With the S&P 500 SPX, +0.52 percent at a new high and possibly more highs on the way, we’re heading into jobs data on Friday. It could also be the last spark of market fervor before the summer heat sets in. In a note, Saxo Bank’s chief investment officer, Steen Jakobsen, said, “Sluggishness in the wake of U.S. data today could mean a summer of low volatility until the Fed’s Jackson Hole conference rolls into view in late August, although we also have a July 28 FOMC [Federal Open Market Committee] meeting.”
Markets may also shrink ahead of the July 4 holiday, which is shaping up to be a huge one given the lack of COVID-19 vaccines and a lack of hope a year ago. Richard de Lisle, the manager of the VT De Lisle America Fund, has some small-cap stock ideas that are prepared to benefit from Independence Day. They are the “best long-term asset class in the world,” according to his firm, and he claims they aren’t too expensive yet.
Performance of the VT de Lisle America Fund compared. the S&P 500.
VT de Lisle is a company based in Lisle, France.
Fears of inflation and overvaluation have pushed investors towards smaller companies, which are seen as value stocks and better bets in an economic recovery than growth and technology names. The Russell 2000 RUT, +0.81 percent has gained roughly 18 percent this year, edging ahead of the larger indices. OneWater Marine ONEW, -1.14 percent, is the first stock to be mentioned.
In an emailed letter, he wrote, “Marinas have come back to life in lockdown and [are] again reopening, but OneWater is still selling at just six times their earnings this year.” He continued, “It is a consolidator, with sales over a billion and rising fast, and it still has a market cap of $620 million.” The company’s stock has risen 43 percent this year, despite the fact that it only went public in January of last year. Johnson Outdoors JOUT, -0.28 percent, which makes fishing gear, tents, canoes, and other outdoor gear, is another favorite of De Lisle’s. “Even though we’ve had it since it was $9 in 2011 (and it’s now worth $122), we bought some more today [July 1] since it’s still cheap,” he explained. Due to social isolation, the great outdoors became even more popular last year, and he says some of those behaviors are lasting. “This company has grown earnings for ever on just 2/3 the market’s price earnings ratio, but has pulled back from $154 in case it was all a one-off. “It isn’t,” he stated emphatically. Cedar Fair FUN, +1.07 percent, is another company that owns and manages amusement parks like Knott’s Berry Farm. “As we look to the past for nostalgia, we expect Cedar Fair to set attendance records in the future. It remains a huge recovery play prepared to display its new earnings strength, although being well below prior glories at $70 (now valued at $45) and with debt accrued during closed periods manageable,” he said. Build-A-Bear Workshop BBW, +1.85 percent is the manager’s final pick, which announced record earnings in March. This year, the stock has increased by 312 percent. “All of the wonderful memories are pouring back as people recall this powerful brand,” de Lisle said. “The bears are on their way out the door, but non-children now account for 40% of their company, which is rapidly rising online. “They’ll be one of the cheapest retailers on the High Street if they keep this earnings turnaround going,” he said. To the moon, to the moon, to the moon, to the moon, to the moon, to the moon, to the moon Along with European equities SXXP, +0.34 percent, Dick Stock futures ES00, +0.10 percent YM00, +0.06 percent NQ00, +0.24 percent are inching up ahead of jobs data.
Chinese equities 000300, -2.84 percent and Hong Kong stocks HSI, -1.80 percent fell in response to Chinese President Xi Jinping’s address the day before, in which he warned of “broken skulls and bloodshed” for anyone who tries to force his country around. Economists forecast a job gain of 706,000 in June, which would be the most since March if it happens. At the same time, we’ll have the May trade deficit, followed by factory orders. Shares of Charles Schwab SCHW, +1.04 percent are falling after the financial services company revealed that the Securities and Exchange Commission is investigating its digital advising business and expects to take a $200 million penalty as a result. Virgin Galactic SPCE, -6.11 percent stock is jumping after the spaceflight business announced that founder Richard Branson will be aboard the company’s next test flight, perhaps beating Amazon AMZN, -0.21 percent CEO Jeff Bezos to the punch. Oil prices are lower, with CL.1, -0.20 percent BRN00, -0.22 percent investors keeping a watch on the Organization of Petroleum Exporting Countries and its partners, who postponed a decision on further relaxing supply restrictions on Thursday. The COVID-19 vaccination from Johnson & Johnson JNJ, +0.74 percent has showed potential in protecting against the more virulent delta coronavirus type. And while Euro Cup soccer passion is already gripping the continent, the World Health Organization has warned that all of the unity at stadiums could result in a flood of new COVID-19 infections. Reads at random He’s on the road throughout Europe, creating mayhem. Will you please leave now, Wally the Walrus? The crocodile cruising through this Indian village is in the same boat. Need to Know starts early and is updated until the opening bell, but you can sign up to have it delivered to your inbox all at once by signing up here. At around 7:30 a.m. Eastern, the emailed version will be sent out. Do you want to know what’s in store for the rest of the day? Sign up for The Barron’s Daily, a daily investor briefing with exclusive insight from Barron’s and MarketWatch writers./n
