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TOP PICK
Stockchase Research Editor: Michael O'Reilly We reiterate IIVI, a maker of industrial optic and laser components, as a TOP PICK. The company remains well positioned to benefit from 5G rollout, cloud migration, and EVs. It is investing over $1 billion over the next 10 years to focus on highly efficient semiconductors for EV adoption. It issued over $2 billion in new equity, giving it a solid cash position to do so. It trades at 26x earnings compared to peers at 30x and earnings are expected to be $4.48 per share next year compared o $2.28 this year. Sales have been growing over 30% annually for the past five years. We would buy this with a stop loss at $50, looking to achieve $85 -- upside potential over 38%. Yield 0% (Analysts’ price target is $85.12)
Technology

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TOP PICK
Stockchase Research Editor: Michael O'Reilly We reiterate our TOP PICK recommendation with BP. As oil prices continue to stabilize and the economy edges forward, this is a good value entry point. It trades at 10x earnings, compared to peers at 14x and is presently valued right near book value. It is paying a good dividend, backed by a payout ratio under 50% of cash flow. It has paid down over $11 billion in debt, while keeping cash reserves relatively steady. We would buy this with a stop loss at $20, looking to achieve $35 -- upside potential over 32%. Yield 4.85% (Analysts’ price target is $34.69)
integrated oils

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TOP PICK
Stockchase Research Editor: Michael O'Reilly We reiterate our TOP PICK recommendation with PIF -- the Canadian $366 million market cap infrastructure developer of renewable energy projects in Latin America. It pays a nice dividend backed by a payout ratio of 35% of cash flow. It trades at 10x earnings, compared to peers at 14x and is valued under 2x book value. We would buy this with a stop loss at $14, looking to achieve $28 -- upside potential over 53%. Yield 3.32% (Analysts’ price target is $28.00)
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PAST TOP PICK
(A Top Pick Jul 21/21, Up 28.1%)Stockchase Research Editor: Michael O'Reilly Our PAST TOP PICK with TOU is progressing well. It has achieved its $43.50 objective. To remain disciplined, we recommend covering half the position here and trailing up the stop to $34 -- just above the original recommended entry level.
oil / gas

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PAST TOP PICK
(A Top Pick Nov 18/20, Up 21.9%)Stockchase Research Editor: Michael O'Reilly Our PAST TOP PICK with KR has triggered its stop at $40. We recommend covering the balance of the position at this time. Combined with the previous recommendation to cover half the position, this results in a net investment return over 21%. We will monitor for another entry level in the future.
food stores
COMMENT
Markets. Investors were bearish through the summer. Now every major US investment bank is saying we're in for some kind of trouble. He doesn't see that. Rallies tend to go on for a long time, and there's been a consistent rally in major indices since last November. These rallies don't end with a bang; rather, they fade. Russell 2000 has been sideways since February. Average stock names in the S&P are down about 12.5%. Conditions are in place to absorb a lot of bad news. As we get through September and into October, fourth quarter will be pretty strong.
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COMMENT
Market sentiment. We have more bearish sentiment in the market than we've had at any other time since 2012, except for brief occasions. The market has an intact wall of worry. In China, unlikely there's major contagion. Fed will taper, but that's no surprise. Typically third quarter weakness comes as analysts realize they've been too optimistic in estimates. But they're still raising estimates for the rest of this year and next.
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