YWR: Global Factor Screen Results
Disclosure: Personal views only. Not investment recommendations. Please seek a professional for all investing advice or guidance.
This is the monthly YWR Global Factor Model Review.
Below are the top 25 ranked stocks for June.
Similar to May many airline stocks are screening well. (LATAM, American Airlines, Air France, and United). Autos and truck manufacturers (Hyundai, Sinotruck) also score well. Toll Brothers made the top 25 for the first time this year.
Just as an example of how the ranking system works, below is chart of the forward earnings expectations for United Airlines. Toward the end of 2022 analysts estimated maybe UAL would make $7/share in 2023 and $9 in 2024. We are halfway through 2023 and those estimates have moved to $9 for 2023 and $11 for 2024. These large positive changes in earnings estimates are why UAL ranks well for estimate revision momentum.
The 2023 P/E is 5x so United is attractive versus other transportation stocks. The stock price is performing well relative to stocks globally (+47% over the last 12 months), so it ranks well on price price momentum as well. Price is the least important factor in the ranking system.
I rank over 3,000 stocks, but for the country and industry trends I look at the top 300 (which I call the YWR 300). It’s useful to pick out industry and country level trends and changes in momentum.
Country Trends
The number of Chinese stocks in the top 300 dropped, but China is still tied with the US for first place and has gained momentum from earlier in the year. The Chinese stock market isn’t looking great at the index level, but the individual companies are scoring well globally on estimate revision momentum, valuations and price momentum, so take another look at China.
Japan continues to move up the list and the overall market has been doing well too.
At the industry level Autos and Trucks continue to stand out. Last month I listed Autos separately, but this month I combined them with the truck manufacturers. The top ranked stocks include Forvia, Kia, Hyundai, Doosan Bobcat, Nissan, Hyundai, Honda and Mazda.
In The Surprise Market for 2023 we highlighted Japanese manufacturers were going to finally pass on the import cost pressures from 2022 through higher prices and it looks like this is finally happening. As a reminder autos are one of the ‘Untouchable’ sectors (Untouchable #4). Sectors at all time low valuations which nobody likes.
Banks are still a top sector and benefitting from the higher rate environment, especially in Italy.
We flagged the emergence of airlines a few months ago and they keep gaining momentum. Read Untouchable #5 if you want an idea what is going on there.
In Software Sega Sammy, Shopify, Twilio and 360 Security in China score the best.
Below is the link to the entire YWR Global Factor Model database for June.