We wrote in our 2016 Outlook Report that we favor stocks above commodities and currencies in 2016, but that increased market volatility should be taken seriously. Volatility also implies opportunities. We identified the following key success factors for investors in 2016:
- Patience: wait for a correction to take place, i.e. wait for a limited number of windows throughout the year to take positions (entry and exit).
- Precision: the timeslot to take positions will be limited, so picking the right timing will be key, but simultaneously the number of winning stocks will be restricted, so stock picking will be key.
- Perseverance: dedication to research the market in order to identify the trends that are unfolding across markets. Most likely, the time spent in research will not be rewarded in 2016.
Stock picking is an important challenge in 2016, combined with a focus on the very best quality names. The companies that truly deliver added value, and, hence, growth. That is reason why we dedicate a section to ‘momentum stocks’.
As we believe the crude oil sell off is largely over, and that crude will ease the pressure on stocks, as explained here (readers are recommended the first chart in the article which shows the correlation between panic in crude and the stock market), now is the time to consider some long term momentum stocks. We pick out 3 great companies with amazing stock charts.
First, the smallest of the three names is Extra Space Storage, with a market cap of $11B, active in the real estate market. The company is growing fast across the U.S., so it has still quite some growth potential.
Second, Fiserv is a $20B company active in the payment industry (hardware and processing). Its growth figures are amazing.
Third, Nike could be a giant, but it is doing extremely well.
We are not exploring these stocks in detail, but we are offering their charts as inspiration. Investors should do their own due diligence.
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