June 11, 2022

Safe Ports in the Data Storm

Are you familiar with the abbreviation TL;DR?

It means “too long; didn’t read.”

The message seems straightforward, but it doesn’t necessarily mean the message is verbose or superfluous – it often just means that there is too much information to take in.

That’s kind of how it feels with all the economic numbers coming in. Inflation, jobless claims, oil prices/supply, China lockdowns, war in Ukraine, political crises in the U.S. and UK…it all seems to be coming at us in one big rush. So, what are we supposed to make of all this?

The biggest headline as I write on Friday is the consumer price index coming in at 8.6% in May – the fastest increase since December 1981, significantly above where surveys of economists expected, and higher than the 8.3% recorded in April. Stocks are sinking on the news.

But there was plenty of other economic news this week. In brief…

• Mortgage demand fell to its lowest level in 22 years.
• Commercial property sales fell 16% in April year-over-year. This was the first decrease in sales in more than a year.
• We’ve seen announcements for lowered guidance from Microsoft and other tech players, as well as retailers such as Gap and Target.
• On Thursday, the Labor Department reported that jobless claims for the week ending June 4 totaled 229,000, well ahead of the 210,000 expected.
• The price of Brent Crude oil got as high as $124 a barrel this week, and as I write Friday morning, it’s sitting at $122.86.



• The European Central Bank left its key interest rate at 0.5% but announced it intends to raise its interest rate by 25 basis points in July. This comes as it announced inflation in the euro area hit a record high of 8.1% in May.
• Both oil and European inflation numbers are affected by the Russian invasion of Ukraine that shows no signs of ending soon.

So, what are American investors to make of all this?

There’s always a bull market somewhere…

Late last year, legendary investor Louis Navellier started moving his subscribers into stocks that would benefit in an inflationary environment. The Friday numbers disappointed him but reaffirmed his stock selections. From a Friday update to Growth Investor subscribers….

…Food prices rose 1.2% in May and have risen 10.1% in the past 12 months.  Energy prices surged 3.9% in May and 34.6% in the past 12 months, led by gasoline that rose 4.5% in May and 50.3% in the past 12 months.  Also notable is that fuel oil soared 16.9% in May and 106.7% in the past 12 months!  The bottom line is that inflation did not peak in March, as I had earlier hoped.  In the current inflationary environment, companies profiting from inflation, like energy, fertilizer, food and shipping stocks, remain an oasis for investors.

One of his more recent picks, Marathon Oil (MRO), is up more than 40% since he picked it in late February.

Here is more from Louis’ Growth Investor update yesterday.

Considering the persistently elevated crude oil and natural gas prices, it’s no wonder that our Growth Investor Buy Lists are now heavily weighted in energy-related companies. The fact is they have accelerating earnings momentum at a time when earnings momentum is slowing for many S&P 500 companies. FactSet recently reported that analysts have lowered second-quarter earnings estimates for seven of 11 sectors, but analysts have upped energy earnings estimates by a whopping 29.4%.

Our Growth Investor companies have certainly benefited from these positive analyst revisions, as well as increased attention from investors. In fact, the majority of the oil and gas companies in the High-Growth Investments and Elite Dividend Payers Buy Lists have rallied between 3% and 10% over the past two weeks. And as second-quarter earnings are released in July, I anticipate these stocks will continue to climb and lead the market higher.

So, in my opinion, we’re well-positioned to prosper in the current inflationary environment.

Louis has recently recorded a brand-new message about the oil markets that you can access by clicking here.

Eric Fry also saw the oil opportunities coming late last year…

And he positioned his readers to take advantage.

In the December issue of Investment Report, I told my readers a tightening oil market coupled with rising inflation provided ample reason to add an oil stock (which we did). I reiterated in January that these tailwinds meant oil stocks would likely deliver market-beating results in 2022.

To be honest, I didn’t expect this much outperformance this soon, but that was before Russia’s invasion of Ukraine.

I continue to expect oil stocks to outperform because of supply and demand, the two most basic forces moving any market.

Just two weeks ago in Investment Report, Eric sold Rattler Midstream LP (RTLR) and captured a 20% return in two months, as compared to the S&P’s 10% loss over the same period. He sold only because Rattler became a takeover target of its parent company Diamondback Energy Inc. (FANG).

He replaced that play with Antero Midstream Corp., which is up almost 3% in about 2 weeks.

You can get a lot more information on Eric’s winning energy plays in Investment Report.

Enjoy your weekend,

Luis Hernandez
Editor-in-Chief, InvestorPlace