V&M Breakouts: Top Growth And Dividend Mega Cap Stocks For May 2020
Summary
- Releasing two top mega cap stocks from the Growth & Dividend breakout portfolio for long-term gain potential into 2020.
- The April portfolio completes the first month up +13.72% with all five selections gaining over +10.8% led by AMGN +18%, KLAC +14.2%, and BLK +14.1%.
- The March Growth & Dividend portfolio continues with strong gainers up; GILD +15.3%, CLX +20.9%, and KR +13.6%.
- These very large market cap stocks are a unique extension of my MDA research for breakout stocks with high frequency 10%+ gains in 126 out of 155 trading weeks (81.3%).
- These stocks have a minimum $10 billion market cap, $2/share price, 500k average daily volume and at least a 2% dividend yield, unlike my short-term breakout portfolios.
- This idea was discussed in more depth with members of my private investing community, Value & Momentum Breakouts. Get started today »
V&M Breakouts: Top Growth & Dividend Stocks For May 2020
Introduction
The Top Dividend Growth stock model expands on my doctoral research analysis on multiple discriminant analysis (MDA) adding new complexities with these top picks. Research shows that the highest frequency of large price breakout moves are found among small cap stocks with low trading volumes offering no dividends and delivering higher than average risk levels. The challenge with the Top Dividend Growth model is to deliver a combination toward optimal total return with characteristics that typically reduce the frequency and size of price breakouts, but deliver more reliable growth factors for higher profitability longer term.
These 5 stocks have above a minimum $10 billion market cap, $2/share price, 500k average daily volume and at least a 2% dividend yield. The population of this unique segment is approximately 330 stocks out of over 7,800 stocks across the US stock exchanges. While these stocks represent less than 5% of available stocks, their market cap exceeds $19 trillion out of the approximately $33 trillion (57.6%) of the US stock exchanges. Efforts are made to optimize total returns on the key MDA price growth factors (fundamental, technical, sentiment) for the best results under these large cap constraints with high priorities for dividend growth and dividend yield.
Top Growth & Dividend Stocks For May 2020
Unlike many other market based selection approaches, these picks are based on a proprietary algorithm using key variables across fundamental, technical, and behavioral finance characteristics. The justification for the selections is detailed in the research analysis link above that explains the algorithm and variable approach. Much of the narrative detailed below has been added to provide readers with familiar measures to consider for your own due diligence.
Score Overview of the Growth & Dividend Stocks for May
Dividend Calendar
The factors shown are not necessarily the selection variables used in the MDA analysis or the dividend considerations for growth and strong total returns. These are additional financial perspectives to enhance your investment decisions for total returns.
Infosys
I wrote about Infosys back in October 2019 and was interviewed by an Indian based financial news network regarding my analysis on the lack of forensic algorithm evidence of any major concerns posed by the whistleblower. INFY continues to deliver strong results and returns as a breakout mega cap contender with good long-term growth characteristics for a price move to $11/share in the medium term.
In addition to strong positive fundamental factors shown below, certain key technical and behavioral variables are very positive for INFY. For example, the high net inflows to INFY have returned to levels comparable to early February but significantly ahead of the same price recovery expected with degree of positive sentiment.
(FinViz)
| Apr-21-20 03:17 AM | Analysts Expect Infosys Sales to Fall After Firm Drops Guidance Bloomberg |
| Apr-20-20 04:15 PM | Infosys Ltd. to Host Earnings Call ACCESSWIRE |
| Apr-20-20 11:41 AM | Infosys: 37.8% Growth in Digital Portfolio Leads to Strong 9.8% Growth in FY 20 PR Newswire |
| Apr-20-20 10:53 AM | Infosys: 37.8% Growth in Digital Portfolio Leads to Strong 9.8% Growth in FY 20 CNW Group |
| Apr-20-20 09:31 AM | Infosys: Q4 Earnings Insights Benzinga |
| Apr-20-20 09:30 AM | Infosys' Q4 Earnings Meet, Revenues Miss Estimates Zacks |
(FinViz)
Infosys Limited, together with its subsidiaries, provides consulting, technology, and outsourcing services in North America, Europe, India, and internationally. It provides application development and management, independent validation, product engineering and management, infrastructure management, enterprise application management, and support and integration services. The company's products and platforms include Finacle - a core banking solution; Edge suite of products; Infosys NIA - an artificial intelligence platform; McCamish - an insurance platform; Panaya; and Skava. It also operates a Defence Center and a Digital Innovation Center. The company serves clients in the financial services and insurance, life sciences and healthcare, manufacturing, retail, consumer packaged goods and logistics, hi-tech, communications, telecom OEM, media, energy, utilities, resources, services, and other industries.
Analyst Forecasts of INFY
Nomura (Rishit Parikh)
Expects a 3% decline in dollar revenue in the new fiscal year as clients’ IT budgets are likely to decline 5%-10%. Growth to normalize by fiscal year ending March 2022, driven by demand for cloud migration services and automation, where company has credible practice.
Investec (Nitin Padmanabhan)
Expects a 6% decline in dollar revenue in FY21 followed by 6% growth in FY22. Assumes a 50% cut in discretionary spending over Q1-Q2, followed by a recovery from Q3. Clients likely to conserve cash until economy completely reopens, which is still some time away; the worst is yet to come.
Citigroup (Surendra Goyal)
Demand to see near-term challenge; discretionary spending to be pushed out. Margins to remain under pressure, but company’s good balance sheet and cash flow generation are positive. Well-positioned for merger and acquisition opportunities with cash-rich balance sheet. Expects faster growth, with steady margins. Keeps buy, raises price target.
Garmin
Garmin delivered a strong earnings beat for Q1 as reported on April 29th and the combination of analyst upgrades and high net MFI inflows add strong breakout value to this dividend stock. Other characteristics for success in the selection model for GRMN include low share dilution, low debt levels, and low short float. The fundamental reports below support key breakout variables with similarly high positive characteristics for growth and total return.
(FinViz)
| Apr-29-20 03:00 PM | Garmin Ltd. Q1 2020 Earnings Call Transcript Motley Fool |
| Apr-29-20 12:23 PM | Garmin's Q1 Earnings & Revenues Surpass Estimates Zacks |
| Apr-29-20 08:25 AM | Garmin Beats Q1 Earnings and Revenue Estimates Zacks |
| Apr-29-20 07:45 AM | 3 Unknown but Amazing Dividend Stocks Motley Fool |
(FinViz)
Garmin Ltd. designs, develops, manufactures, markets, and distributes a range of navigation, communication, and information devices worldwide. It operates through five segments: Auto, Aviation, Marine, Outdoor, and Fitness. The Auto segment offers personal navigation devices; infotainment systems; and cameras, as well as mobile applications. The Aviation segment provides flight display, navigation, communication, flight control, hazard avoidance, weather radar, radar altimeter, and in-cockpit and cloud connectivity products; datalink weather receivers and services; engine information, traffic collision avoidance, and terrain awareness and warning systems; wearables, portables, and apps; and training, simulation, flight planning/filing, premium trip, and aviation data services.
Prior Growth & Dividend Breakout stocks
A sample of prior MDA breakout Growth & Dividend stocks from the full portfolios exclusive to subscribers are as follows: V&M Breakouts: Top Growth And Dividend Stocks For April 2020
V&M Breakouts: Top Growth And Dividend Stocks For March 2020
- The Clorox Company (CLX) +20.88%
- Gilead Sciences (GILD) +15.27%
- The Kroger Co. (KR) +13.62%
- Taiwan Semiconductor (TSM) -5.09%
Conclusion
These stocks continue a live forward-testing of the breakout selection algorithms from my doctoral research applied to large cap, strong dividend growth stocks. These monthly top Growth & Dividend stocks are intended to deliver excellent total return strategies leveraging key factors in the MDA breakout models used in the small cap weekly breakout selections.
These selections are being tracked on the V&M Dashboard Spreadsheet for members and enhancements will continue to optimize dividend, growth, and higher breakout frequency variables throughout the year. More detailed analysis is available in the link to my research in the introduction as well as through many published articles on my profile page.
All the very best to you and have a great week of trading!
JD Henning, PhD, MBA, CFE, CAMS
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