Good morning,
Last week’s price action was nasty, with the S&P down by over 3% marking one of its worst Friday closes since the onset of the Iran war.
Whether we see a rebound, recovery, or continuation this week should matter very little to you.
The reason is that there’s almost no edge to being exposed to this market right now.
I can prove it through actual numbers:
— The U.S. 10yr yield is now close to 4.6%
— At a 31.8x P/E ratio, the S&P only offers an earnings yield of roughly 3.1%
Earnings yields tell you a lot about the underlying state of investor sentiment and psychology, and it might explain why Warren Buffett had been sitting in cash before Berkshire’s new CEO stepped in.
You divide one by the current P/E, that’s how you arrive at the above yield by the way.
When the S&P offers a yield below the risk-free rate, being the 10yr treasury yield, the common conclusion is that stocks offer lower returns and much higher risk than just defaulting to buying bonds.
Which is exactly why we’ve gotten more selective on our stock picking.
You have Domino’s Pizza (DPZ) from last week, which beat the market by over 5% since our announcement.
That deal’s details will be covered in the coming days.
But,
Know that there’s another major brand out of Japan that’s been wrongly ignored and discounted.
The best part?
Wall Street analysts, and ourselves, believe that this stock has over 100% upside from today’s price.
We’ll reveal this entire deal, the target price, and overall thesis in our next round of portfolio deep dives, starting this week.
Join our Premium Research subscription to access this deal and several more.