YWR: Global Factor Model
Some say this is their favorite email of the month.
It’s where we review the data across thousands of stocks around the world and highlight the strongest earnings revision trends.
As an extra treat this month I’m going to throw in a bonus Mystery Inflection Trend.
YWR Top 25 Ranked Stocks
These are the top 25 stocks in the world based on a combination of estimate revision momentum, valuation and price momentum.
Samsung, SK Hynix, Micron, Nanya Tech, ADATA, Winbond Electronics, Innodisk: ‘Everyone knows’ memory stocks are super cyclical and always crash. It’s common knowledge. Which is why we have the biggest memory bull market ever with dramatic shortages and architectural differences causing unprecedented manufacturing complexity, and yet the stocks trade on P/E’s <5x 2027.
Riley Exploration (REPX): Now that the oil bull market has started should we be looking at small cap energy stocks in the US like Riley which are trading on P/E’s less than 5x? Riley is especially interesting because they are diversifying into power generation as another way to monetise their gas assets.
Here is a link to Riley’s presentation.
Steel: Salzgitter is in the YWR Top 25, but Arcelor Mittal also ranks well. Prices for HRC in the US and North European HRC, Ex-Works Ruhr are steadily rising.
The combination of strong local economies, defence spending, and regulatory protection from tariffs or in Europe the Carbon Border Adjustment Mechanism are creating an ideal, once in a lifetime, situation for domestic steel companies.
Are we in the earlys stages of a new normal where domestic manufacturing benefits from protected domestic markets and earns super normal returns?
I also need to find time to do some work on Nippon Steel. They bought USX and the stock is just sitting there.. untouched.
Top 5 Ranked Industries
Gold and ‘Other Metals’ (copper + aluminium) are the two best ranked sectors for their combination of estimate revision momentum, price momentum and valuation.
Next it’s all the Taiwanese semiconductor + electrical component stocks (Powerchip, Winbond, Nanya Tech, Unimicron, Gold Circuit, and on and on).
In the YWR Rankings sheet at the bottom of the post you can filter the full Taiwanese universe of semiconductor and electronic component stocks.
But Alert!
We have a new sector trend developing and it’s integrated oil stocks.
The oil trade is new (red line below) and will probably get stronger next month.
Top 5 Ranked Countries
We also look at the data on a country level.
The US always ranks well with a high number of top ranked stocks. The US market includes many sectors which are doing well, but it’s also the statistical result of having such a big universe of stocks.
South Korea is booming with top ranked stocks across semiconductors, electrical components, industrial machinery, finance, real estate development and home building. The strength in the South Korean industrial sector appears be spilling over into the finance and real estate.
Canada and Australia rank well due to the high number of gold and metals related listings. Australia also benefits from coal stocks like Yancoal and Stanmore which score well.
Maybe we should be looking at the TSX and ASX exchanges if the precious metals and commodity trend is going to continue. Or the JSE.
Inflection Analysis.
Since December we’ve been trying to identify trends even earlier.
In our EPS inflection analysis we look for where estimate revisions have recently inflected upwards.
The inflection analysis has been screaming to look at everything energy related; refining, contract drilling, oil and gas production, and oil pipelines.
The energy inflection is massive.
But can I highlight something potentially more interesting?
It’s the early stage estimate momentum in US Savings Banks.
Use the YWR Factor Model Data App (link below) and look up the estimate trends for Triumph Financial, OceanFirst Financial, Columbia Financial, and Northfield Bancorp.
Earnings estimate are rising for these stocks and yet nobody is talking about this new trend. As an extra positive the stocks have gone nowhere.
It’s also a positive read through for the US economic outlook if savings banks are surprising positively.
I have included links to the Google sheets below for the top ranked inflection stocks for each sector and country. This way you can see which stocks are driving the inflection in trucking for example. BTW it’s Werner. Trucking is booming. Another positive indicator.
OK. Now the mystery inflection sector.
Mystery inflection sector… another inflection so early the stocks haven’t move yet. Everyone hates this sector so much they are afraid to notice something positive might be happening.
