alteryx wasn't worth more than $75. Since then, they've had to raise their Targets multiple times. Another firm also piped up to match our $105 Target. Odds are good we'll all need to raise our expectations again and again. After all, it isn't hard to love a Computer Security company that manages to flirt with sustainable profitability before the revenue run rate tops $350 million a year. One day soon, this will be a cash machine . . . and for shareholders, it's already doing well, up 76% YTD and up 81% since we initiated coverage in November.

But it isn't all Technology. Some said Dollar Tree would be ground zero in any trade war because so much of its price-sensitive merchandise comes in from China. We disagreed because we were actually paying attention on the quarterly conference calls and saw management pivot its sourcing relationships to other countries.

Now mighty JP Morgan is telling its clients the same thing: Dollar Tree isn't in trouble at all. There's still upside left here to capture, and if we ever cut coverage in the foreseeable future, it will be to rotate to another Discount Retail stock with bigger potential.