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4/24/2024 10:35:03 AM Eastern Time

BUYING THE DIP
By Charles Payne, CEO & Principal Analyst

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Tuesday was another solid session. Buyers were being lured out of shallow foxholes, and their memory of the easy days since October of last year was much greater than that of significant past downturns.                                                      

I was surprised at the big decline in Materials (XLB), the only sector in the red yesterday, but I’m not surprised the growth sectors led the broad market higher.

Coming into the session, I noticed that every sector was down for April. The S&P 500 is still lower for the month and unlikely to break its five-month winning streak.

Fear, Greed, and Opportunities 

Nothing motivates the buy-on-dips crowd more than a sense of missing the bounce. As the needle moved toward greed, urgency increased. Interestingly, small-cap growth was the best factor.

Tesla

Musk posted the ugliest earnings report in many years, and the stock popped. Considering the stock looked oversold, it's not too surprising, but this is a massive move for a company producing less expensive cars. Musk is all in and thinks the hybrid craze is a phase. Plus, they have stuff (see below) on the drawing board.

Tesla (TSLA) is also sitting on a ton of cash.

Portfolio Approach

Yesterday, we closed a position in Materials (SCCO) and added a new position in Technology (ZS) in the Hotline Model Portfolio. This morning, we are adding a new position to Industrial (POWL).

Today’s Session

With beleaguered names like Tesla (TSLA) and Boeing (BA) leading the way, the market looks to open higher.

This is great, but we must contain our collective glee for big upside tests. The S&P 500 closing over 5,120 would be huge.

Long Idea: Powell Industries, Inc. (POWL) @ $147.70
Industry: Industrial; Equipment And Parts
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BACKGROUND: Powell Industries, Inc., together with its subsidiaries, designs, develops, manufactures, sells, and services custom-engineered equipment and systems. The company's principal products include integrated power control room substations, custom-engineered modules, electrical houses, medium-voltage circuit breakers, monitoring and control communications systems, motor control centers, switches, and bus duct systems, as well as traditional and arc-resistant distribution switchgears and control gears. Its products have application in voltages ranging from 480 volts to 38,000 volts. The company also provide field service inspection, installation, commissioning, modification and repair, spare parts, retrofit and retrofill components for existing systems, and replacement circuit breakers for switchgear. It serves onshore and offshore production, liquefied natural gas facilities and terminals, pipelines, refineries, and petrochemical plants, as well as electric utility, light rail traction power, mining and metals, pulp and paper, data centers and other municipal, commercial, and industrial markets. The company has operations in the United States, Canada, the Middle East, Africa, Europe, Mexico, and Central and South America. Powell Industries, Inc. was founded in 1947 and is headquartered in Houston, Texas.

SKINNY: POWL seeing a strong reversal since its last earnings report in January 2024, taking it to new highs of $198. The company has seen strong growth across all its segments.

POWL expects results next week, some volatility is expected.

Strong and solid best describe the earnings execution, and analysts' estimates suggest a robust FY25 ahead. Our target is $177.