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History has shown stocks that have been beaten down in the 4th quarter of the year
tend to bounce in the January. In this post we've outlined 10 stocks that have been beaten down in q4 and are undervalued according to our Fair Value Indicator.
The January effect is a phenomenon that has been observed in the stock market, in which stocks that have sold down in the fourth quarter of the previous year tend to outperform in January. This phenomenon has been studied by researchers and investors for many years, and there is some evidence to support its existence.
One theory for the existence of the January effect is that it is related to the behaviour of tax-loss selling. At the end of the year, investors who have realized losses on their investments may sell those stocks in order to offset gains and reduce their tax liability. This selling pressure can drive down the prices of stocks that have already been performing poorly, which may then bounce back in January as investors look to take advantage of the lower prices.
Another theory is that the January effect may be related to the "turn of the year" effect, in which investors tend to re-evaluate their portfolios and make changes at the beginning of the year. This may involve selling underperforming stocks and buying those that are expected to do well.
There have been numerous studies conducted to examine the January effect and its potential causes. While some studies have found evidence to support the existence of the effect, others have not. It is important to note that the January effect is not a guarantee, and it is not certain that stocks that have sold down in the previous quarter will outperform every year in January.
Below are 10 stocks from the S&P 500 index that are in the bottom decile (1/10th) of the index for performance in Q4 2022 and are also undervalued high quality stocks according to our Fair Value and Business Quality Score indicators. Snapshots of the respective weekly charts along with our indicators and a 50-bar moving average are shown.
Stock #1: Tesla - $TSLA
Tesla is a global leader in electric vehicles, energy storage systems, and renewable energy generation. The company was founded in 2003 with the goal of producing electric vehicles at an affordable price, and has since grown to become one of the most innovative and successful companies in the industry.
Tesla offers a range of electric vehicles, including sedans, SUVs, and semi trucks. The company's vehicles are known for their advanced technology, including features such as self-driving capabilities and over-the-air software updates. Tesla also produces a range of energy storage systems for residential, commercial, and utility-scale use, as well as solar panels and solar roof tiles for generating renewable energy.
In addition to its products, Tesla is also focused on advancing sustainable transportation and energy solutions through its research and development efforts and partnerships with leading organizations in the industry. The company has a strong reputation for innovation and is constantly pushing the boundaries of what is possible in the electric vehicle and renewable energy markets.
Stock #2: Catalent - $CTLT
Catalent is a global provider of advanced delivery technologies, development, and manufacturing solutions for drugs, biologics, gene therapies, and consumer health products. The company has a network of over 30 locations around the world, including research and development centers, manufacturing facilities, and warehousing and distribution centers.
Catalent's advanced delivery technologies include a range of drug delivery systems such as oral, injectable, and inhaled products, as well as specialized technologies for targeting specific areas of the body. The company also offers a range of development and manufacturing services, including formulation development, clinical supply manufacturing, and commercial scale production.
In addition to serving the pharmaceutical and biotechnology industries, Catalent also provides solutions for the consumer health and wellness market, including dietary supplements, over-the-counter products, and skin care products. The company has a strong track record of innovation and has developed a number of proprietary technologies and platforms to support its clients' development and manufacturing needs.
Stock #3: Generac Holdings - $GNRC
Generac Holdings is a leading manufacturer of a range of power generation products and engine-powered tools. The company is known for producing high-quality, reliable products that are used in a variety of applications, including residential, commercial, and industrial settings.
Generac's product offerings include a range of portable, residential, and commercial standby generators, as well as pressure washers, portable generators, and a range of engine-powered tools such as portable air compressors and light towers. The company's products are known for their durability and performance, and are used in a variety of industries, including construction, manufacturing, and agriculture.
In addition to its core product lines, Generac also offers a range of complementary products and services, such as transfer switches, switchgear, and maintenance and support services. The company has a strong track record of innovation and is constantly working to develop new and improved products to meet the changing needs of its customers.
Stock #4: Lincoln National Corporation - $LNC
Lincoln National Corporation is a financial services company that provides a range of insurance and financial products and services to individuals, businesses, and other organizations. The company operates through a number of subsidiaries, including Lincoln Financial Group, which offers a range of insurance and investment products, and Lincoln Financial Distributors, which provides distribution and support services to financial advisors and other intermediaries.
Lincoln National's product offerings include a range of life insurance, annuity, and retirement products, as well as group benefits and other insurance products. The company also offers investment and wealth management services, including mutual funds, managed accounts, and advisory services.
In addition to its core product lines, Lincoln National also provides a range of complementary services, such as consulting and advisory services, estate planning, and employee benefits consulting. The company has a strong reputation for financial strength and stability and is committed to helping its customers achieve their financial goals.
Stock #5: SVB Financial Group - $SIVB
SVB Financial Group is a financial services company that provides a range of banking and financial products and services to innovative companies and their investors. The company operates through a number of subsidiaries, including Silicon Valley Bank, which provides a range of commercial banking services to technology, life science, and other innovative companies, and SVB Capital, which provides venture capital and private equity funding to emerging growth companies.
SVB Financial Group's product offerings include a range of banking and lending products, such as business loans, lines of credit, and equipment financing, as well as deposit and cash management services. The company also offers investment and wealth management services, including private banking, wealth planning, and investment management.
In addition to its core product lines, SVB Financial Group also provides a range of specialized services to its clients, including international banking, global Treasury management, and corporate finance. The company has a strong reputation for serving the needs of innovative and growth-oriented companies and is committed to helping its clients succeed.
Stock #6: Signature Bank - $SBNY
Signature Bank is a full-service commercial bank that provides a range of banking and financial products and services to businesses, professionals, and individuals. The bank operates through a network of branches in the New York metropolitan area and has a focus on providing personalized service to its customers.
Signature Bank's product offerings include a range of deposit and cash management products, such as checking accounts, money market accounts, and certificates of deposit. The bank also offers a range of lending products, including commercial loans, lines of credit, and real estate financing. In addition, the bank provides a range of specialized financial services, including international banking, trade finance, and private banking.
Signature Bank is known for its commitment to providing exceptional service to its customers and has a reputation for being responsive and flexible in meeting their financial needs. The bank has a strong track record of growth and stability and is well-regarded in the financial industry.
Stock #7: M&T Bank Corporation - $MTB
M&T Bank Corporation is a regional bank holding company that provides a range of banking and financial products and services through its subsidiaries. The company operates a network of branches in the eastern United States, with a focus on the Mid-Atlantic and Northeastern regions.
M&T Bank's product offerings include a range of deposit and cash management products, such as checking and savings accounts, money market accounts, and certificates of deposit. The bank also offers a range of lending products, including mortgages, home equity loans, and commercial loans, as well as credit cards and personal loans. In addition, the bank provides a range of specialized financial services, including wealth management, trust and estate planning, and commercial leasing.
M&T Bank is known for its strong financial performance and stability and has a reputation for providing excellent service to its customers. The bank has a long history of growth and has a strong presence in the communities it serves.
Stock #8: NRG Energy - $NRG
NRG Energy is a leading integrated power company that generates, sells, and delivers electricity and natural gas to customers in the United States. The company has a diverse portfolio of power generation assets, including natural gas, coal, nuclear, and renewable energy sources, and is one of the largest independent power producers in the country.
NRG Energy's product offerings include a range of electricity and natural gas plans for residential, commercial, and industrial customers. The company also provides a range of energy solutions and services, including demand response, energy efficiency, and renewable energy solutions. In addition, NRG Energy has a strong presence in the retail electricity and natural gas markets, with a network of retail brands that serve customers in a number of states.
In addition to its core power generation and energy retail businesses, NRG Energy also has a number of complementary businesses, including a renewable energy development and construction company and a renewable energy yield company. The company has a strong commitment to sustainability and is focused on developing and delivering clean and reliable energy solutions to its customers.
Stock #9: CF Industries Holdings - $CF
CF Industries Holdings is a global leader in the production and distribution of nitrogen fertilizers and other agricultural nutrients. The company operates a network of nitrogen fertilizer manufacturing complexes in the United States and Canada and serves customers around the world.
CF Industries' product offerings include a range of nitrogen-based fertilizers, such as ammonia, urea, and UAN, as well as other specialized fertilizers and chemicals. The company also has a strong presence in the retail fertilizer market, with a network of retail locations and a range of branded products.
In addition to its core fertilizer business, CF Industries also has a number of complementary businesses, including a natural gas liquids business and a phosphate mining and manufacturing business. The company has a strong commitment to sustainability and is focused on developing and delivering innovative solutions to meet the changing needs of the global agriculture industry.
Stock #10: Lumen Technologies - $LUMN
Lumen Technologies (formerly known as CenturyLink) is a leading provider of advanced communications and networking services. The company operates a global network of fiber optic cables and other advanced infrastructure and serves a diverse range of customers in the enterprise, government, and wholesale markets.
Lumen Technologies' product offerings include a range of communications and networking services, such as broadband and internet access, data center and cloud services, and managed network and security services. The company also offers a range of specialized services, such as professional and consulting services, and has a strong presence in the wholesale market, providing a range of network and connectivity solutions to other service providers.
In addition to its core communications and networking business, Lumen Technologies also has a number of complementary businesses, including a managed security services business and a data center colocation business. The company is known for its innovation and is constantly working to develop and deliver advanced solutions to meet the evolving needs of its customers.
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