Investing in last year’s top 10 stocks is ‘a recipe for disaster,’ expert says

Published

2 years ago

January 14, 2023

admin

Look back on the best-performing stocks in a given year and you’re likely to see a mixed bag: some mainstays, some breakouts and maybe even a meme stock or two.

Not so in 2022. Each of the 10 top-performing stocks in the S&P 500 index belonged to the same sector: energy.

In a year in which every other sector in the S&P 500 lost money, energy stocks delivered an average return of 59%, with top performer Occidental Petroleum returning 119%.

However, that doesn’t necessarily mean you should go out and add any of these stocks to your portfolio now, investing experts say.

Following an overall down year in the market, “don’t chase the few things that have performed well,” Christine Benz, director of personal finance and retirement planning at Morningstar, told CNBC Make It. “Doing a complete repositioning of your portfolio is a recipe for disaster.”

Here’s why investing experts say to tread carefully before adding last year’s winners to your portfolio.

You’re historically slightly better off buying losers

The market operates in cycles, and this has been a particularly good one for companies involved in the discovery, transportation and sale of oil and natural gas. Energy prices shot up early in 2022 after Russia invaded Ukraine and the U.S. and EU took steps to curtail Russian energy exports.

But a cyclical market means eventual reversion to the mean. Energy will come back to the pack, and laggards will catch up. There’s no telling when that will actually happen, but historically losers have outperformed winners following a down year.

“If it’s an up year, history says to let winners ride. However if the prior year was down, you’re better off rotating from ‘first’ sectors like energy to ‘worst’ sectors like technology and consumer discretionary,” said Sam Stovall, chief investment strategist at CFRA.

By Stovall’s calculations, a “first to worst” rotation has beaten the market 60% of the time since World War II.

That’s isn’t to suggest you shift your entire portfolio into tech, the worst performer in 2022. Rather, it illustrates that the factors that drive certain corners of the market to take off are unpredictable from year to year.

Choose stocks sparingly and carefully

If you’re a long-term investor, financial advisors generally recommend building a broadly diversified portfolio. By spreading your bets across a wide array of asset classes, you decrease the chances that a sharp drop in any one particular investment derails your portfolio’s performance.

For that reason, investors are typically told to steer clear of devoting too much space in their accounts to any one particular stock. Unlike the broad market, which has historically trended upward, any one stock has the potential to go to zero.

If you do want to invest in a few stocks as a complement to your core broad-based investing strategy, ignore which way the market is trending and examine each stock on its own merits, experts say.

“As long-term investors, we don’t try to chase momentum,” said Dave Sekera, chief U.S. market strategist at Morningstar. “We focus on opportunities where the market doesn’t understand the intrinsic value of a company.”

There are plenty of ways to determine a company’s value, and each investor has their favorites. You may want to focus on how a stock trades relative to the company’s earnings or cash flow, for instance.

No matter which measure you choose, the more a company’s stock price has run up, the more likely it is that it’s trading more expensively relative to peers, the broad market and its historical averages. And there tends to be some mean reversion there, too.

Headed into 2022, energy stocks were the most undervalued by Morningstar’s calculations. And after a 59% runup? “It’s the sector we now think is the most overvalued,” Sekera said.

Sign up now: Get smarter about your money and career with our weekly newsletter

Don’t miss: Think twice before buying the top 10 ETFs of 2022: ‘It doesn’t work that way in investing’

Environment

Cybertruck backlog runs out, Model S gets stuck, GM hits a sales milestone

Published

7 hours ago

November 5, 2024

admin

Cybertruck backlog runs out, Model S gets stuck, GM hits a sales milestone

On today’s episode of Quick Charge, Tesla’s Cybertruck is now available in Canada – and, like in the US, there’s no waiting! Plus, we’ve got an “actually” smart summon Tesla that’s actually stuck, GM reaches a sales milestone, and we get a brand-new title sponsor!

Today’s episode is the first with our new title sponsor, BLUETTI – a leading provider of portable power stations, solar generators, and energy storage systems.

Source Links

Prefer listening to your podcasts? Audio-only versions of Quick Charge are now available on Apple Podcasts, Spotify, TuneIn, and our RSS feed for Overcast and other podcast players.

New episodes of Quick Charge are recorded, usually, Monday through Thursday (and sometimes Sunday). We’ll be posting bonusLucid proves than an EV company can keep its promises while Xiaomi teams up with Chevrolet and Honda to prove – at least conceptually – that records are made to be broken. audio content from time to time as well, so be sure to follow and subscribe so you don’t miss a minute of Electrek’s high-voltage daily news!

Got news? Let us know!
Drop us a line at tips@electrek.co. You can also rate us on Apple Podcasts and Spotify, or recommend us in Overcast to help more people discover the show!

FTC: We use income earning auto affiliate links. More.

Environment

This ‘supercharger on wheels’ brings fast charging to you [update]

Published

9 hours ago

November 4, 2024

admin

This 'supercharger on wheels' brings fast charging to you [update]

Mobile car care company Yoshi Mobility launched a DC fast charging EV mobile unit that it likens to “a supercharger on wheels.”

November 4, 2024 update: Yoshi Mobility will only be charging EVs on the side of the road now – it announced today that it’s selling its fleet fueling operation to EZFill Holdings (Nasdaq: EZFL).

It was originally founded as a direct-to-consumer, mobile fueling business in 2016, but now it’s going to focus on mobile EV charging, virtual vehicle inspections for partners like Uber and Turo, and onsite preventative maintenance.

Bryan Frist, Yoshi Mobility’s CEO & cofounder, said, “By spinning off our fuel business and focusing all of our energy on solving hair-on-fire problems that fleet owners face, we are meeting the changing needs of enterprise customers while making the future of transportation safer, cleaner, and more sustainable.”

May 22, 2024: Yoshi Mobility saw that its existing customers needed mobile EV charging in places where infrastructure has yet to be installed, so the Nashville-based company decided to bring the mountain to Moses.

“We recognized a demand among our customers for convenient daily charging, reliable private charging networks, and proper charging infrastructure to support their fleet vehicles as they transition to electric,” said Dan Hunter, Yoshi Mobility’s chief EV officer and cofounder.

The company says its 240 kW mobile DC fast charger, which can turn “any EV” into a mobile charging unit, is the first fully electric mobile charger available. It can provide multiple charges in a single trip but doesn’t detail how they charge the DC fast charger or who manufactured it. (I asked for more details, and they replied that they won’t disclose client names or the manufacturer of its DC fast charger yet.)

Yoshi is launching its mobile charger on two GM BrightDrop Zevo 600s and will introduce additional vehicles throughout 2024. It aims for full commercialization by Q1 2025. (I wonder if the Zevo 600 ever charges itself? Yes, I asked that too.)

Yoshi Mobility says it’s already deployed its EV charging solutions to service “major OEMs, autonomous vehicle companies, and rideshare operators” across the US. Its initial customers are made up of large EV operators managing “hundreds” of light-duty vehicles requiring up to 1 megawatt of energy per day that don’t yet have grid-connected EV chargers. I’ve asked Yoshi for details of who it’s working with, and will update if they share that info.

The company says pricing is based on location and enterprise charging needs. Once under contract for service, the service will be deployed to US-based customers within 10 days.

To date, Yoshi Mobility has raised more than $60 million, with investments from GM Ventures, Bridgestone, ExxonMobil, and Y-Combinator in Silicon Valley.

If you’re an electric vehicle owner, charge up your car at home with rooftop solar panels. To make sure you find a trusted, reliable solar installer near you that offers competitive pricing on solar, check out EnergySage, a free service that makes it easy for you to go solar. They have hundreds of pre-vetted solar installers competing for your business, ensuring you get high quality solutions and save 20-30% compared to going it alone. Plus, it’s free to use and you won’t get sales calls until you select an installer and share your phone number with them.

Your personalized solar quotes are easy to compare online and you’ll get access to unbiased Energy Advisers to help you every step of the way. Get started here. –ad*

FTC: We use income earning auto affiliate links. More.

Environment

Marqeta shares plunge more than 30% on big forecast miss

Published

9 hours ago

November 4, 2024

admin

Marqeta shares plunge more than 30% on big forecast miss

Marqeta celebrates its initial public offering at the Nasdaq on June 9, 2021.

Source: The Nasdaq

Marqeta shares tumbled more than 30% in extended trading on Monday after the company issued weaker-than-expected guidance for the fourth quarter.

Here’s how the company did compared with Wall Street estimates, based on a survey of analysts by LSEG:

Loss per share: 6 cents adjusted vs. a loss of 5 cents expected
Revenue: $128 million vs. $128.1 million expected

While third-quarter results showed a slight disappointment on the top and bottom lines, Marqeta’s forecast for the current period was more concerning.

The payment processing firm said revenue in the fourth quarter will increase 10% to 12% from a year earlier. Analysts were looking for growth of more than 17%, according to LSEG.

Marqeta, which primarily functions as a card-issuing platform, attributed the guidance miss to “heightened scrutiny of the banking environment and specific customer program changes.” The company has been struggling for a while, and its stock is now down more than 80% from its peak in 2021, the year it went public. The stock was down 15% for the year prior to the report.

Total processing volume of $74 billion was up more than 30% from a year earlier. Net revenue and gross profit were up 18% and 24%, respectively.

Marqeta’s digital commerce business sells payment technology designed to detect potential fraud and ensure that money is properly routed. It also issues customized physical cards that look like a credit or debit card that can be used for point-of-sale purchases.

The company has been trying to break into the buy now, pay later business with a recently launched product called Marqeta Flex. The service brings BNPL from lenders such as Affirm or Klarna to any credit card wherever Mastercard and Visa are accepted.

“It’s an orchestration layer, but it’s tied to issuing and processing and disputes and chargebacks,” CEO Simon Khalaf told CNBC at Money2020 in Las Vegas last week. “So it is not actually a Wild West in BNPL. It is actually very well established. And there is a reason why a lot of people are jumping to it.”