Insights: Bullish EM Stocks
• Today's report is a bottom-up compilation of technically attractive emerging market stocks, with one fundamental kicker: each name is accompanied by positive momentum in their FY EPS estimates... see screen on pages 2-5• We screened for stocks whose latest EPS estimate is higher than last week's, which in turn is greater than the prior month's estimate. From this list, which was rich in relative leaders, we picked out the names that were either (1) breaking out from, or (2) pulling back to base support levels... see charts on pages 6-14
• Group themes present in this screen:
o Tech is extending its leadership status: Tech still reigns supreme within EM. Its relative strength trend--the MSCI EM Tech/ MSCI EM ratio--just rebounded to decade highs. Several attractive charts: Taiwan Semi (2330-TW), LG Innotek (011070-KR), and Adlink Technology (6166-TW).
o Chemicals continues to outperform: Chemicals remain a leading segment with the strengthening Materials Sector. Formosa Chemicals & Fibre (1326-TW) and Formosa Plastics (1301-TW) depict pullback opportunities above long-term base patterns.
o Chinese internet stocks are inflecting higher: U.S.-traded names like BABA and JD are bullishly inflecting. Buy.
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Vermilion Research delivers timely, actionable, and unique research inputs to professional investors. Our research strategists highlight securities which we believe are at major inflection points, based on our various proprietary technical indicators, and offer asymmetric risk/return profiles. We believe our research methodology, which is not limited by industry sector or market capitalization, enables us to deliver superior investment recommendations.
Our process begins by organizing all actively traded stocks into coherent sectors, then into logical industry groups. We then apply our proprietary relative strength tools to identify developing price trends. Once attractive trends are identified within a selected sectors or groups, we screen for individual stocks which we believe offer the best risk/reward profile. Vermilion offers U.S. and global equity market research products. Vermilion’s research team, which has received numerous awards and accolades, has a combined 70 year of experience in the analysis of investment securities.
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