Hap Sneddon's Investment Picks: May 2024 Edition

Investing in today's volatile market requires a keen eye and sharp analysis. Hap Sneddon, president and chief portfolio manager at Castlemoore, shares his insights and top picks for May 29, 2024. With a focus on technical analysis, Sneddon offers a unique perspective on the market outlook and his chosen investments.

Market Outlook

Corporate earnings are on an upward trajectory, with analysts revising their first-quarter consensus to 6% from 5.7%, the second and third quarters to 9.3% from 9.2%, and the fourth quarter to 17.6% from 17.4%. The full-year forecast has also improved, moving to 11.4% from 11.1%. This positive trend extends to revenue guidance, indicating a strong market performance.

Typically, broad market weakness is expected around this time of year. However, the current U.S. presidential election year brings a different dynamic. Historically, the market experiences a bullish turn from June until just before the election in early fall. Despite anticipated volatility near the election, investor concerns about rates and inflation present opportunities in both commodity-based and tech-based growth investments.

Investing can be challenging when trying to decipher global trends before making decisions. Instead, recognizing strength in individual businesses or themes can lead to a sound portfolio. A collection of good ideas, even if it appears disjointed initially, can form a robust investment strategy.

Hap Sneddon's Top Picks

Hap Sneddon highlights three top picks: Schneider Electric SE, Costco Wholesale Corporation, and Chemtrade Logistics Income Fund. Each of these companies demonstrates strong potential and solid technical profiles.

Schneider Electric SE (SBGSY OTC)

Schneider Electric SE, based in France, specializes in medium voltage, low voltage, secure energy, and automation systems globally. The company's focus on the digital transformation of energy management and automation spans residences, buildings, data centers, infrastructures, and industries. Its ecosystem allows collaboration with partners, integrators, and developers on its open platform, offering customers real-time control and operational efficiency. Schneider Electric has seen a 36% increase in cash flow over the past year and a 63% increase over two years. With 89% institutional and fund ownership, the stock has a promising long-term profile.

Costco Wholesale Corporation (COST NASD)

Costco is a well-known retail giant, operating 861 warehouses worldwide, including 591 in the United States and Puerto Rico, and 107 in Canada. It also has e-commerce sites in most of these countries. Costco's success formula crosses borders with little direct competition, especially internationally, suggesting a long growth runway. The company has consistently rewarded shareholders through sensible organic reinvestments in pricing and expansion. Technically, Costco's stock is sound across all time frames and resilient in various economic environments.

Chemtrade Logistics Income Fund (CHE.UN TSX)

Chemtrade Logistics Income Fund provides industrial chemicals and services to customers in North America and globally. Its business lines include sulfur (industrial), water chemicals (water treatment), and electrochemicals (industry, batteries). Recent earnings exceeded expectations by 10%, with margins at a healthy 26.3%. This strong start to the year and good visibility allowed Chemtrade to raise guidance to the upper end of the range. Its high payout, focused business, and smaller size make it an attractive takeover target. The technical outlook on the daily, weekly, monthly, and quarterly charts is positive.

Conclusion

Hap Sneddon's top picks for May 29, 2024, showcase a strategic approach to investing, focusing on strong individual businesses and themes. Schneider Electric SE, Costco Wholesale Corporation, and Chemtrade Logistics Income Fund offer promising opportunities in their respective sectors. Investors should consider these companies for their portfolios, leveraging Sneddon's insights and technical analysis expertise.