SCHAEFFER'S ANNIVERSARY STOCK PICKS
International
Schaeffer's Investment Research was built on Bernie Schaeffer’s vision of providing accessible professional-grade trading information to retail traders. This remains our mission today, 43 years later. As a company that started out at the forefront of the options trading industry, we had a major decision to make from the get-go: should we offer stock trading picks in addition to options trading picks (the safe route), or should we stay the path, going all-in with an options-centric focus (the risky route)? From the moment that our founder Bernie Schaeffer made the decision to be the best options trading publisher in the world, focusing exclusively on identifying and timing options trades for our customers, our success has unfolded consistently. At the time of the decision, options were just taking off and stocks had been around for a while. Stock-trading newsletters in our industry were established comfortably. But Bernie has never been one for swinging base hits. He is always seeking the next grand slam -- in business and in trading. Options are incredibly attractive to traders with this "high risk, high reward" mentality. Your profits are uncapped, while your downside risk is limited to your initial investment. Options play with the power of convexity, creating an unlimited upside potential in every options buy. All trading comes with risk, so why take on the risk without major potential returns? Per Bernie, “There's a disconnect between what people are doing and the reason for buying stock in the first place... Why are you risking your money if you're not expecting, potentially, some very attractive appreciation down the road?” We are 100% options because options offer 100% more opportunity than just trading stocks. And, the crazy growth rate for options trading supports that more traders are realizing this every single year. Thank you for joining us on this journey within the options industry, and we look forward to working with you as we continue to trade. We hope you enjoy these carefully chosen stock picks from our team of top traders!
Courtesy of our esteemed Senior Quantitative Analyst, Rocky White, here are the best 25 stocks to buy and hold in the second half of the year based on data over the past 10 years. The list is sorted by stocks with the highest percent positive, then average return.
TOP 25
Birkenstock (BIRK)
A previous earnings report took popular shoe brand BIRK above its $46 initial public offering (IPO) price and to a fresh all-time high. The equity used these previous highs as support on its most recent pullback in addition to the 30-day moving average and $10 billion stock valuation. Since its IPO, the footwear name has climbed 39%, compared to the S&P 500 Index’s (SPX) 25% gain. BIRK is moving in as a 40- and 60-day relative strength (RS) leader, while short interest is on the rise. Accounting for nearly 15% of the stock’s total available float, short interest climbed 75% over the past three quarters. There has been 6.86 puts bought-to-open for every call, and while we don’t have a rank on this yet due to limited data, five of the top eight open interest (OI) positions are put-based.
Uranium miner Cameco (CCJ) doesn’t have to worry about demand, as long as artificial intelligence (AI) and electric vehicles (EV) need power. Even better news is Cameco stock is at an intriguing entry point for contrarian investors to buy the dip on. After hitting an all-time high of $56.24 on May 31, Cameco (CCJ) stock pulled back to its 80-day moving average and round-number $50 level. Longer term, the shares boast solid gains, up 100% since breaking above their 80- and 200-day moving averages in March 2023. There’s some short squeeze potential, with short interest up 48% since Jan. 30, now representing 4.3% of CCJ’s total available float. In the options pits, a sentiment shift could add tailwinds. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity’s 10-day buy-to-open put/call volume ratio of 0.96 ranks in the elevated 78th percentile of its annual range, showing puts being picked up at a faster-than-usual rate during this time. Digging deeper, there’s peak put open interest (OI) at the 50-strike through September expiry that could offer options-related support.
Cameco (CCJ)
Hilton Hotels (HLT)
Hotel stock HLT is breaking out to all-time highs, while holding support at its March peak around $215.80. The shares are up 60% in the past year since breaking above their 128-day moving average, and shorter-term, have reclaimed their 21-day moving average after a recent pullback to that 128-day trendline. Despite the solid technical setup, there’s pessimism swirling around the stock. Roughly 60% of the analysts in coverage maintain tepid “hold” ratings, while short interest is up 50% since January. That rise in bearish bets is concurrent with a 20% rally in the equity, underscoring the fundamental strength in place. Puts are wildly popular. At the ISE, CBOE, and PHLX, HLT’s 10-day buy-to-open put/call volume ratio sits at 2.46, in the 80th percentile of its annual range. Digging deeper, peak call OI sits at $220 through July expiry, so when this evaporates, it removes an overhead call wall and frees the stock up to climb.
India-based Infosys (INFY) is the country’s seventh largest publicly traded company by market cap, and comprises 5% of the Nifty 50. Despite the lofty stature, there’s still promising medium- to long-term technical and fundamental upside. The shares recently moved above their 200-day, 200-week, and 50-month moving averages, as well as a 227.2% Fibonacci retracement from its August 2019 high to the March 2020 lows. With these trendlines cleared, INFY could be on the verge of a long-term breakout over descending highs going back to early 2022, with shorter-term upside at February highs of $20. If $20 gets cleared, a move to the 2021 peak around $24, or a retest of all-time highs at $26 could be within sights. Amid this promise, half of the analysts rate Infosys a "hold" or worse, so more technical strength could turn the tide toward a bullish bias, especially as net margins are beginning to trend significantly higher quarter-over-quarter. Investing in Infosys is a shrewd way to gain exposure to the top-performing Emerging Market (EM) economy, especially considering INFY’s strong fundamentals, financials, and technical upside.
Infosys (INFY)
Palantir Technologies stock is seeing a cup-and-handle pattern on the weekly and monthly charts, pushing above resistance at its monthly closing high near $27. The shares just broke out to fresh 52-week highs, while large, aggressive out-of-the-money (OOTM) call sweepers target $31 and $36. The software giant looks ripe for upgrades and price-target hikes, with 13 of the 19 following analysts carrying a "hold" or worse rating, alongside an average 12-month consensus price target of $21.39 -- a more than 20% discount to current levels. There is still potential for growth as the government and international commercial customers have yet to adopt AI segment products.
Palantir Technologies (PLTR)
Miner PAAS can be best described as an inflation uncertainty hedge play. The shares are breaking out of a long-term downtrend, gapping above their 200-month moving average at the time of this writing. If the stock can clear its August 2016 highs at $21, continued momentum could propel PAAS to $40, which would mark a retest of its February 2021 peak. The recent move above the 200-month trendline comes with Fibonacci support above a 38.2% level, with multiple retracement levels above that could step up as a cushion. That 200-month moving average has historical significance; after failing to hold and then breaking below it in 2017-2018, PAAS’ last move above this trendline was in March 2020, when the shares vaulted to as high as $40, adding 100% in the span of roughly 200 days. It goes without saying that the stock is highly correlated to the spot price of silver. The good news is that both appear on the verge of a longer-term breakout to retest those aforementioned highs. Beyond its typical inflation hedge, silver’s growing industrial applications mean that even if the economy remains strong amid inflationary headwinds, silver demand and equity demand in PAAS could keep rising.
Pan American Silver (PAAS)
Phillips 66 (PSX)
Oil & gas stock PSX closed at an all-time high in early April, but has since corrected 23% off that peak, retracing 50% of the move from 2023 lows to that 2024 record. The shares found support at their ascending 200-day moving average, as well as their year-to-date breakeven level. Based on current short interest data, it would take bearish bettors nearly four trading days to buy back their PSX bets, at the stock’s average pace of trading. That’s an ample amount of pessimism that can be unwound and fuel a rally. Analysts remain skeptical as well, with six of the 17 brokerages in coverage on the sidelines. Should PSX resume its uptrend, analysts could be forced to upwardly revise their stance, adding another tailwind in the process.
Tesla (TSLA)
Electric vehicle (EV) TSLA is experiencing a downtrend breakout on the weekly and monthly charts, while its daily movement is currently extended on a short-covering rally, though dips in buying could yield long-term gains. The shares experienced a huge reversal and swung above their year-to-date breakeven mark, and are now seeing large, aggressive OOTM call sweeps being bought, targeting +400 per share. Short interest is rolling over from nearly three-year highs, with shorts likely to stay in covering mode as many of them remain underwater. Analysts are looking bearish, leaving plenty of room for bull notes moving forward, with 22 of the 33 in coverage sporting a tepid "hold" or "strong sell" rating. Plus, the humanoid Optimus robot could transform Tesla into a next-generation tech leader, with sales expected to begin in late 2025 amid limited production.
Texas Instruments (TXN)
In the first quarter of 2024, shares of Texas Instruments stock broke and closed above their 2022-2023 highs, an area which marked resistance around $185-188 and corresponded with the +10 percent year-to-date level. In May, a brief close above the round-number $200 mark, which corresponds to the stock’s 2021 high, led to a consolidation. This has continued, as the 10-week and 50-day moving averages play catch up. Despite decent price action, there is lukewarm sentiment from the analyst community. Currently 19 of the 28 brokerages following the stock sport a tepid "hold" or worse recommendation, leaving ample room for bull notes in the days and weeks ahead. Short interest has risen 42% since mid-February and currently would take four days to cover at the stock’s average pace of daily trading, as most of these positions are losses.
Steakhouse TXRH is seeing a solid uptrend on the charts, supported by the 30-day simple moving average. The shares have seen a 44% advance over the past 12 months, easily outpacing the S&P 500's 27% rise in the same time frame. The security is now pulling back from all-time high levels, showing up as a relative strength leader (RS) for the 40- and 60-day measurements. Texas Roadhouse stock recently crossed above 6.5 times its Covid lows at $163.48, and despite tepid price action since its last earnings call, RS versus the market remained above 50 -- implying that TXRH retained its RS advantage on the broader market. More than half the covering brokerage firms carry a "hold" or worse rating, leaving ample room for upgrades moving forward.
Texas Roadhouse (TXRH)
Thank you for checking out schaeffer's top stock picks in honor of our 43rd anniversary. July 26, 2024 marks the 43rd year that Schaeffer's has had the privilege of serving up professional-grade options trading analysis and tools to retail traders . We are forever grateful for your support and, especially today, we toast to you, our incredible clients who have supported us every step of the way. We look forward to the many exciting things we plan to bring to even further enhance your trading in the coming years!