Here are April’s “Perfect Stocks”

Dear Reader,

There are no April Fool’s gags when it comes to the market. I take your money very seriously. This is why I’m letting you in on one of my favorite monthly rotation strategies.

If you’re an investor and a trader, you’ll love the list of stocks below, especially with momentum finally turning the corner.

Despite the concerns around the state of the economy, there could be one last Bull run in the coming weeks, and – if you’re a conservative market participant – I’ve got your plan right here.

Why The F Score… Scores Big

I love this score because it helps us identify what works in this economy… and who manages their company correctly.

I look at three different metrics to help build a list of winning stocks that are low-risk, high-upside stocks, given their rock-solid balance sheets.

The Piotroski F-score
The Altman Z-score
A valuation rank

Let’s start by finding positive financial growth and low debt exposure.

That’s where the Piotroski F-Score succeeds.

The F-score is a NINE-POINT system that rewards each company for meeting a certain criterion on its balance sheet.

If the company meets all nine criteria, it has an F-score of 9.

That means it’s perfect.

The Altman Z-score is a weighted average of five metrics to determine whether a company might go out of business.

If a company falls below 2.6, it has a risky balance sheet.

That risk is tied to a balance sheet that likely has lots of debt or weak cash flow.

We are looking for stocks with a Z-score of 3 or higher.

This is pure forensic analysis.

But let’s add one last element to this.

We want our stocks to have attractive valuations. We don’t want to trade at 15 times sales. We don’t want to have a negative book value or negative EBITDA.

So, we aim for stocks with attractive buyout values.

And using EV/EBITDA, we come up with this list.

Here are your top F and Z score stocks for April:

We don’t have a significant amount of variation from last month.

But with momentum turning positive this week for the S&P 500, a few key names stand out.

The Mosaic Co. (MOS) and CF Industries (CF) are both producers of fertilizer at a time that the world is facing supply challenges. Recent reports indicate that China may start hoarding the commodity to boost its rice production in the months ahead. I assure you, the most underrated commodity for investment is Potash, given its importance to the global food supply.

Next, Core & Main (CNM) is a distributor of water, sewer and fire protection products. This is probably the first time that you’ve heard of this company. This stock has an interesting momentum cycle to it – as it does well during periods of positive conditions and sells off with the broad index rather quickly on the other side. This makes for an interesting swing trade stock.

Finally, ConocoPhillips (COP) is a remarkable long-term stock. It’s a company that I’ve sold bullish put spreads on for the months ahead. Specifically, I like the $90 put as a place to sell puts in case it does pull back to that level. COP will benefit from the coming cyclical bull market for natural gas and oil in the years ahead.

Now, if you’re ready to take your investing to the next level, you need to join my Tactical Wealth Investor. Because I’ll be adding a new stock to our incredible long-term portfolio next week.

To your wealth,

Garrett Baldwin

Market Momentum is Green

We had a dramatic shift in momentum this week, with the Russell 2000 breaking higher. The media will say this is because of inflation data, but the reality is that buyers have been picking up over the last week. I expect we’ll see a run on the S&P 500 up to the 4,200 level, and the Russell can run to 1,850. Then, we’ll see how earnings results impact broader sentiment.

*This is for informational and educational purposes only. There is an inherent risk in trading, so trade at your own risk.

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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.

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