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Daniel Snyder: Hey everyone. I’m Daniel Snyder from Seeking Alpha. Thank you so much for taking the time to hang out with us for this hour on this webinar, because I’ve decided, the key word of this webinar is outperformance. And you will see what I mean as we dive into conversation here today with Steven Cress. We are recapping the Top 10 Stocks of 2026, checking in on and see how they are doing half way through the year and the year of volatility because who know or who knew really that Iran and now we have Warsh and everything else that just happened this year and it seems like we are going to have fireworks going into the second half of this year. And we’re going to talk a little bit about the event we have going on next week, Top Stocks H2 of 2026, it’s one that you’re not going to want to miss. But before we get into all that, let’s get our quick legal disclaimer out of the way.
We are not advising you personally concerning the nature, potential, value, or suitability of any particular security. You alone are solely responsible for determining whether any investment, security, strategy, or any product or service is appropriate or suitable for you based on your investment objectives and personal and financial situation.
This presentation is for information purposes only. Content is presented as of the date published or indicated and may be superseded by future events. It represents my opinions and Steven Cress’ opinions, which may not reflect the views of Seeking Alpha as a whole. Past performance is no guarantee of future results, and Seeking Alpha is not a licensed securities dealer, broker, US investment adviser, or investment bank.
Oh! my goodness. We got people already in the chat. Everybody.
Steven Cress: I think you only took one breath. That’s probably what they wanted. I was like, how many times did you breathe during that disclaimer. Well done. Thank you.
DS: …here saying, outperformance. We’re going to get into it. But, Steve, great to have you with us. Everybody, if you don’t know who Steven Cress is, he is our VP of Quantitative Strategy here at Seeking Alpha. He used to work at Morgan Stanley. He raised to run a hedge fund, a prop desk. He’s done it all, and he is the founder and creator behind the Quant system that we have here on Seeking Alpha. Seeking Alpha actually acquired his company, CressCap back – what year was it, Steve? 2018, 2019?
SC: Yeah. Right around 2018, 2019.
DS: Somewhere around there.
SC: Yeah.
DS: And that’s what we brought into the fold, and that’s what you guys get access to now as Premium, PRO subscribers, as well as it’s in Alpha Picks and QG&I. But, Steve, let’s get into the conversation today. You put out some incredible picks in January. I can’t wait to dive-in, but let’s talk about markets. What’s going on?
SC: Yeah. Well, Daniel, first, thank you for organizing this today. And, for everybody who is viewing it, we appreciate you viewing it. And, hopefully, you were back there in January when we selected these stocks, because it has been a fantastic run, and, we’re only halfway through the year. And, indeed, I actually think we’ve got a little bit of an opportunity. The markets have been rotating between risk-on, risk-off, risk-on, risk-off. And we’ve had a little bit of a dip in these stocks, which we’ll tell you about today, and we’ll show you exactly where we are. So, I’m going to provide you with a market recap for the first half of 2026 and how our Top 10 Stocks have done, halfway through the year and what we could do beyond just the Top 10 Stocks.
So, starting with our recap, you will see it just feels very strange when you look at this chart. It shows you that the indexes are near all-time highs. The Nasdaq has come off from June 1st. But when you look at the S&P 500 and Dow Jones, they are literally almost at their record levels. And it doesn’t really feel that way. If you have your finger on the pulse of the market every day, you have just sensed a lot of anxiety from the market, a lot of fear, a lot of trading driven by sentiment. And we have had quite a few rotations into safe haven sectors and out of safe haven sectors into technology stocks, and then out of technology stocks back into safe haven sectors. But meanwhile, the stocks that we did select back in January all had very, very strong fundamentals, and they have fared through this environment quite well.
So, taking us to the GICS sector performance, this really provides a much more insight than just looking at the line charts of the Nasdaq and the S&P 500. So, if you look at the far right side, you will see the year-to-date performance for the GICS sectors. And technology, to no surprise, is at the very top. The sector itself is up 27.5%, followed by industrial stocks and energy stocks and basic materials.
So, that is the year-to-date performance. If you look at the bottom part of that, you’ll see consumer discretionary stocks and communication service stocks are actually in the red. But take a look just over to the left from the year to date, and you’ll see the one month performance. And you could see energy stocks are down about 7.87%. So that decline, really energy has been all over the place this year.
Year-to-date, you could see it’s up 18%. Over the last four weeks, it’s down 7.8%. It looked like we were entering into a treaty that might stick with Iran, but obviously today that looks like it has unwound, and nobody knows exactly where we are in that war. So, energy will continue to be all over the place, and you could see today, it is actually up 1.68%, while technology is down 2.7%. Underneath, you will see the CNN Fear & Greed Index, and I often use this sentiment indicator. It’s just as good as anyone that’s out there. There are a lot of underlying metrics that go into this CNN Fear & – sentiment indicator. And you can see where we are now. We’re in Fear, at a level of 41. A week ago, Fear and anxiety was even higher. It was at 30. But if you look back one year ago, we were in Extreme Greed.
So, the market, it’s very interesting. You could see we went from Extreme Greed to Fear, yet the market is still near all-time highs. And, again, we’re having a lot of rotations into safe haven sectors and out of safe haven sectors, more or less known as risk-on, risk-off, occurring numerous times since the beginning of the year. And the VIX, which spiked during many periods, came off many periods, spiking a little bit today as well.
So, one of the really interesting aspects of the market for 2026 and really going back to 2025, I think many investors had expected in the second half of 2025 that there were going to be a number of interest rate cuts going into 2026. So, it looked like inflation was going to be under control. It looked like the scare that we had with tariffs was manageable. And because we had some poor labor numbers, it looked like the Fed would continue on a path of rate cuts. And you could see by looking at this table, even as, I guess, back in November of 2025, the market was expecting about three rate cuts. When you look at this chart and you go all the way to the right, you could see there’s a massive drop off in the expectation of rate cuts, which started in March, which went from, I guess you could say, somewhere between two and three dropping like a brick, into negative territory, and negative territory is actually the expectation of interest rate hikes.
So, indeed what has happened, geopolitical events took a turn for the worse. We went to war with Iran. Oil skyrocketed. Inflation stayed much stickier than expected, and interest rates went up, not down. Hence, the market is now expecting interest rate hikes for 2026.
And this next chart, which is from the CME, and it displays interest rate traders forecast going into the December FOMC meeting. So, this is going all the way out to December. The expectation is that 21% of interest rate traders actually believe there will be a 25 basis point hike. You have 41% of these traders expecting a 50 basis point hike, and you have 28% of interest rate traders expecting a 75 basis point hike.
So, as you could see, it’s a total different scenario now versus where it was back in October and November of last year. So, this macro landscape is weighing heavily on the markets, hence why we’ve seen so many rotations between risk-on and risk-off.
Now, the other big story continues to be AI. So, this is a story that you’d say is, running into its third year of many stocks doing incredibly well based on AI. And the focus really has a lot of the mega tech companies, or even the Mag 7, as you could say. The amount of CapEx spending coming out of these companies is so huge that these companies that were cash rich and are cash rich and very profitable are actually having bond issuances to raise capital for their CapEx spend for AI. And what you’re looking at here is a chart by Goldman Sachs where you see the hyperscalers AI CapEx spending. And this number has been fast forward. Really, now Goldman Sachs is looking for 2027 to see $1.4 trillion in spending.
I remember seeing a chart probably about a year ago where the expectation was back and going into, like, 2030 to 2035, we would be hitting that trillion dollar territory, and that number has been fast forward all the way to 2027. So, Goldman Sachs expecting the hyperscaler CapEx reaching $1.4 trillion. Now that actually really benefits a lot of the companies that we cover. And you will see with the chip stocks such as Micron and AMD, and you will even see it with industrial companies that do a lot of the construction and engineering and maintenance for the data centers as well, and a number of utility companies and companies that also maintain the infrastructure for utility companies because there is such a tremendous demand on energy when it comes to AI and data centers.
So another, interesting aspect is, despite inflation being sticky and interest rates going up and geopolitical events and the tremendous impact on oil, which surged from the high $60 region to $120 at one point all the way back down to $70 and back up, I’m not even sure where it is today. Daniel, maybe you could take a look and see where the current spot price is for oil. The economy has continued to do well, and S&P companies, S&P 500 companies, continue to have a good outlook in terms of their earnings capability. And you could see this table from FactSet indicates how strong the year-over-year numbers are for most sectors ranging from healthcare to energy to IT, looking at where the expectation is for the year-over-year growth now, which is in the blue bars, and the gray bars were from March 31st. So, you could see it almost in all cases with the exception of healthcare, the expectation is that earnings year-over-year will actually be higher. So, that…
DS: Steve, got that oil future price for you, it’s $74.50.
SC: $74.50. Okay. So, in the $70 range dropped from, I guess, a couple weeks ago, it was a $100 range. It has been very, very volatile.
DS: It’s up 5.7% today off of the Iran headlines that we’ve all seen out with the NATO stuff going on.
SC: Yeah. And, look, we started this at 04:00 Eastern Standard Time. By the time we finish, who knows where we’ll be with geopolitical events and the price of oil. But what I can tell you is, our stocks have very strong fundamentals, and they have continued to do well with a record top line and bottom line growth.
So, taking us to the next slide, there is another reason for uncertainty outside of, inflation, outside of war, outside of interest rates. You also have midterm elections coming up. And you could see, midterm elections historically have introduced uncertainty into the markets. And what you’ll see here is, if you go back to 1926, you will see every instance, and those were 25 midterm elections, in every instance, there was a drawdown for the market ahead of midterm elections. And I really do think we could be entering into a period right now. So, you not only have this period, with geopolitical events, you have midterms coming up, and the markets historically are volatile during that period.
The really good news, though, is once the midterm elections are over, regardless if Republicans or Democrats win, the market does go up. And on average, three months after midterm elections, the market is typically up 5.8%. Six months after, it’s up 10.5%. And 12 months after midterm elections, the market is up on average 14.8%. So, really, this ends up being an incredible buying opportunity by looking at this previous seasonality impact of midterm elections.
So, one of the reasons – I’m going to highlight a couple charts here, that have to do with markets correcting and stocks correcting. And the reason why I want to highlight this is, you’ve probably witnessed if you owned the Top 10 Stocks in January, almost through the end of June, the Top 10 Stocks on average were up about 70%. Now, from June 30th just to July 7th, it’s only a couple of trading days. Many of these stocks have come off sharply, much more than the market.
And I often say, Quant is like a Richter scale. When something starts to go wrong with the Quant stocks, usually, a larger correction falls with the market. And we may enter that, especially with what we know with midterm elections and the uncertainty with geopolitical events, the market could continue to pull back. There could continue to be a rotation into the safe haven sectors. But that is usually where opportunity is. And fear creates losses. Conviction creates opportunities. So, what my Quant team did is, we went to, we took the last five market corrections since 2010, and we drew a line in the sand at 15% pullback.
So, when the market pulled back 15%, if you purchased the S&P 500 when the market pulled back 15% and you held it for two years, you were up almost 50%, 50%. Conversely, if you bought stocks that had strong fundamentals and you focused on our top 10 Quant Strong Buys and you purchased those stocks when the market was down 15% and you held it for two years, you were up on average 117%.
So, what I really want to highlight here is often you’ll see stocks with good fundamentals pull back before the market does. And the reason being is, investors are nervous. They want to rotate into safe havens, and they sell stocks that have made them profits. In fact, more often than not, they tend not to really sell their losers. They want to sell where they made money. They want to protect that capital, and they rotate it to the safe haven sectors. And that actually often can end up being a big mistake.
I have a couple quotes here from some famous investors. Peter Lynch famously said, the key to making money in stocks is not to get scared out of them. Warren Buffett has said, be fearful when others are greedy and greedy when others are fearful. A writer for Seeking Alpha, Cullen Roche said, the stock market is the only market where things go on sale and all the customers run out of the store. And that is what panic feels like, and sometimes you will witness it with the stocks that have the strongest fundamentals. And my own quote, which I have in the last bullet point is, fear fades, the markets will always return to fundamentals. And you really want to be able to take advantage of those pullbacks.
So, we have our own track record, really. Outside of the Top 10 Stocks, if you are a customer of Alpha Picks and you’re familiar with the trading patterns there, it shows exactly what I’m talking about, where these opportunities are created. So, if you went back to September 2022, there was a mini crash that occurred. The market fell 17%. And if you bought Alpha Picks when the market was off 17% and you held on to it, you would be up 396% today. Looking at another correction that occurred more recently in the first quarter of 2025, known as Liberation Day, the market came off 12%, and that was April 3, 2025. If you bought Alpha Picks when the market was down 12%, you would have been up 146% in Alpha Picks.
And even more recently, in March 2026 when we had the initial oil shock from our war with Iran, on March 27th, the market was down 8.5%. And if you bought Alpha Picks back then, you would already be up 41%. So, we have a bit of a track record to show with stocks that have strong fundamentals, Quant Strong Buys, how well they typically do. Now, they do come off sharply during these corrections, typically more than the market, but that is, it usually ends up being a great buying opportunity.
So, why Quant? We try to do with Quant is help to remove emotion from investing. So, it’s a data driven methodology and strategy where we focus on the numbers. So, we look at growth. We look at valuation frameworks. We look at profitability, and we do it through the power of computer processing and a systematic process. So, within our data driven process, we use math and algorithms, and we have a strategy which we call a GARP plus strategy. GARP would be Growth At a Reasonable Price, and we also look, in addition to that Growth At a Reasonable Price, at earnings revisions from analysts and momentum as well.
What we do is, really not that much different than a fundamental analyst that works at Morgan Stanley or Goldman Sachs or Merrill Lynch. We’re looking for stocks that are attractive on value, growth, profitability, momentum, and EPS revisions, as I mentioned. But what Quant does is, it adds the power of computer processing. So, as opposed to just covering a handful of companies, it gives us the ability to cover 5,000 stocks and actually refresh the data on those 5,000 stocks every single day. So, every single day, we’re going through each company’s cash flow statements, income statements, and balance sheet as well hundreds of financial metrics, and we measure each stock relative to its sector. And this gives us the ability to separate the strong companies from the weak companies. And that’s how we come up with our Quant Strong Buys and our Quant Sells. So…
DS: I’m not…
SC: We haven’t…Yeah.
DS: I do want to mention it’s not that it’s just every single day. It’s every single day before the market opens. And when we say that, it’s not 30 minutes before market opens where you have to scramble real quick to look at it. Like, it’s done hours beforehand, so you have that early morning prep ready to go.
SC: That’s absolutely right. It just take a couple hours to run. After all, 5,000 stocks and going through balance sheets, income statements, cash flow statements, and hundreds of financial metrics for 5,000 stocks. It’s pretty amazing that our powerful computer process could really just do that in a couple of hours, but we do. And that’s really what separates the power and capabilities of a computer compared to human capabilities. I used to be an analyst. And as an analyst, I can only cover a universe of maybe 20 stocks. And with those 20 stocks, I can only write about them on occasion.
The Quant system gives us the ability to literally rate these stocks every single day versus their competitors, and it works. And what I’m showing here is the performance of our Strong Buy recommendations. Now, this is not an investable product. This is really just to demonstrate how well the strategy works, the GARP strategy that we use. And we keep a portfolio of all our Strong Buys. If a stock falls off of Strong Buy, it’s taken out of the portfolio. This gets refreshed every day. And we actually compare it to Wall Street Strong Buys and the S&P 500. And you could see over the last five years, our Quant Strong Buys are up 181%, compared to Wall Street Strong Buys up only 17% for the same period, and the S&P 500 up 54% for that period. So, again, this is not investable, but it does demonstrate the power of our strategy.
So, let’s get to our Top 10 track record as well. For 2025, if you bought the Top 10 Stocks and you held on to those stocks, you’d be up 91% versus the S&P 500, up 27.85% for that same period. So that would be from January 09, 2025 to June 29, 2026. So, this is buying in the beginning of January and just continue to hold the stocks, not sell them, you would be up 91%. If you did this in 2024, you bought our Top 10 recommendations, you would be up a whopping 329%, compared to the S&P up 60%, which is still impressive in its own right.
Having the S&P up that much from January 2024 to June 2026 is impressive, but our Top 10 Stocks are far more impressive being up on average 329%. And if you had purchased the stocks in 2023 and held on to them and did not sell, you would be up 232% versus the S&P up 101% for the same period. So, whether you’re looking at all our Quant Strong Buys or just our Top 10 Stocks that we announced at the beginning of the year and typically in July, your performance has been fantastic.
So, let me bring you to our Top 10 Stocks of 2026 that we announced in January and provide an update on it. So, this was measured as of June 29th. You could see they were almost 70%, compared to the S&P 500, up 8.32%. Daniel, I got to say it’s very impressive. We did it again. The market has gone up a little bit since then.
DS: Outperformance.
SC: I think that’s what you were going to say as well. It’s incredible how much these stocks have actually come up. It was up 69% at the end of June, and I think currently, it’s up about 54% or 55%. Of course, that is unbelievable as well. But we lost a little bit going down from 69% to up 55%, and that speaks to what I was talking about with what we’re seeing with the sector rotations into safe haven sectors.
People are selling stocks with good fundamentals, taking profits on stocks that have done well, and putting it into cash or utilities or healthcare stocks. And that’s exactly what we’re experiencing right now, but that always ends up being an incredible opportunity if you take advantage of that weakness.
So, here’s a little bit of a breakdown. You could see four of my Top 10 Stocks delivered triple digit returns. That is amazing. Micron, up 267%. AMD up 144%, Coherent up 109%, and Ciena up 107% in a six month period. The returns on the other stocks aren’t too shabby either. We have ATI, which is an industrial stock, up 64%. We have Allstate Insurance, up 18%. We have Celestica, up 17%, INCY, healthcare, up 12.64%. So, the majority of stocks, beating the S&P 500, which is up only 8.3% for that period. If you took the S&P on an equal weighted basis, it’s up 10.3%.
We did have two losers, Barrick Mining, which is a materials company, and Willdan, Industrials, which is down 27%. So, two losers. But the really important thing is, as we focus on stocks with good fundamentals, and you’ll see this in the products that we manage as well, the stocks to the upside far, far, far outpace our losers.
DS: What blows my mind, Steve, is, like, if you go back for a second, because you do this basket of 10 stocks, not only do you have, of course, the AI names and the information technology sector taken off, but financials? Right? Isn’t ALL that’s Allstate. Right? 18.63%?
SC: That’s correct.
DS: And then healthcare’s even, I mean, even just those two stocks alone, I mean, it just blows my mind that when you go to put these stocks together, you’re not so focused on solely the AI trade, but you’re also seeing things elsewhere with the Quant system.
SC: Yeah. I think if you were to, like, take the top stocks in the S&P 500, it would be all technology. I will say one of the things I do try to do when I pick the Top 10 Stocks is, I do want a little bit of a diversification. So, normally, I’ll limit the IT sector to maybe four stocks, and we want to have some other sectors in there as well. And as you could see, the performance is pretty good. Now, not all going to win, but as I mentioned, the winners and this happens with companies that have good fundamentals. Companies that have strong growth rates, good valuation frameworks that are profitable, they will beat the S&P 500. And that’s what we try to do here is, introduce stocks that will outperform the market, and we’ve been very successful at it since 2023.
So, taking a little bit of a deeper dive into where we are with the stocks in terms of the Quant Ratings, you could see the majority of them are still Strong Buys. We have seven stocks that are still Strong Buy. We have one that is a Buy that is Barrick Mining, and we have two that are Holds, Coherent and Willdan. And you will see Coherent, which has had very good performance, that has a D for valuation right now, which means it’s a little bit expensive versus the rest of the group, and its profitability is in line with the rest of the IT sector. So, hence, the Hold recommendation on it. The growth is still very strong. You could see it has an A- growth rate.
Even Willdan Group still has a B+ growth rate, indicating that its growth is far stronger than the rest of the industrials sector. And the performance that we showed going back to 2023, many of those stocks have a Hold. 2024, they still have a Hold. And I often say Hold does not mean Sell. And even with our Alpha Picks product, when a rating drops from a Strong Buy or Buy to a Hold, we keep it in the portfolio for 180 days. So, Hold means Hold. It does not mean Sell.
And this is a table that I really like to show here. So, as I mentioned, what we’re trying to do is, outperform the S&P 500 with our picks, and that doesn’t just come in the performance of the stocks. When you look at the growth for the companies, we always highlight companies that have far stronger growth. So, if you took the average forward revenue growth for our Top 10 Stocks that we selected in January, the average revenue growth is 33%, compared to the S&P 500, which has revenue growth of 8.5%. But far more impressive is the forward EPS growth. And when I say forward, we’re actually using consensus forecast from Wall Street analysts. So, these are not our models. We’re using consensus forecast, and we feel like that is a really fair representation. So, the forward EPS growth estimate, the consensus for this 10 stocks is 88% EPS growth, compared to the S&P 500 at 19.66% growth.
Now, I will say our P/E is a bit higher. There was a period for quite a while where we would recommend our top stocks, and the P/E would be in-line with the market. Here, you could see it’s got a healthy multiple at 34x versus the market at 24x, but you’re paying for growth. That growth rate is substantially higher than the S&P 500, so it is well worth that P/E of 34x. And hence, most of the companies still have Strong Buy and Buy recommendations. And here we break down the performance as well. You could see what the total return is for stocks that we recommended at the half year mark.
So, typically, the ones that I showed were for the full year, which were from January picks in 2023, 2024, 2025. Here are the stocks that we picked halfway through the year. Total return for the stocks that we picked in 2023 at H2, 191% versus the S&P up 69%. One period, the second half of 2024 proved to be the only period where we didn’t have a return that outperformed the S&P 500. As you could see, the return there is 1.58%, compared to the S&P, up 38%. And you could see for the second half of 2025, those stocks were up 77%, compared to the S&P, up 24%. So, for all those periods, it’s almost good that it shows we’re not perfect. We have one period out of, since 2023 where we didn’t outperform the market, and it makes us look real, which we are.
Alright. So, going over our Strong Buys right now to get you up to speed. We’re about 32 minutes into the presentation, and now I’m going to go over the Top 10 Stocks that we recommended back in January. Micron, which was our best performing stock. You could see this stock was up 267%, and it still ranks number one in the IT sector. It also ranks number one out of semiconductors. So, there are 531 stocks in IT, and there are 69 semiconductor companies, and Micron Technology beats them all. And you could see why. If you look to the right side, you could see it has a straight A report card.
So, despite the stock being up 267.07%%, the valuation on it is an A-. The valuation framework is better now than it was six months ago. Six months ago, it was a B. Now, it’s an A-. So that A- and remember, these factor grades are all sector relative. It’s not absolute. So, relative to the sector, it is actually more attractive in terms of its valuation than it was six months ago. Growth, far superior than the sector with an A+ there. Profitability is an A+. Momentum is an A+. And analyst EPS revisions, A, far better than the sector and also far better than where it was six months ago. Had a B+, so a little bit of a jump to A from B+, but pretty amazing considering the stock is up 267%. I would say, almost ignore that. Look at it as a fresh idea, and this stock is still very attractive where it is.
In terms of some of the data points, the forward EPS growth for this company is 386% versus the sector at 17%. The forward growth ROE is 254% versus the sector at 6%. And the PEG, which is, the P/E ratio over growth, one of my favorite metrics, is at 94% discount to the sector. So, Micron Technology continues to be very attractive even in-light of that incredible run up that it’s had.
Another semiconductor company, AMD, Advanced Micro Devices, still remains a Quant Strong Buy. This ranks number 5 in the IT sector, and within semiconductors, it ranks 4 out of 69. This stock is up 144%. If you look at the factor grades, you could see the valuation now is a C versus six months ago, it was a D+. So, the valuation with this stock as well is actually better now than it was six months ago, and growth is an A now versus an A- six months ago. Again, all sector relative. So, despite the movement in the stock, it’s really to be completely ignored because the company looks so good, compared to the rest of the sector. The forward EPS growth for this company is, 59% versus the sector at 17%, and the forward revenue growth is 44% versus the sector at 12%. On a PEG basis, it’s at 13% discount to the sector.
Stock number three, Ciena Corporation, ticker symbol CIEN. This is another IT company. This one ranks 20 out of 531. But within communications equipment, it ranks 2 out of 39. The return on this stock from January is 107%. Again, you could see the valuation framework is actually more attractive now with the C+ grade than where it was six months ago with a D. The growth for the company has actually improved slightly from where it was six months ago with an A grade versus A- six months ago. And you could see profitability and momentum still superior to the group.
If you’re not familiar with, Ciena, it is a U.S. global networking system and software company offering high capacity fiber optic cable, optical fibers, which benefits absolutely the scalers for the incredible CapEx spending that’s occurring with the data centers. Their forward EPS growth rate is 74%, and their leverage free cash flow growth rate is 113%, compared to the sector at 9%. On a PEG basis, it’s at 37% discount to the sector.
Now, getting out of, IT into financials, Allstate Corporation, market cap of $64 billion. It’s a big company. It’s a Quant Strong Buy. Within the financials sector it ranks 13 out of 691. Within its industry, which is Property & Casualty insurance, it ranks 1 one out of 56. It’s handedly beat the S&P. The stock is up 18% so far this year.
A quick sip there. Thank you very much. You could see the valuation framework is a little bit more expensive than where it was six months ago, and the growth is a tad slower, but the stock is still a Strong Buy. In terms of its growth, it’s a B+, so it is superior to the sector. In terms of profitability, it’s way superior compared to the sector. It has an A+ for profitability. And analysts continue to really like the company and has an A- for its EPS revisions, which means analysts are taking their estimates up at a higher level, compared to the rest of the sector. Company has a huge return on equity at 48% versus the sector at 12%.
Now, that’s not the ROE growth rate. Before I was discussing ROE growth rates, this is actually the absolute return on equity, which stands at 48%. That’s a tremendous number. They have $11.7 billion in cash from operations versus the sector at $220 million. And the P/E, the forward P/E on this company is only 8x. So, it’s incredibly cheap to the sector. 27% discount to the sector just on a P/E basis, not even looking at on a PEG basis.
Stock number five, ATI, which is an industrial company. It’s an aerospace and defense. Within industrials, it ranks number 7 out of 613 stocks. And within aerospace and defense, it ranks number 1, and that is a pretty good sector to be in. There are wars all over the world right now, Ukraine, Russia, U.S., Israel, Iran. So, geopolitical events really out of whack, and it has been depleting the stockpiles of many nations. So, owning a aerospace and defense company is a pretty good place to be. This stock has had a return of 64% since the beginning of the year. And you could see, if you look at the factor grades, the valuation grade is a C-, which puts it in-line with the sector, but the valuation has actually improved slightly compared to where it was.
Growth at an A- is superior to the sector. Profitability with a B. Momentum versus the sector, very strong, and analyst revision is very strong. With an A+ grade, it means analysts are taking their estimates up more than they are for the rest of the sector. This is a global manufacturer of advanced specialty materials and components primarily used at the defense – for defense companies, jet engines, airframes, sporting major deals with giant companies like Boeing and Airbus. And it has had a 30% forward EPS growth rate versus the sector median at 11%, and its operating cash flow growth is 29%, compared to the sector at 10%. Its PEG at 1.47x is at a 13% discount to the sector, and it remains a Quant Strong Buy.
Stock number 6, Celestica. This is another IT company. This ranks number 50. Obviously, earlier in the year, it did rank higher when we recommended it. But within its industry of electronic manufacturing services, it still ranks 7 out of 18. So, it’s fairly high, and it’s got a great report card. It’s still a Strong Buy. You could see the valuation is, the framework is actually much better now for valuation, compared to where it was six months ago. So, it’s a B grade versus six months ago where it was expensive. It was a B+. You could see the growth is actually a little bit better, compared to the sector at A versus A minus six months ago. Company remains profitable. Momentum remains strong, and analysts continue to really like the company.
And here, if you look, where analysts were three months ago, the EPS revision grade was B+, and now it is an A+. So, that means at a higher rate than what it was three months ago, they are taking their earnings estimates up, and they are not reducing their earnings estimates. The company has a 50% forward EPS growth rate, for its three to five year CAGR versus the sector at 18%. Their forward revenue growth is 40% versus the sector at 12%, and the PEG is 0.68x, putting it at 50% discount to the sector. Again, this stock remains a Quant Strong Buy.
Stock number 7, Incyte Corporation, ticker symbol INCY. This is a healthcare company. It is in the biotech industry. Within healthcare, it ranks 40 out of 938 healthcare companies. We really have a lot of healthcare companies in our universe. And within biotech, it ranks 15 out of 445 companies. The performance, not up as much as many of our technology stocks, but it is up 12.64%, handily beating the S&P 500. And this company for a biotechnology company, they offer a diverse pipeline of therapies for cancer, blood disorders, dermatology. So, they are in the right places at the right time.
They had 105% EPS growth versus the sector at 10%, and their operating cash flow was 92% versus the sector at 10%. On a PEG basis, it’s at 32% discount to the sector. If you look at the factor grades, you could see the valuation of B- is still attractive, compared to the sector. The growth coming in at A is amongst the highest in the sector. Profitability is amongst the highest in the sector. And the EPS revision grades, analysts are increasingly actually referring the company now to six months ago was a B+. Now, it’s an A-. But three months ago, was a C-. So, within the last three months, analysts have actually become more positive on the company. You could see that in the EPS revision grade versus the sector.
Stock number, oh, I think…
DS: Yeah. So, that was all the Strong Buys. Now, let’s get into your …
SC: Thanks for highlighting that. I caught myself by surprise. Buys and holds. Now, we’re onto the Holds. Barrick Mining Corporation, which is a good company. This is a Buy. If you look at the factor grades, you could see the factor of that valuation framework. B now versus a B- six months ago. Growth at B+ versus A-, almost unchanged. Profitability remains amongst one of the most profitable mining companies around with that A+ grade. And analyst revisions at a B. So, they like the company. It’s still better compared to the sector. In terms of EPS revisions, not quite as strong as where it was six months ago.
Yeah. Gold has had a crazy, crazy year. In most geopolitical events and most periods where you see sector rotations, you actually see when risk is off and investors are going to safe haven sectors, they typically go to gold. Now, we have a major war occurring with the U.S. and Iran, and you would expect investors to actually go into gold during an event like this. But this year, this event, it’s very different. Gold seems to be having an indirect relationship to the dollar now. So, gold has been very volatile this year. Still, this company is up 18.26%, so it has done fairly well. It is a leading company in terms of being not just in gold, but a very strong recent focus on copper, which has done very well, because of energy companies and the demand for copper and electrification. So, that is a strong tailwind for the stock, and perhaps that’s why it has outperformed some of the other mining companies.
But when you get down to the metrics, its EPS growth rate is 54%. That’s tremendous versus the sector at 14%. The company has $9 billion in cash from operations versus the sector at $438 million. And the PEG ratio at 0.52 is a 57% discount to the sector. So, perhaps because of their diversification and their focus on copper, it has outperformed a number of other companies within mining, and this is a Buy rated stock.
Number 9, Coherent is now a Hold. You could see that that valuation grade is a D, but the growth remains an A. This is an IT stock. This was ranked much higher earlier in the year. It’s down 109 out of 531. So, it’s still fairly high within its industry. Electronic components, it actually ranks 4 out of 21. This stock has had a good run up. You could see shortly after we recommended the stock, in January, I think it was sometime maybe in February, the stock went from a Strong Buy to a Hold. Hold does not mean Sell. And if you held on to the stock, you are rewarded. The stock is up 109% from January 6 through the end of June. So, you’ve done very, very well with this stock.
And one of the reasons being is it has very strong growth versus the sector. Its EPS growth rate is 70% versus the sector median at 17%. Its ROE growth rate is 58% versus the sector at 6%, and it’s PEG at 1.28. It’s at a slight discount to the sector, about 6% discount to the sector. So that devaluation does let you know that it is a bit expensive. But irregardless because of the growth, the company has had a tremendous run up in its price performance.
And finally, stock number 10, Willdan Group. This stock has not really performed that well. It is down 27% since we recommended it. Within the industrials sector, it now ranks 244 out of 613 companies. Within research and consulting services, it ranks 9 out of 40. And I’m not sure if you could hear in the background here there’s a lot of thunder and lightning. Probably appropriate for my Willdan stock pick being down 27%. They do provide services in energy and engineering consulting, and they have been able to transform themselves into an AI infrastructure powerhouse.
They do have very strong EPS growth at 30% versus the sector at 11%, and the forward EBITDA growth rate is 38% versus the sector at 8%. And on a PEG basis, it’s at an 87% discount. Unfortunately, the stock just has not performed that well. And you could see even though it has had really good growth at a B+, it’s superior to the sector, but it is off from where it was six months ago. The valuation is actually a little bit more attractive, but it just has not been in the right place at the right time. And we’ll see in the upcoming quarters if earnings continue to be strong. It should be a stock with good fundamentals, but it’s just not the right time for this stock.
And, Daniel, that is our recap on our 10 stocks for the recommendations that we put out in January, the beginning of the year. Now, stock picks beyond the first half of this year. Daniel, I’ll let you provide the highlight here.
DS: Yeah. Let me chime in. So, obviously, the top 10 from January have been doing extremely well this year. And as you see the track record has been doing well, also. So, what we are doing next week, we hope you can join us. If you are a paying subscriber across any service here on Seeking Alpha, you can join this event. It is the Top 10 Stocks for H2 of 2026, where not only are you going to get 10 fresh names to put together another portfolio just like this one.
We’re going to challenge Steve. We’re going to give him the questions. We’re going to talk about what’s going on with Warsh and how it’s going to affect the markets. We’re going to talk about what’s going on with midterm elections coming up. How is that going to affect things? You got a little teaser here today if you were paying attention. And if not, you can always rewind the replay if you’re catching it here. But Top Stocks H2 2026, I just had the link dropped in the chat here if you’re joining us live. And if you’re catching the replay, that link will be beneath the video player here as well. But that is next week, so make sure you register so that you get notified.
SC: Should be a good event. And as Daniel said, we have a really good track record. Hopefully, you bought the stocks earlier this year, and you’re completely crushing it versus the market. And we’re confident that the stocks we’ll be recommending for the latter half of this year have very strong fundamentals as well.
Now, there is life beyond picks in January and June. If you are interested, we do have three products, that allow you to participate in our Quant Strong Buys. If you like a high frequency of ideas, there’s a PRO Quant Portfolio. We have a portfolio there of 30 stocks, but we rebalance it every Monday. And on average, there are two to three new ideas that come out every Monday. That’s the PRO Quant Portfolio. If you want a little bit less frequency, we have our Alpha Picks products, which selects our two favorite Quant Strong Buys every month on the trading day closest to the 1st and the 15th of the month.
And then if you have a, more of an interest in growth and income, those other two products are really focused towards capital appreciation. The third product, which is our newest product, Quant Growth & Income, focuses on a portfolio of 30 stocks that pay dividends. And I’m pleased to say, we just started that in the beginning of June, and it’s actually up 6% versus its benchmark, which is flat. So, three different products which allows you to participate in the market at more than just twice a year in January and July.
And, here are the returns. So, for Alpha Picks, you’re looking at the 52-week return, and I believe that actually should be since inception. I apologize. We put 52-weeks. So, Alpha Picks since inception is up 378% versus the S&P up 97%. PQP, which started last June, so it’s actually really just, coming off of its one year anniversary, PQP is up 54%, versus the market up 24%. And the Quant Growth & Income, which just started in June this year, is up 6.25% versus its benchmark, which is the Vanguard High Yield Index ETF up 0.44. So that just provides you with a few of the returns. And, again, we’re going out with our top 10 for the second half of next year. Daniel, any questions?
DS: Yeah. We’ve got quite a few questions in here. I know we’re coming up at the top of the hour, so we’re going to squeeze in a couple here. And, obviously, there have been a ton of questions asked throughout this presentation. So, if any of you have additional questions, make sure, a, you follow Steven Cress’ author profile here on Seeking Alpha. They’re always giving out picks throughout the year as well. Drop a comment there. Or if you want to reach out to our team, subscriptions@seekingalpha.com, you can also get help with some of your service and product questions that you have dropped here today.
Now number one, Steve, for you, is the Top 10 Stock bucket that we put out at the beginning of every year, how do you know when to Sell a stock out of the portfolio?
SC: Well, when a stock hits a Sell or a Strong Sell, I would sell it right away. I tend to hold on to a number of these stocks. So, I have stocks from 2025. I have stocks from 2026 that are still in my portfolio. I have some stocks from before that. So, for me, even though it’s a Hold, if it has a revenue growth rate and an earnings growth rate that is better than the sector, I anticipate that the stock should outperform. So, that’s why I hold on to a couple of those stocks. If it’s got a hold recommendation and its revenue and EPS growth rate is in-line with the sector and the valuation’s expensive, I would probably let it go out of the portfolio. But as I said, Hold means hold. But how do you know when to Sell? When a Quant Rating goes to a Strong Sell or a Sell, that’s when you absolutely know to sell a stock.
DS: Alright. Well said. Patrick had a really good question here about, the Quant system sometimes has Strong Buy when a share price is over Wall Street analyst price targets, and I think the question is, how the Quant system know that the stock should still be a Strong Buy if it’s already above Wall Street analysts’ price target? Maybe we talk about the differentiation of the two.
SC: Well, I think what’s great about that is, we go back to this chart here. You could see Wall Street Analysts Strong Buys over the last five years up 17% versus the Quant Strong Buys up 181%. For us, it’s a data driven process. For a lot of Wall Street analysts, there could be a lot of subjectivity that goes into their Strong Buys. It’s not always about the data. For us, it’s always about the data. We’re always looking to see where a company compares versus its sector on growth, on value, on profitability, and we keep emotion out of it. For Wall Street, sometimes they have clients that could impact their rating. Sometimes they have block trades that could impact their rating. So, very often, we see our Quant Strong Buys significantly outperforming Wall Street Strong Buys.
DS: I also want to mention because I was looking at it while you’re giving the presentation. For example, Micron, right, with the super controversial pick when we first put that out back in January. Everybody said, we were buying the top at the time, and it was going to pull back and XYZ. Then you see the earnings come out, and you see Wall Street analysts have to revise their earnings and revenue projections upwards tremendously. So, it goes into, do they actually know everything? No.
SC: Yeah. I think there were, like, 40 analysts that revised their estimates up and 0 revised it down. And, again, we’re going off of the data that’s there. We’re looking at the valuation versus the sector and the growth versus the sector. And from our vantage point, that stock is still worthy of a Strong Buy, and I guess Wall Street didn’t really call that.
DS: Yeah. Absolutely. So, somebody that’s watching this right now, we had a question. If they’re watching today, do you still consider this portfolio stocks, a solid investment of ideas for the rest of the year?
SC: Yeah. Absolutely. You see that. And you don’t even have to take my word for it. When you look at the Quant Rating and you see it’s still a Quant Strong Buy, that means that these securities are still mispriced versus their sector and the market. So, as you could see from the growth rates and the valuation frameworks, very attractive versus the sector. So, absolutely, these stocks, everyone that’s a Strong Buy would still be a Strong Buy, a Buy, and of course, there are the Holds as well.
DS: Alright. And then there was a quick mention. We should mention this. You, I guess, misspoke earlier about Barrick Gold. It is down 16% or 18%, whatever it is.
SC: It is down.
DS: I think you said it was up while you were just going through, but it’s a lot of data.
SC: I apologize. Yeah. Sorry about that.
DS: No one blames you. No one blames you. Alright. There was a question about when you subscribe to Seeking Alpha, do you get access to Quant Ratings across all 5,000 stocks?
SC: Question being that do you get Quant Ratings?
DS: Yeah. So, I guess they’re asking, are there Quant Ratings for all 5,000 plus stocks on the stock market?
SC: I think the Quant Ratings are it’s – at this – I think it’s, like, 4,800, but there are actually many more stocks that are covered on the Seeking Alpha platform. So, if you have Premium, there are a few thousand more stocks. So, with Quant, we have a restriction, and that restriction is there has to be at least one Wall Street analyst covering the stock. There are many, many stocks that do not have Wall Street coverage, and Seeking Alpha does provide investment research on those companies from our contributors as well as news. So, there are many more stocks that you’ll find stock pages for that you won’t find necessarily having Quant Ratings, but with Quant Ratings, there’s close to 5,000 stocks.
DS: Yeah. We should also mention, because there was a question early on in today’s presentation about what’s the Quant Rating for SpaceX? Well, SpaceX, everybody just started trading. So, we also have the rule about IPOs. So, that is one year, correct, Steve, on the IPO?
SC: That’s absolutely right.
DS: Alright. Just so everybody’s aware of that as well. I know everybody gets caught up in the news cycle around these IPOs, they come to Seeking Alpha looking for the Quant Rating. Alright. So, let’s see here. Let me just scroll back up to some of these other questions. Maybe actually, there was a question about the valuation grade specifically. Maybe you want to jump onto the platform real quick, and we just pull up the valuation metrics
SC: Sure.
DS: And show people what they get with the underlying metrics. And just to remind everybody, these five factor grades that go into the Quant Rating behind these stocks, they’re not equally weighted. They are weighted based off of a proprietary weighting system that predicts, correct me if I’m wrong on this, Steve, but you focus on what is the highest predicting factors, and then we weight those a little bit heavier than the rest.
SC: That is correct. Not all factors are created equal. Some do have a greater predictability, as I say, and we place a higher weight, and we back-test these. Our model back-tested, going back to 2010, but I’ve been at this for about 35 years. I’ve been doing back-testing for a long time. So, when I created the model for Seeking Alpha, there was a bit more history just even then what we used for the back-test that we were at initially from 2010. So, Daniel, I believe you had a question on the current ratings for the companies.
DS: Yeah. Well, let’s go into a valuation grade. So, I don’t know if you just want to click on Micron there at the top.
SC: Alright. So, let’s go to MU. Beauty of this, this is our portfolio tool, and here are the Top 10 Stocks. And you could see all the grades right there. You could see this is mostly still green. Couple of the valuations are in the yellow, but these stocks really look very, very healthy, hence the Quant Strong Buys. But we’re going to go, we’ll see if there’s an A- for the valuation grade for Micron. So, we’re going to click on that, and that will take us there. Unfortunately, because of this thunderstorm here, my platform is really slow today. So, I apologize. It’s either my platform is slow because of the rain or U.S. forces watching further strikes against Iran, which seems to be going on right now.
DS: Steve, do you want me to…
SC: And as we hear that at the top of the hour…
DS: Do you want me to share my screen real quick? I got to pull it up.
SC: You know what? We’re there, I think.
DS: Okay.
SC: Let’s see. Here we go. Yeah. This is, Steve Cress’ system running slow. This is not the Seeking Alpha platform running slow. So, here are the valuation metrics. So, you could see we have the overall valuation metric that we’re looking at, and there are a number of underlying metrics that make up that valuation grade. So, for Micron, you could see we’re looking at trailing P/E, forward P/E. Most of those look great. I mean, the forward P/E is only 12.8x for Micron. I cannot believe that this stock is so cheap, compared to this sector, especially in-light of the growth rate that they have.
There are a couple metrics that are expensive, like EV-to-sales and price-to-sales, but the conventional metrics such as P/E, price to cash flow look very, very attractive for the stock. And what we do is, we take a score. Not all these are equally weighted. There are various weights based on which ones have a higher predictive value, and we total up those scores, and that gives us the overall valuation grade. And so, you could see it’s an A- versus the sector, so it is very, very attractive compared to the sector.
DS: Alright. Let’s go ahead. We’re hitting the top of the hour, Steve. I know some people got to jump off of here, and everybody watching the replay, thank you for tuning in. Again, the event is next week, July 14th from 12:00 P.M. to 01:30 P.M. Eastern. If you haven’t already, go ahead and follow that link that was dropped in the chat to go register for the event. We can’t wait to see you there. We’ve got a lot of great content, as well as those Top 10 Picks for the rest of the year, so you’re not going to want to miss that. And as I mentioned as well, go follow Steven Cress’ author profile here on Seeking Alpha. You will always get new pick ideas coming out from him and the team over here. Steve, we can’t thank you enough for your time. We know you’re a busy guy as, Quant Titan of the World. Maybe, might have to have a word with somebody about IT and your tech issues, but we’ll figure that out before Tuesday. Right?
SC: We certainly hope so, and, I want to thank everybody for attending today’s presentation. Hopefully, you were a benefactor of selecting new stocks back in January, and it has enriched your portfolio, as well as your experience and skill set with the market. So, Daniel, thank you again for organizing this today, and we truly appreciate your time.
DS: Yeah. And I’ll leave you with this little tidbit because I just saw this research the other day that under 30% of all fund managers are underperforming their benchmark this year. So, all they really had to do is, take your Top 10 picks from January, and they’d be sitting fine. But I don’t know why Wall Street doesn’t care about watching us. I mean, it is what it is. But, everybody, take care. Have a great rest of the week, and we’ll see you here soon. Alright?
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