The Goldman Guide

It looks like The January Effect has just begun for small caps and should continue with earnest next week and beyond. What is it and why has it occurred for 30 of the past 36 years?

While you’re at it, see why the numbers show that small caps offer a greater value and more upside than larger cap stocks after ensuring a poor 2 years.

Finally, we uncover a stock that is expected to grow EPS by 40% next year, had a major contract renewed for 7 years by one of the biggest companies in the world, and yet it trades only 8x next year’s EPS!

Ever get the feeling that stocks have no clue which way they wish to move? That’s why we outline the top 4 things that will drive stock direction over the next 12 months in this week’s issue of The Goldman Guide. While we shoot a warning shot across the bow due to Asia growth problems brewing, the 2016 Presidential Election is sure to have a major impact. The good news is that since 1979, the performance of the S&P 500 Index during election years has been strong. (Check out the table on page 2 of The Guide.)

Remember the interest rate hike last week? Well, that means it is likely the Financials sector will have a banner year in 2016. With that in mind, we have identified a stock you can “bank” on. Not only is it enjoying solid growth, but just last week it raised its quarterly dividend by 25%. Plus, if the long-awaited M&A activity occurs in this segment of the banking space, it could have a strong performance for the first half of 2016.

Last week was an abject disaster thanks to the dive in oil prices and concern about the prospective interest rate rise this week. Nonetheless, our Smith & Wesson (NASDAQ – SWHC) pick was up 23%.

What’s on tap this week and what is inside this week’s issue of the Guide? 

• There is one stock that stands to benefit from the release of Star Wars: The Force Awakens which stands to break all kids of records.
• Chipotle (NYSE – CMG) is going to drop lower and we believe that estimates are still too high. See what two stocks are beneficiaries of the CMG debacle.
• The warm weather means you need to avoid apparel stocks.
• We expect the market to stabilize and rise once the oil price decline subsides and the interest rate uncertainty finally reaches a conclusion.

Look, there is a reason gun sales are surging and the more gun control advocates make noise or these horrific events occur, the more gun sales will climb. Thus, it is a no-brainer town these stocks, regardless of their big performance this year, are going to move higher. See what to expect from these stocks and their surprisingly reasonable valuations.

Opportunity Knocking?

Each year around this time, year-end selling occurs in stocks that have been poor or disappointing performers over the previous 6-12 months.  The heavy and steady selling in these securities typically results in unique oversold opportunities toward the end of the year, especially in small cap stocks.  Moreover, history illustrates that many of one year’s big losers tend to be strong performers during the early part of the following year. This week’s candidate is under major accumulation, has a series of very positive events in its sights, and could grow by 40% by early next year.

Hope everyone had an enjoyable Thanksgiving weekend. Which sectors will be on fire in the weeks ahead? Is the small cap segment about to break out?

Welcome to the coolest week of the year where we have two full trading days with big volume and essentially two half-days (as most people leave early on Wednesday) that have lighter volume, but impact direction. This week’s theme is all about health. It starts with Mega Merger Monday with a combination of two health care behemoths. The just announced Allergan/Pfizer deal will spark speculation regarding new deals that will drive the space higher.

The second health issue is the health of the economy, which will come to light via home sales figures Monday, Q2 GDP and consumer confidence on Tuesday, and initial jobless claims on Wednesday.

The biggest question will be the health of holiday sales, which commence in earnest this week, and will drive stocks’ performance in the near term.  But there is also something else that typically starts at week’s end and plays a big role in determining what stocks perform best from December through January. For that, click on the buttons below.

Bonus: Been feeling lousy because small caps seem to be stuck? Check out these stats and take comfort in the turn in small caps in 2016.

Obviously our hearts go out to the people of France. It was a needless tragedy that reminds us that while gold may not be the place to be, security and defense stocks need to be a component of everyone’s portfolios, today and going forward as this menace is not going away.

Separately, stocks were crushed late last week due to the poor October retail sales figures. This panic was unwarranted and overdone but most important, gives us the opportunity to predict which stocks will do extremely well in the all-important holiday season which will be better than the fear-mongers are forecasting today and which ones will be worse. How could the nation’s economists not predicted what would happen and what should happen this season? Check out the list below. While stocks will still be rocky for a while we are nearing the start of the typical year-end rally, with each passing week.

Now that the Q3 earnings reporting season is coming to a close in the next few days, it is time to predict what the market, key categories, and sectors will do for the balance of the year. The good news is that we can predict what will happen almost on a weekly basis for the next 6-7 weeks, since the calendar works like clockwork this time of year. The better news is that a rally in small caps is in the offing and will continue into next year after being left in the dust the past 2 years. Click one of the buttons below to see what will happen before it happens.

Every few years a brand new market evolves and takes America by storm. With recent and pending events, I believe that two markets are going to change everything as we know it: crowdfunding and cannabis.

For those of you still groggy this morning after changing the clock, this week brings us the Halloween Indicator in full swing and a bunch of key growth stock names slated to release financials this week. We make a very brief mention of 3 stocks whose reports will surely tell us what to expect going forward.

Who has time for lengthy email descriptions these days? That’s why we are cutting to the chase. If you do not reach any more editions of The Goldman Guide for the rest of the year, do yourself a favor and read this one.

• Learn how to use a proven, top-performing strategy that typically generates surprisingly strong returns every 60 days, year-round, like clockwork.
• Size matters, right ladies? Well it does with stocks right now since the mega caps are ruling the roost. Still, every dog has its day and with the strong dollar hurting multinationals, small caps are about to be front and center.
• Auto stocks are a hot commodity right now and this overlooked, well-regarded stock may be the best play in the group. (Hint: It is a connection to Italy.)