Focus on Quantum Cash While Waiting for Rate Cuts

By TradeSmith Research Team

Editor’s Note: Louis Navellier is a legendary quant investor whom I admire, am fortunate enough to consider a mentor and friend, and continue to meet with weekly.

I’ve mentioned Louis before here in Power Trends. He has helped a lot of people make money in stocks through the years, and today I wanted to let him share some of his latest insights with you.

He and I agree most of the time. I’m a fan of his incredibly successful system, which he built decades ago after a “failed” college assignment. He was supposed to match the S&P 500’s performance, but instead he beat it. And he’s continued to trounce it ever since.

Louis is also a fan of my Quantum Edge system that I share with you here in Power Trends and that has also been phenomenally successful.

I guess we’re just a couple of stock market and numbers geeks, which comes in handy at a time when data is about the only thing we can trust. We like to learn from each other, analyze stocks, and most importantly, make money for our readers and ourselves.

With that said, I’ll turn today’s Power Trends over to Louis…

All About Earnings

I’ve been in the investing game for more than 40 years now, and I can say confidently that earnings work 70% of the time.

Considering that much of the market’s strength over the past five weeks was driven by strong quarterly results and that we still have a few more weeks left in earnings season, I think stocks can continue to meander higher.

We may see some stocks back and fill around mid-February in order to digest their recent gains. But overall, February could be a relatively positive month.

The reality is the fourth quarter is typically the strongest of the year for companies, and the fourth-quarter earnings season commences in January. So, stocks tend to consolidate these gains in February.

That’s a strong possibility this year, considering the market’s strength in November, December, and January.

But after that, I think it will be off to the races right up through the election. I know Jason is also highly bullish on 2024.

The fact is that year-over-year earnings comparisons are favorable this quarter, and they’ll remain that way for at least two more quarters this year.

Right now, tech companies, especially semiconductor names – and Jason recommends several – are posting wave-after-wave of positive earnings results this quarter. And I fully expect them to remain market leaders, thanks to the artificial intelligence boom.

All in all, I fully expect the market to continue rewarding fundamentally superior stocks, just as it does during almost every earnings season. And that’s why my readers and I remain focused on these stocks, as Jason is with his readers.

Jason has often said that the “earnings apocalypse” so many have waited for since the time of COVID has never materialized. And he’s right. Earnings continue to work.

In a recent stretch, nine of my Accelerated Profits Buy List stocks reported their latest quarterly results. Of these nine companies, eight topped analysts’ estimates, and five rallied to new 52-week highs.

Of course, I didn’t just pick these names out of a hat… I used my Quantum Cash system to find the best stocks. This system helps me pinpoint companies that are primed to post strong earnings results – sending their stocks soaring as a result.

At its core, Quantum Cash uses a series of AI algorithms to constantly scour massive amounts of data looking for patterns. Many of these patterns are nonlinear, meaning you’re not going to be able to see them with the naked eye. But the more data you feed it, the more patterns it can spot.

Now’s the Time to Focus on Earnings

Until the Federal Reserve cuts rates, I think investors are better served if they focus on earnings season. The reality is there is a lot of money to be made this earnings season.

Case in point: Powell Industries, Inc. (POWL).

In case you’re wondering, Powell Industries has nothing to do with Fed Chair Jerome Powell. Rather, the company develops and manufactures equipment and systems for electrical infrastructure. These systems are used by petrochemical plants, as well as pulp and paper mills, oil and gas producers, utilities, and transportation facilities.

POWL is also a small-cap stock that’s flown mostly under Wall Street’s radar… until it posted phenomenal fourth-quarter earnings results last Tuesday evening. First-quarter earnings surged 1,908.3% year-over-year to $24.1 million, or $1.98 per share, compared to $1.2 million, or $0.10 per share, in the first quarter of 2023. Analysts only expected earnings of $0.84 per share, so Powell Industries posted a whopping 135.7% earnings surprise.

Company management noted that the first quarter is typically a slower period, but total revenue rose 53% year-over-year to $194.0 million in the first quarter of fiscal year 2024. That topped estimates for $182.04 million by 6.6%.

POWL skyrocketed more than 50% to a new record high on Wednesday following its blowout quarterly report.

POWL’s phenomenal results might have taken Wall Street by surprise, but I knew they were coming… thanks to my Quantum Cash system. It flagged Powell Industries back in December, well before the stock took off.

In the end, earnings move stock prices, and quantitative analysis helps us spot those earnings monsters early. I wish you and Jason continued success relying on quantitative analysis that is now enhanced by AI and computing breakthroughs that make it more powerful and more effective than ever.

To learn more about my Quantum Cash system and how I incorporate it into Accelerated Profits, click here.


Louis Navellier