Tom Lee, head of research at Fundstrat Global Advisors.
Scott Mlyn | CNBC
Fundstrat Global Advisors founder Tom Lee recently completed the quarterly rebalancing for his Granny Shots portfolio, a list of his top 36 stock picks that has consistently outperformed the market since its inception on Jan. 10, 2019.
From that time, the S&P 500 is up 68.4%. The Granny Shots portfolio, on the other hand, is up 157.3% during the same period, according to Fundstrat’s website. This year alone, the Granny Shots portfolio’s 19.33% rally has also outpaced the S&P 500’s 13.9% gain.
The portfolio takes its name from a style of underhanded shot in basketball that’s considered to be highly efficient.
The rebalance comes as rising yields and escalating geopolitical tensions have rattled investors in recent weeks. The benchmark 10-year Treasury yields traded within striking distance of the key 5% level Thursday. Despite this backdrop, Lee sees the case for the stock market to rally heading into year-end. He cited a couple of reasons for this:
- “UST is a ‘hot potato’ given Washington and Fed ‘higher for longer’ but this is not necessarily negative equities.”
- “Stronger GDP growth is reflationary growth and thus would pressure rates higher and EPS higher.”
His recent rebalance added seven new names to the portfolio, including one addition into the “Super Grannies” basket. This list consists of Lee’s top five most attractive tactical buys.
Here are a few of the newest additions to Lee’s Granny Portfolio.
Source: Fundstrat Global Advisors
Everest Group was named a Super Granny pick. Despite climbing nearly 23% since the start of the year, Fundstrat’s Mark Newton still sees upside potential ahead for the stock.
“The entire Insurance sector has exhibited superior relative strength over the past year, and EG’s sudden breakout of an eight-month base is a larger positive, than any negative associated with short-term overbought conditions,” Newton wrote in the same note.
Computer software behemoth Oracle was also included on the list. Despite a recent pullback, the stock is up an impressive 32% since the start of the year.
Earlier this month, Evercore ISI upgraded shares of Oracle to overweight from in line, citing an attractive entry point given the stock’s lower valuation versus the company’s consistent revenue and earnings growth. The name could also be poised for a fourth-quarter comeback, according to CNBC Pro’s stock screener.
Caterpillar also made the list. Shares of Caterpillar are up more than 30% this year.