Join Bill Gundersen as he delivers an in-depth analysis of today’s market trends. In this episode, explore the surprising gains in the NASDAQ and examine the implications of the latest sugar high in stock markets. Discover the effects of key financial decisions, such as the future of Obamacare subsidies and their impact on health insurance stocks. Gain insights into the continual growth of S&P earnings and what this could mean for your portfolio.
He’s been seen on CNBC, the Fox News Channel, and the Fox Business Channel. His articles can be found on MarketWatch, Seeking Alpha, thestreet.com, and many other places. He’s the author of the weekly Best Stocks Now newsletter and the inventor of the Best Stocks Now app. He’s president of Gundersen Capital Management. Here is professional money manager Bill Gundersen.
SPEAKER 02 :
And welcome to the Monday Who Lit a Fire Under the Market Here Today edition of the Best Stocks Now show with professional money manager Bill Gunderson, president of Gunderson Capital Management. And I’m here with Barry Kite, our Chartered Financial Analyst and Certified Financial Planner. And look at what we’ve got going on here in the market so far. It’s the NASDAQ that’s really got an eye-popping gain here this morning. It’s up 2%. That equates to 460 points. And that puts the NASDAQ at 23,464 after a pretty tough week. Last week, especially in the AI space, the Dow is up 277, which equates to 60 basis points. That puts the Dow at 47,264. The S&P is up 73. It’s back to 6,800. Maybe we’ll see 7,000 between now and the end of the year. Who knows? Small caps are up 1%. And there is a rebound in Bitcoin, the beleaguered crypto that tested 100,000 a few times, that support level. And it did hold that 100,000 level, which a lot of times those big round numbers do provide support. And it is up today 2,819, and it’s back up to 106,192. But don’t leave out gold. Gold is up 2.1% today. So welcome to today’s Best Stocks Now show with professional money manager Bill Gunderson, president of Gunderson Capital Management, a nationwide fee-based only firm. And Barry, I thought maybe we were going to get a day off tomorrow with Veterans Day looming. No, only the bond pits, only the bond traders, only the bond market will be closed tomorrow. No rest for the wicked. We’ll be here trading stocks tomorrow, but… You know, when’s the last day off we got? It’s been a while.
SPEAKER 01 :
I guess it would be Labor Day. Yeah, Labor Day.
SPEAKER 02 :
Labor Day would be it. Well, we’ll patch it somehow, but we’re not getting any feed from… There he is. Yeah. No. Oh, Labor Day. Okay.
SPEAKER 01 :
Yep. Definitely Labor Day.
SPEAKER 02 :
I’ve been laboring ever since Labor Day. Yeah. Okay. Well, we’ll look ahead to Thanksgiving for a badly needed day off. We’ve been through a lot here on the market the last several weeks. Well, it’s a sugar high today. I don’t know how long-lived it will be, but it appears that they finally are reaching a deal to open the government back up. I don’t know if that’s good news or bad news, really. But I suppose it takes some uncertainty out of the market. It was all around that Obamacare subsidy, which the Republicans did not want to extend that. because you’re basically just paying for people’s premiums, and the money that you’re paying is going to the insurance companies. Yeah, and check out some of the health insurers today. Are they doing well? No, doing terrible.
SPEAKER 01 :
Yeah, they’re down big.
SPEAKER 02 :
Yeah. Yeah. Oh, they’re down. Well, I mean, if you’re going to bypass them and send the subsidy right to the person, you know, for their health care to go out and get your own, you know, through a HCA plan, what do you call it? Yeah, HCA. HSA. And bypass the insurance company. HSA, that’s right. I wouldn’t own a health insurance stock in this environment right now. We’ve got a mess. We’ve got a mess to clean up on aisle number nine. That may be aisle number ten, too, over there. But anyways, that’s the sugar high underneath the market today, opening the government back up, taking that big amount of uncertainty out. And don’t forget, I mean, those 40 million people getting food stamps, they do spend it in the economy. The retailers and whatever, probably mostly convenience stores and grocery stores and things like that and fast food, et cetera. It helps them. So anyways, you’ve got a sugar high going on in the market today. After a fairly kind of rough week, in fact, it was the worst week since April. which we remember April, of course, when the S&P got down to 4,800, and the AI trade was struggling there. Consumer sentiment was kind of sour last Friday. And look, Barry, I’ve also noticed this, all right? I don’t know if this is a big revelation here or whatever, but when that forward P.E. of the S&P gets up to 23%, That’s a ceiling. And the last time we saw 23 was back in the sugar high of 2021. We got up to 23. Well, guess what? Last Monday or Friday, the forward P.E. ratio of the S&P 500 got up to 23. And I put a copy of that chart in the newsletter over the weekend and And that seems to be the ceiling where investors, big ones, especially the institutional boys and girls out there, they see that 23 number on forward PE and they go, you know what, it’s time to take some chips off the table. So we’ll see. What we did last week is we hit 23 earlier in the week, and then the market sold off, right? And we ended the week at 22.5%. So it’s just my guess. We get back up to 23, which could happen today or tomorrow, and your sugar high is gone, and you see the market start backing off again. We’ll see if there’s anything to that magical number of 23. Now, what is the forward P.E. ratio? If we take the number that the S&P 500 is trading at right now, 6,800. It’s right on a round number, 6,800. And if we divide that by the anticipated, the projected earnings of the S&P over the next 12 months, which is something I update every Friday in my newsletter, we get a number. And right now that number is 23X. And keep in mind that over the last decade, the average forward P.E. ratio has been around 19. We’ve stretched it here recently for a couple of reasons. There’s some hyper-growth stocks in the market right now, the Palantirs, the NVIDIAs, the CrowdStrikes of the world. And you’ve also seen a falling interest rate environment, Fed easing, expanding the multiple indexes. Can the multiple go beyond 23 forward PE ratio? Well, it hasn’t over the last 5, 10. You’ve got to go back to 2020 or 2000. You’ve got to go back to the year 2000. So we’ll see whether or not there’s something to that 23 ceiling right now. I think there is. That’s just my opinion. We need the E to keep growing. All right. Yeah, well, I mean, the E can only grow so much. Now, I have good news on the E front. Okay, really good news on the E front. When we started this earnings season, we were expecting 7.5% growth in earnings. That’s the E. And now we’re at 13.5 with about, I think we’ve got 93% of the companies now reporting growth. And we’re at 13.5%. So the E has gone up, but that affects the P-E ratio because that’s the past 12 months. The forward PE ratio, I have seen a little bit of a revision upwards to the E. In other words, anticipated earnings over the next 12 months, but not really enough to move the needle. You know, the other side of that, you’ve got a numerator and a denominator. The denominator is the E, Barry. And it’s pretty hard to move the needle on the E. Unfortunately, the only way to lower that forward PE is for the numerator to come down that’s the stock price and that would take for the s&p to go from 6800 down to maybe 6500 6400 and that would lower your forward pe multiple back to that 22 range which is a distinct possibility so yeah i would rather see the forward earnings go higher but The more likely scenario is for the market to correct somewhat to bring that forward P.E. down. All right. Well, we’ve got a lot of news today. And, you know, with the government opening back up, how many government reports? I saw a list of them that are stacked up, right? And we could get a flood of unemployment numbers, PMI, all these different numbers when the government’s back up and running. You can also brace yourself for that. We’ve got just like lined up on the runway all of these reports. So anyways, we also have some earnings still coming in. 93% however of the S&P 500 companies are now in the books. I think we’re only going to get 11 S&P 500 companies reporting this week and two, count them, two Dow stocks. And then pretty much it’s all in the books after this week. And I’ll give you a little rundown of where we’re at right now when we come back. And welcome back here to the second quarter of today’s Best Stocks Now show. 93% of the companies in the S&P 500 have now reported earnings. 82% have beat their EPS estimates. You know, Barry, if you’re in that 18% that didn’t, you’re way in the minority, right? If you couldn’t even beat the estimates that are usually too low to begin with, you’re very much in the minority. 77% beat their sales estimates. No, you couldn’t even beat the analyst. You sandbagged the analyst and you still couldn’t beat him. So it’s not good. You’re not a very good company in a world where 82% are beating. Growth and earnings for the quarter now expected to be 13.1%. That’s phenomenal. It’s absolutely phenomenal. When we started this quarter, it was 7.3%. And, you know, I hear so much negativity from people. Oh, this and that, and we’ve got this to worry about and this to worry about. But we just said it in the first quarter of the show, the E, the E is the denominator. The earnings drive the market. And that’s why you’re still seeing the market, even though you’ve got an extended market. highly extended pe and forward pe ratio the earnings continue to blow away expectations and even if you look out over the next four quarters you’re looking at about 11 10 to 11 percent growth versus these four quarters that we’re just finishing so it still looks very very good out there the eps number for this quarter will be record earnings for the s&p 500 coming in somewhere in the range of 70.24 that’s going to beat the all-time record of 67.03 that we set last quarter And if you look ahead one year from now, the same comparable quarter is expected to come in at $79 per share, although a lot can happen between now and then. I also put a chart in the newsletter on Friday of these quarterly earnings and the upward slope of these quarterly earnings. Over the last couple of years. And it’s not just earnings, Barry. The revenue growth, the sales growth is going to come in at 8.3%. The five year average has been 7%. The 10 year average has been 5.2%. So 8.3 sales growth is a phenomenal number. It will mark the second highest growth rate in sales. You got to go clear back to 2022. It will also mark the 20th consecutive quarter of revenue growth for the index. 20th consecutive quarter. Now, if I’m not mistaken, that works out to five years straight without a downward. So basically, since COVID, we had a couple of down quarters in there. And let’s take it one step further. The estimated net profit margin for the S&P 500 is 12.8%. The five-year average is 11.7%. Now, obviously, some companies have much higher profit margins. 12.8% is healthy. That’s very healthy for the overall S&P 500. And some companies have very narrow profit margins, much narrower than that. And again, the forward P.E. went down to 22.55 on Friday after the close, after it hit 23. And that seems to be a ceiling right now that we’re going to keep our eye on. And there’s that chart that I put up in the newsletter. And the title of the newsletter was, The Market Has Multiple Problems. Not a lot of problems, but the multiple. Although it does have some multiple problems also. One of the problems still hanging out there, let’s not forget the Supreme Court has not come down with a decision. No. And that has major ramifications. Although I think that he can justify the tariffs through some other reasoning than the one he used, which was kind of an economic crisis type of argument. But that’s still hanging out there also. And we’ve had some weak jobs numbers. We could get a whole slew of job numbers with the government opening back up again. It would be nice to get it open so airplanes aren’t stacked up on the runway for Thanksgiving.
SPEAKER 01 :
I had a friend who sent me a picture of the board at Atlanta’s airport yesterday morning, and it was all red. It didn’t look good. I don’t know if he made it back or not.
SPEAKER 02 :
A lot red.
SPEAKER 01 :
Yeah.
SPEAKER 02 :
Yeah. Oh, yeah. If you’ve got a connection, I mean, Atlanta’s tight and it’s a huge airport. Sometimes you get into Atlanta and your connector is like 12 gates away. You know, you got to take the train way down to the end of the airport to get you. And you see people panic running through the airport and stuff like this.
SPEAKER 01 :
Running up the escalator.
SPEAKER 02 :
It’s not a pretty sight. But anyways, the average target price for the S&P 500 now, 12 months from now, reaches a record high of 7,000, I want to say 7,700. Yeah, 7,837 is the consensus analyst 12-month target price. I’m not that high. I am much lower in that. To get to 7,800, you’ve got to be up at a 25 multiple. I can’t justify using a multiple that high. When we get to that 23 level, that seems to be the ceiling. And I think the market’s a lot more comfortable in the low 20s somewhere, so I don’t have a target price that high. But suffice it to say that the earnings expectations can support a higher market price from where we are right now. And here’s all the releases that we’ve missed. I was trying to figure out where I put this. Here it is, all right? You can get employment for November, retail sales, GDP we missed on November 26th, the PCE, which is the preferred gauge for the Fed on inflation we missed on November 26th, or back, no, on October 31st. We could get that. We’ve got CPI. We’ve got some employment numbers. So all of that, trade balance, blah, blah, blah, that could come flooding into the market here, which gives us a little bit more risk. So is the data there? Yeah, they’ve got the data, I guess, or they can get it, right? They’re going to recreate it or go back and say, here’s what it was. But a little late, but here’s what it was. I also saw that e-commerce – we did get e-commerce sales, but that’s a private report. It was big. It was up – 8.2% year over year. Adobe puts that report out. So, yes, retail sales very good, especially if you’re buying online. Very robust. And like you say, health insurers down as Trump calls for a major overhaul in Obamacare, which the only way Obamacare is working right now is with heavy subsidies from the government. or the taxpayers that give the money to the government. We’ll be right back. This is Bill Gunderson. Thank you for tuning in to today’s Best Stocks Now, Best Inverse Funds Now show. I put several hours of research in during the wee hours of the morning each day to bring you the very best cutting-edge stories that I can. To get two free weeks of my newsletter, go to GundersenCapital.com. To talk to us about our fee-based only money management services, call us at 855-611-BEST. Now, back to the second half of the show.
SPEAKER 05 :
And welcome back here to the second half of today’s Best Stocks Now show. I met a kid yesterday. He’s probably not a kid.
SPEAKER 02 :
Maybe he’s in his 20s. He’s from Zimbabwe. Barry and I asked him, where do you work? He says, I work for Boeing. He spoke perfect English. And I said, what do you do there? And he actually is part of making presentations to people that come here to South Carolina to get a presentation on Boeing’s products and whatnot. He says he meets people from all over the world. And I see today that Boeing’s going to invest a billion dollars in their South Carolina plant, which is roughly, what, five miles from our house here? That’s amazing. They’re going to double the 787 Dreamliner output. So, hey, you know what? I think I’ll open up a little hamburger stand around there or something over in that.
SPEAKER 01 :
You talk about how busy it is around there all the time.
SPEAKER 02 :
Oh, my gosh. I mean, a major effort to double production of its best-selling wide-body jet. global demand rises. The expansion is expected to create over 1,000 jobs in five years. It will nearly double Boeing’s footprint near the Charleston International Airport where about 8,200 employees currently work. And I happen to know quite a few of them. The facility remains non-unionized even as the strike continues at Boeing’s defense operations in Missouri. So anyways, that is a major, major ramp up. And you know, I was also told that Boeing owns all of that property all around our airport there. And they can definitely really ramp things up. And they’re going to and doubling that production. Now, I was looking at Boeing stock last week. I said, you know, this is one of the weakest stocks in the market right now. I’m going to take a look at it right now. It is a member of the Dow. Boeing stock was getting ready to roll over. That’s still a weak stock on Boeing. Right. I’m starting to keep a chart journal. I cut, paste, put a comment. In fact, this is on Death Watch right now. That’s not good. No, it’s not a good chart. We’ll see whether it can pull out of… uh… this uh… uh… crypto was on that same thing uh… several weeks ago that death watch okay so that’s uh… the news on boeing there but again that’s not a good looking chart data centers already are reshaping electricity demand uh… mario gabelli is out i’m gonna look at all four of these he he brings up four companies that he thinks uh… are going to be major players for the hyper scalers and this has been a pretty good theme to play He calls out in Wisconsin WEC Energy, which is supporting Microsoft’s construction of a 1.8 gigawatt data center, one of the first mega data centers currently under construction and scheduled to come in line in phases beginning in 2026. He says this single facility alone is expected to increase Wisconsin Electric’s peak load by 20%. He then brings up American Electric Power, which is AEP, which is a more conservative utility serving Missouri and Kansas. It’s also based on a 500-megawatt buildout of a single-load plant that they’re building. Then he brings up Pinnacle West in Arizona, which is being driven in part by Taiwan Semiconductors, billion-dollar investment in that area. Well, imagine the power and the electricity it takes to run the building of those semiconductors. And then he mentions a fourth one, PMW. Oh, and EVRG. So this will be in the newsletter this week where I give you a complete wrap of some of these articles that I find very interesting. And I will definitely take time to look at all four of those that Mario Gabelli is talking about with big ramp-ups in power. And I did see that Constellation Energy reported on Friday. We’ll get to that in the final quarter of the show. And they also, I mean, they’re one of the major players on the East Coast, if not the biggest player as far as data centers go in that Pennsylvania, New York area. We’re going to get to that. Then there’s a biotech here, a couple of them here today. COGT is the first one I want to mention. COGT is up today 127%. That company is headquartered in Cambridge, Massachusetts, which is a big center for biotech now. you know, in that Harvard corridor back there. Cogent has some good news. I just love to see good news from this biotech sector. The company disclosed encouraging late-stage trial data for its lead asset, I’m not even going to try to pronounce it, against a form of gastrointestinal cancer. Okay, so that’s good news. I mean, that is a movement there and progress being made on this form of cancer. And the company involved here is COGT. And Eli Lilly, man, has that stock been impressive lately or what? It is closing in on $1 trillion, which I predicted several years ago. You’re at $918 billion today. Wow. We could be to a trillion here before long. Is that not the best pharmaceutical stock in the world today? Without question. There’s not even a close second. maybe novo nordisk but the performance at nvo has not been very good lily is breaking out this is one of our largest holdings at gundersen capital now with their cash pile that they are accumulating they’re going out and buying other biotechs and they’re buying one here they’re going to invest in eye disorders which Regeneron basically kinda has a corner on the market there has been a pretty good stock over the years but Lilly is going to enter this and I’m sure they’ll make a big splash when they start throwing their cash around Lilly breaking out to a new 52 week high today and $918 billion and it seems like just a matter of time before they become the first trillion dollar a biotech company and let’s not forget they just made a deal with the u.s government to lower the price of zep bound and ozempic so that medicare will cover it and i think that’s going to be a blockbuster deal for them in addition to that they’ve got the pill coming out They were targeting November of this year or December of this year to have a pill instead of the shot in the stomach for the blockbuster drug Ozempic slash Zepbound. So big news out of Lilly today as they’re also going to go in. And they’re like NVIDIA. How many companies is NVIDIA and how many different technologies is NVIDIA investing in? When you buy NVIDIA, you’re getting all their investments in all of those companies and the same with Lilly. You’re getting an investment in numerous biotechs, in numerous potential drugs down the road because Lilly’s pipeline is flush with drug candidates whereas others, their cupboards are bare Pfizer had to go out and buy Metzera for a huge price to try to even get into the weight loss drug arena. Pfizer has had no products in their pipeline for years. And the only way they can get any is to buy a company for an extreme price. And I don’t know, Barry, when you’re late to the party, I mean, you’ve already got Zepbound and Ozempic proven. It’s pretty hard. uh to get in on that uh on that weight loss craze as a late entrant into all of that so you know that’s why we call it best stocks now and uh every sector in the market has its leaders and it has its laggards and the laggards by far outnumber the leaders in the market And from my perspective and watching my Best Stocks Now database on a daily basis, the leaders in the market are about 10% of the market. The mediocrity is about 70% of the market. And the other 20% is good, but not quite good enough. We’ll be right back.
SPEAKER 03 :
On a winter’s day.
SPEAKER 02 :
Welcome back here to the final segment of today’s Best Stocks Now show. I’ve got about 5,300 stocks, ETFs, mutual funds in the Best Stocks Now app database. And Barry, today there’s 530 that are B plus or better. I kind of consider that the line to be a best stock now candidate. That’s 10%, right? 10% of the market.
SPEAKER 01 :
Talk about how that number fluctuates sometimes where, you know, when you, of course, when the entire market is just, you know, going up breath wise, that number, that B plus number will increase. And then you get to a point where you’re like, okay, this is too much of a target rich environment. And then. and obviously the other way around where you can’t find many B-plus or better.
SPEAKER 02 :
Well, so half the formula is momentum and performance. So in a very strong momentum market, which we’ve had off and on this year, especially since April the 8th, obviously, I got up to maybe 1,000, 20% of the market. So I know at that point in time the market’s vulnerable to a pullback. Because that momentum side of the equation is lifting these to B+, even though the valuations aren’t really there. And then it starts to settle down, which it has. Now we’re back at a more normal level, about 10% of the market is B+, or better. And those are the charts that I look at every single day. That’s one of the lists that I look at, those 530 charts of B-plus or better stocks. A lot of them, obviously, we own. And this just happens to be the arteries in the market where the blood is flowing the best, right? You got a lot of clogged arteries in other parts of the market. that aren’t doing well at all. There’s entire sectors in the market where there’s just nothing happening whatsoever. The oil and gas sector would be a good example of that. There’s only a handful of oil and gas stocks Amongst those top 500 stocks right now, most of them are going to be in information technology, software, semiconductor, and a few other areas that are non-AI related. But there’s a lot of clogged arteries in the market right now. And unfortunately, a lot of people are invested in a lot of dead stuff. And when it comes to me, obviously, like any good heart surgeon, I go in there and get rid of the clog, try to clean those clogged arteries up, get them flowing again, or get the weeds out of the garden. and sell a lot of the dead weight that’s out there in the market, which 90% of the market is dead weight. And, like, I mean, the bottom 30% is just awful, absolutely awful. And then, of course, you’ve got ones that are momentum only. There is no valuation to these stocks. And that’s your Kathy Woods type stuff, which I’m sure she’s having a good day today in a go-go environment. But as soon as that sugar high comes off of the market. And the market starts looking for valuations to justify where these stocks are at. And then it sees, hey, this stock here doesn’t even have any sales yet, let alone earnings. That stuff’s really, really vulnerable during high go-go times in the market like we have right now. And she was down 8.3% last week. When the market was down about 2%, the NASDAQ was down 3%. But you get out in the Netherlands of the market into that speculative stuff, it was down 8.3% today. You’re probably getting a big bounce there today. I would use that as an opportunity to lighten up in those areas of the market, which includes biotechs, the crypto-related stocks, Bitcoin miners. It includes probably the quantum stocks. The rare earths, I think, maybe have a bottom in underneath them. We have a one-year reprieve on, I think it came down to five elements. I don’t know what they are. I’m not sure if it’s my antimony here, which I’ve got on my desk in a glass case so I don’t get lead poisoning or antimony poisoning from it. But that just means that we’ve got to separate the men from the boys here in these rare earth mining stocks. I think the MP Materials and the Lithium Corp of America are probably the two best. And then you’ve got a lot of wannabe players, the UUUUs and the United States Antimony and the U.S. Rare Earth. But there’s going to be a lot of money being invested in those areas as we’ve got to solve that supply chain problem. There’s no question about it. It’s got to be solved. Because China, after a one-year reprieve, there’s no guarantees that they’ll renew that limited access to those rare earths that they dominate the market. And I think that’s why we’re making deals with Kazakhstan. You saw them come into the Abraham Accords. Kazakhstan is full of rare earth minerals, which, you know, Russia has heavy influence there. And, of course, South America, rare earth. And then, of course, a lot of the mines here in the U.S. have overlooked the rare earth part of it. Well, they were, you know, bringing in the coal and the copper and the gold and the silver out. And now they’re hoping that there’s a lot of rare earth mixed in. So I think you’re going to see a lot of movement in that area real soon, like now and over the next 12 months. But you have to tread very lightly. That’s a landmine, that area of the market. And there’s a lot of companies that all of a sudden are claiming land. A lot of little Canadian miners and whatnot claiming to have rare earth mixed in their mines.
SPEAKER 01 :
You’ve hit it on the head, though. I mean, it’s inevitable. We’ve got to get the rare earths in some form or fashion, and so there’s potential demand and value there in the market. Yes.
SPEAKER 02 :
Then the last thing I would mention is Constellation Energy. I never got to, but they upped their guidance for 2025 from $9.05 to $9.45. As their nuclear growth is starting to really take off, that’s CEG. And for me, that’s the blue chip of the nuclear companies is Constellation Energy. They kind of started it all as Three Mile Island when they got the big contract from Microsoft. And there’s going to be more contracts coming down the road for probably the biggest nuclear player, along with Vistra. Those are the two main ones. In my book, along with a lot of other ancillary players. Okay, well, we’re all out of time. That’s the reason you want to get the newsletter every Saturday. Even the free newsletter has all of the highlights from the show during the week and these companies that we mentioned. So to get four-week trial to the whole enchilada, then after that you continue to get the free newsletter, go to GundersenCapital.com. To get your arteries unclogged in your portfolio, have us take a look, give you a little diagnosis, call us at 855-611-BEST, set up an appointment with us, 855-611-BEST. Sure, another solicitation.
