Mid and small-cap stocks have been under-performing their large-cap counterparts as of late, however, it’s important to remember when looking at an index that it’s basket of stocks and therefore looking at each of the components can unearth great opportunities. In this month’s (Premium) Members Only Conference Call we spoke about the strength in the Financial Services, Information Technology, Consumer Goods, and Energy sectors, so this is a follow-up post looking at the mid-cap stocks, many of which are in these sectors, that we want to be buying.
Before we get into individual stocks, I want to highlight the potential failed breakdown that we’re watching in the index itself. Last week prices undercut the March lows as momentum diverged positively. If we can get back above 19,200, it would confirm a failed breakdown and likely be the catalyst to push this market to new all-time highs. Due to the strength we’re seeing in the stocks discussed throughout this post, we think that is the higher probability outcome, but remain open-minded and have defined our risk in each of the names we want to be buying in case we’re wrong.
The first stock on our list is United Breweries Ltd, which is breaking out of a 3-year base after an aggressive rally sparked by the failed breakdown in March. As long as prices are above 1,210 we want to be aggressively long and looking to take profits near 1,550.
The next name I want to highlight is Pfizer Ltd. because despite the strong downtrend in the Nifty Pharma Index, this stock is making new all-time closing highs as it breaks out of a 3-year base. Prices are now back at the intraday highs set in 2015 and may pause slightly to work off this bearish momentum divergence, but ultimately we think prices are headed a lot higher. For risk management purposes we want to be long only if we’re above 2,600 and taking profits near 3,260.
Here is a list of the remaining mid-cap stocks we want to be buying:Lost Password?