YWR: Global Factor Model
Can I show you something beautiful?
But I’m getting ahead of myself.
We should do the Top 30 first.
Reminder: all the Factor Model Data and Apps are linked at the bottom of the post.
YWR Global Top 30
Our goal with the Top 30 is to make sure we know the big trends underway globally, and why they are happening.
Emaar and Emaar Development:
Dubai is pumping. The city has managed itself well. It’s a real world Elysium (The Elysium Analog).
But there is another theme at play. Dubai is a play on the global elite moving to low tax jurisdictions while they still can.
The stock price has gone up a lot, but it’s kind of amazing you can get an infinite pipeline of projects, world class hotels and the best malls in the world at 8.5x earnings.
We’ve already talked about Chinese brokers and insurers (100% upside in Ping An).
United, American, Alaska.. we’ve also talked about airlines and why the problems at Airbus and Boeing are a godsend. It means the cycle can keep going for years.
Cal-Maine.. the egg crisis.
Gold Miners… we are bullish everything gold. #TheNewBitcoin.
Carnival, Norwegian Cruise Lines.. these came up on our short screen in September last year, and we discovered how cruise lines are hidden Rise of the Lower Class plays (Short Squeezers in the Cruise Industry).
Gilead: Not one I know well, but it’s pretty good growth through 2028 and not too expensive for a drug company (on 2027 earnings). 2.8% dividend yield. Already moved a lot though. I struggle with these.
Societe General, Santander, Barclays….
European banks are exploding… and yet they are still cheap.
What’s happening?
Something you never thought could possibly happen.
There is starting to be bullishness in Europe.
Analysts have flipped from calculating all the things that could go wrong, to realising what might happen if the European banking sector deploys all this excess capital and starts to grow?
Maybe we were too early but we started asking this question in 2023. What do you do with EUR 250 billion?
And what if investors go crazy and banks stocks trade on P/E’s of 10x? #TheNewBitcoin
But what could be about to move next?
Rubber and Steel
Sumitomo Rubber is interesting because we did a whole video on the upside in Rubber and how tire companies could at some point benefit from multiple trends at the same time.
Gross profit growth from higher rubber prices. Tire companies pass on the rubber prices with a stable gross margin (ideally).
Eventual pick up in new car sales in US and Europe. The average age of cars in the US and Europe continues to set new records.
EV’s are heavier and run down tires more quickly than traditional cars.
The tire theme hasn’t worked so far, but it still makes sense, so I’m keeping an eye on any early signs in rubber prices and tire earnings estimates.
Our video on autos with
on:What’s so Interesting about Auto Stocks.
We discuss tires at the end.
Also our video on the upside in Rubber Prices with Stephen Schlegal:
The Unintended Upside in Rubber
And it’s starting to happen….
Continental is totally smashed and doing a spin out of the auto parts business . GT 0.00%↑ is also smashed down, but 15 months into a turnaround, and reported good Q4 #’s.
In YWR Dirty Dividends we own Mercedes and TSLA 0.00%↑ .
Thyssen and Arcelor Mittal
These are total dogs, but for some reason they are scoring well in the factor model. US steel prices have bounced, but Europe hasn’t followed. It’s hard to tell if this is the start of a bigger trend or a tariff thing. It’s interesting because Iron Ore companies also look good.
Thyssen is a mix of auto parts, steel, and naval engineering (submarines). It’s a mess, but doesn’t have any debt. If steel turns around, and If every investor is dying to own a European defence play,then Thyssen could be a great Sum of the Parts value play. Lots of ‘if’s’. I know.
Top 5 Sectors
The Factor model ranks over 3,000 stocks, but when we take the top 300 and group by sector we see banks are the most highly represented. This has been a consistent finding. So nothing new, other than the consistency is surprising.
When we look at semis, it’s semis everywhere. Taiwan, China, South Korea and the US. SK Hynix, the leading memory chip supplier to Nvidia, at 5x earnings is especially interesting and part of why we love South Korea.
Pharmaceuticals is the 3rd best ranked sector. I can’t really discern any trend behind the various drugs and companies, but I don’t know the sector well. It screens as a sector where investors are underweight, so it would be good to be able to articulate what is going on.
Investment banks and brokers is a mix of US brokers benefiting from the US bull market ($HOOD, COIN 0.00%↑ ), but also Chinese brokers benefitting from the start of a multi-year bull market.
Interestingly, shipping is off the Top 5 list.
Monthly trend for the Top 5 ranked sectors.
Top 5 Countries
The US consistently has the highest number of stocks in the top 300, but it also has bigger capital markets.
South Korea is extremely cheap and interesting with lots of high tech plays. We bought the ETF at the end of 2024 and are going to keep adding more (Who am I ETF?).
Japan consistently scores well, but when you look at the BofA Fund Manager survey there is no Japan overweight. I don’t know why.
UK banks (Barclays, Standard Chartered, Lloyds, Natwest) have all put the UK into the top 5. Last year the UK was tied with China for the cheapest, most hated market in the world. We even called it The New China.
Monthly trend for the Top 5
I don’t know why China dropped so much. Maybe it was the lack of price momentum from the previous months. It should rank better next month.
Below are links to all the Factor Model resources.
The Google Sheet with all the rankings and data for over 3,000 global stocks.
The Retool Factor Model App with earnings estimate charts.
The Tableau Dashboard to visualise the data by sector.