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Sabrient Quantitative Investment Research

Financial Advisors & Investment Professionals

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News & Announcements - 2020                                      USER GUIDE

2-13-20:  Earnings Busters Alerts for Friday, 2-14-20
    BUY:  Winnebago Industries Inc. (WGO)
    SELL:  SS&C Technologies Holdings, Inc. (SSNC)
Details are in the Earnings Busters newsletter.

2-11-20:  Weekly Stock Ratings Changes Now Available
This week's Stock Ratings Changes report is available for downloading.

1-30-20:  Earnings Busters Alerts for Friday, 1-31-20
    BUY:  Huntington Ingalls Industries Inc. (HII)
    SELL:  Alaska Air Group Inc. (ALK)
Details are in the Earnings Busters newsletter.

1-28-20:  Weekly Stock Ratings Changes Now Available
This week's Stock Ratings Changes report is available for downloading.

1-21-20:  Sector Detector: Big hopes for 2020 ride on earnings growth and capex revival
by Scott Martindale
President and CEO, Sabrient Systems

As the New Year gets underway, stocks have continued their impressive march higher. Comparing the start of this year to the start of 2019 reveals some big contrasts. Last January, the market had just started to recover from a nasty 4Q18 selloff of about 20% (a 3-month bear market?), but this time stocks have essentially gone straight up since early October. Last January, we were still in the midst of nasty trade wars with rising tariffs, but now we have a "Phase 1" deal signed with China and the USMCA deal with Mexico and Canada has passed both houses of Congress. At the beginning of last year, the Fed had just softened its hawkish rhetoric on raising rates to being "patient and flexible" and nixing the "autopilot" unwinding of its balance sheet (and in fact we saw three rate cuts), while today the Fed has settled into a neutral stance on rates for the foreseeable future and is expanding its balance sheet once again (to shore up the repo market and finance federal deficit spending (but don't call it QE, they say!). Last year began in the midst of the longest government shutdown in US history (35 days, 12/22/18-1/25/19), but this year's budget easily breezed through Congress. And finally, last year began with clear signs of a global slowdown (particularly in manufacturing), ultimately leading to three straight quarters of YOY US earnings contraction (and likely Q4, as well), but today the expectation is that the slowdown has bottomed and there is no recession in sight. Read more at Scott Martindale's blog

1-17-20: Baker's Dozen Model Portfolio for 1st Quarter 2020 Has Launched
Starting this year, Sabrient's Baker's Dozen portfolios will be published quarterly rather than monthly. Commensurately, each portfolio is designed to be held for 15 months.

The 1st Quarter 2020 Baker's Dozen Model Portfolio was launched on January 17, 2020. This portfolio, like all Baker's Dozen portfolios, comprises 13 top-ranked stocks from a cross-section of market caps and industries based on our GARP approach, i.e., growth at a reasonable price. Sabrient believes each of these stocks is positioned to perform well for the next 15 months. The portfolio will terminate on April 20, 2021. To track the performance of this and all Baker's Dozen portfolios, please visit the Sabrient Baker's Dozen website.

1-16-20:  Earnings Busters Alerts for Friday, 1-17-20
    BUY:  Ciena Corporation (CIEN)
    SELL:  Commercial Metals Company (CMC)
Details are in the Earnings Busters newsletter.

1-7-20:  How to identify short candidates through anomalous insider selling activity
by Dominic Finney
Senior Analyst & Chief Technical Editor
Gradient Analytics LLC (a Sabrient Systems company)

Perhaps the most reliable shortcut to identifying a company at elevated risk of a downturn in its share price is looking at how executives and directors use their equity instruments. This might sound too simple to be predictive -- something that would be quickly understood by the market and integrated into investors' thinking on a scale that would cause the "edge" to disappear. But there are complications that have prevented that from happening, on which I will elaborate shortly. But first, let's look at some recent examples.

Over the past two years, Gradient Analytics has published five brief "snapshot" reports based on our Equity Incentive Analytics examining signs of unusual and concerning equity use by executives and directors. The subject companies were Amarin (AMRN), United States Cellular (USM), WW International (WW, or WTW when we wrote on it), Supernus Pharma (SUPN), and Magellan Health (MGLN). All five of the reports preceded significant declines in company share price, with four of the five stocks showing double-digit declines over the ensuing three months and all of them hitting double-digit declines over six months. Read more

1-2-20:  Earnings Busters Alerts for Friday, 1-3-20
    BUY:  Advanced Micro Devices (AMD
    SELL:  Boyd Gaming Corp (BYD)
Details are in the Earnings Busters newsletter.

2019

12-31-19:  Weekly Stock Ratings Changes Now Available
This week's Stock Ratings Changes report is available for downloading.

12-20-19: Baker's Dozen Model Portfolio for December 2019 Has Launched
Sabrient Baker's Dozen Model Portfolio for December 2019 was launched on December 20, 2019. This portfolio, like all Baker's Dozen portfolios, comprises 13 top-ranked stocks from a cross-section of market caps and industries based on our GARP approach, i.e., growth at a reasonable price. Sabrient believes each of these stocks is positioned to perform well for the next 12 months. The portfolio will terminate on December 21, 2020. To follow the performance of this and previous Baker's Dozen portfolios, please visit Sabrient Baker's Dozen website.

12-19-19:  Earnings Busters Alerts for Friday, 12-20-19
    BUY:  Charter Communications, Inc (CHTR)
    SELL:  KEMET Corporation (KEM)
Details are in the Earnings Busters newsletter.

12-13-19:  Sector Detector: Stellar year for stocks now suggests strong follow-through in 2020
by Scott Martindale
President, Sabrient Systems

As yet another decade comes to a close, the US continues to enjoy the longest economic expansion on record. And as if to put a cherry on top, the economic reports last week hardly could have been more encouraging for the New Year, propelling the S&P 500 index into its third major technical breakout since the recovery from the financial crisis began well over 10 years ago. In particular, the jobs report blew away estimates with 266,000 new jobs, the prior month's report was revised upward, and the unemployment rate fell to a 50-year low of 3.5%. Importantly, those new jobs included 54,000 manufacturing jobs. Indeed, a growing view is that the manufacturing/industrial segment of the economy has bottomed out along with the corporate earnings recession and capital investment, with an economic upswing in the cards, which has been a key driver for the resurgence in value and cyclical stocks with solid fundamentals.

The good news kept coming, with the Consumer Sentiment report jumping back up to 99.2 (and averaging 97.0 over the past three years, which is the highest sustained level since the Clinton administration's all-time highs), while wages are up 3.1% year-over-year, and household income is up 4.8% (to the highest levels in 20 years). And with capital rotating out of pricey bonds into riskier assets, it all seems to me to be more indicative of a recovery or expansionary phase of the economic cycle -- which could go on for a few more years, given a continuation of current monetary and fiscal policies and a continued de-escalation in trade wars. Read more at Scott Martindale's blog

12-12-19: New Small Cap Growth UIT Launched
The 25th Sabrient Small Cap Growth UIT Series (FAKDPX) was launched by First Trust Portfolios on December 12, 2019. The portfolio invests in top-ranked (at the time of their selection) small-cap stocks that represent a cross-section of industries that Sabrient believes are positioned to perform well in the coming year. The stocks are GARP stocks -- stocks that represent "growth at a reasonable price" -- and they are meant to be held for the full term of the trust, which terminates March 12, 2021. For a prospectus or fact sheet, please visit First Trust Portfolios.

12-05-19:  Earnings Busters Alerts for Friday, 12-6-19
    BUY (RENEW):  NMI Holdings, Inc. (NMIH)
Details are in the Earnings Busters newsletter.

12-3-19:  Weekly Stock Ratings Changes Now Available
This week's Stock Ratings Changes report is available for downloading.

11-21-19:  Earnings Busters Alerts for Friday, 11-22-19
    BUY:  Telefonaktiebolaget LM Ericsson (ERIC)
    SELL:  The Mosaic Company (MOS)
Details are in the Earnings Busters newsletter.

11-20-19: Baker's Dozen Model Portfolio for November 2019 Has Launched
Sabrient Baker's Dozen Model Portfolio for November 2019 was launched on November 20, 2019. This portfolio, like all Baker's Dozen portfolios, comprises 13 top-ranked stocks from a cross-section of market caps and industries based on our GARP approach, i.e., growth at a reasonable price. Sabrient believes each of these stocks is positioned to perform well for the next 12 months. The portfolio will terminate on November 23, 2020. To follow the performance of this and previous Baker's Dozen portfolios, please visit Sabrient Baker's Dozen website.

11-19-19:  Weekly Stock Ratings Changes Now Available
This week's Stock Ratings Changes report is available for downloading.

11-12-19:  Sector Detector: The ducks continue to line up positively for equities
by Scott Martindale
President, Sabrient Systems

The market this year has been oscillating between fear and optimism, risk-off and risk-on. Until 8/27/19, risk-off defensive sentiment was winning, but since that date a risk-on sentiment has taken hold, and the historic divergence favoring secular growth, low-volatility and momentum factors, defensive sectors, and large caps (i.e., late-stage economic cycle behavior) over cyclical growth, value and high-beta factors, cyclical sectors, and small-mid caps (i.e., expansionary cycle behavior) continues to reverse, as fickle investors have become optimistic about at least a partial resolution to the trade war (including the lifting of tariffs), an improving outlook for 2020-21 corporate earnings, and resurgent capital investment. Investors have moved from displaying tepid and fleeting signs of risk-on rotation to full-blown bullish enthusiasm and reluctance to sell in a fear of missing out (FOMO), even though the short-term technical picture has become overbought.

The late-August risk-on rotation came in the nick of time. Last year at that same time of the year, the S&P 500 was marching higher until peaking on 9/20/18, but it was doing so on the backs of defensive sectors along with secular-growth Tech mega-caps, and I was opining at the time that the rally would fizzle if there wasn't some rotation into the risk-on cyclicals and small-mid caps -- which as you know didn't happen, leading to the Q4 selloff. But, happily, this year has played out quite differently. Read more at Scott Martindale's blog

11-8-19:  Earnings Busters Alerts for Friday, 11-8-19
    BUY:  Marriott Vacations Worldwide Corporation (VAC)
    SELL:  AAR Corp. (AIR)
Details are in the Earnings Busters newsletter.

11-5-19:  Weekly Stock Ratings Changes Now Available
This week's Stock Ratings Changes report is available for downloading.

10-25-19:  Aggressive accounting of restructuring costs and other non-GAAP adjustments: Where is the SEC?
by Ryan Frederick
Equity Analyst, Gradient Analytics LLC (a Sabrient Systems Company

(Note: Many of Sabrient's newsletter subscribers have expressed interest in receiving articles on additional topics, including forensic accounting and earnings quality from our wholly-owned subsidiary Gradient Analytics.)

In 2003, the SEC first officially adopted rules (following Sarbanes-Oxley in 2002) related to the reporting of non-GAAP financial metrics. The new regulations called for a reconciliation of GAAP versus non-GAAP results to be included in various investor resources and to refrain from excluding non-recurring items from non-GAAP metrics if they are reasonably likely to reoccur, which is subject to wide interpretation. Since then, it seems the perceived importance among investors of non-GAAP financial performance has been elevated above traditional GAAP measures. Between 2015 and 2017, less than 10.0% of companies in the S&P 500 did not report a non-GAAP income calculation. However, the ability for management to subjectively decide what is or is not relevant to a company's core business leaves plenty of room for earnings manipulation. Read more . . .

10-24-19:  Earnings Busters Alerts for Friday, 10-25-19
    BUY:  KB Home (KBH)
    SELL:  HollyFrontier Corp (HFC)
Details are in the Earnings Busters newsletter.

10-22-19:  Weekly Stock Ratings Changes Now Available
This week's Stock Ratings Changes report is available for downloading.

10-18-19: Baker's Dozen Model Portfolio for October 2019 Has Launched
Sabrient Baker's Dozen Model Portfolio for October 2019 was launched on October 18, 2019. This portfolio, like all Baker's Dozen portfolios, comprises 13 top-ranked stocks from a cross-section of market caps and industries based on our GARP approach, i.e., growth at a reasonable price. Sabrient believes each of these stocks is positioned to perform well for the next 12 months. The portfolio will terminate on October 19, 2020. To follow the performance of this and previous Baker's Dozen portfolios, please visit Sabrient Baker's Dozen website.

10-16-19:  Sector Detector: Stocks are itching for a year-end breakout rally, but who will lead it?
by Scott Martindale
President, Sabrient Systems

The early weeks of September were looking so promising as a brief but impressive surge gave hope of a revival in the long-neglected market segments. This sustained risk-on rotation seemed to be marking a bullish change of market character from the risk-off defensive sentiment that I have been writing about extensively for the past 18 months (ever since the China trade war escalated in June of last year), specifically the massive divergence favoring the low-volatility, growth, and momentum factors, defensive sectors, and large caps over the value and high-beta factors, cyclical sectors, and small-mid caps.

But then, for the next few weeks, those risk-on market segments were once again lagging, as fickle investors keep returning to stocks displaying stronger balance sheets, high dividend yields, and/or secular growth stories -- in spite of high valuations -- rather than the more speculative cyclical growth stocks selling at attractive valuations that typically lead an upside breakout. It appeared that the fledging bullish rotation was caput -- or perhaps not. Suddenly, there have been positive developments in the trade negotiations and in the Brexit saga, and the past several days have brought back renewed signs of a pent-up desire to take stocks higher. Signs of a better-than-expected Q3 earnings season may be the final catalyst. Read more at Scott Martindale's blog

10-15-19:  Weekly Stock Ratings Changes Now Available
This week's Stock Ratings Changes report is available for downloading.

10-10-19:  Earnings Busters Alerts for Friday, 10-11-19
    BUY:  Assurant, Inc. (AIZ)
    SELL:  II-VI Incorporated (IIVI)
Details are in the Earnings Busters newsletter.

10-8-19:  Weekly Stock Ratings Changes Now Available
This week's Stock Ratings Changes report is available for downloading.

10-7-19:  New Sabrient Dividend UIT Launched
A new Sabrient Dividend UIT Portfolio (Ticker: FGSCIX) -- 29th in the series -- was launched by First Trust Portfolios on October 7, 2019. This UIT seeks companies with above-average total return through a combination of capital appreciation and dividend income. The stocks are selected through an investment strategy process developed by Sabrient. The portfolio will terminate on October 7, 2021. For more information, a prospectus, or a fact sheet, please visit First Trust Portfolios.

10-7-19:  New Dividend Opportunity UIT Launched
The seventh portfolio in the Sabrient Dividend Opportunity UIT Series (Ticker: FHBTLX) was launched by First Trust Portfolios on October 7, 2019. This UIT seeks companies with above-average total return through a combination of capital appreciation and dividend income. The stocks are selected through an investment strategy process developed by Sabrient. The primary difference between the Dividend Opportunity portfolio and the other Sabrient Dividend portfolios, is the length of term. The Dividend portfolios have a 2-year term, while the Dividend Opportunity Portfolio has a 15-month term,. This Dividend Opportunity portfolio will terminate on January 7, 2021. For more information, a prospectus, or a fact sheet,please visit First Trust Portfolios.

10-1-19:  Weekly Stock Ratings Changes Now Available
This week's Stock Ratings Changes report is available for downloading.



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