Barron’s Stock Picks Had a Good Week. Tesla and Generac Outperformed.

Tesla shares surged 22% in the past week, making it one of the top performers in a portfolio of stocks recommended by Barron’s.

Eric Thayer/Bloomberg

A portfolio of stocks picked by Barron’s has enjoyed a rally in the past week, as the market anticipates the end of the Federal Reserve’s interest rate hikes. A buoyant performance from the auto industry also juiced the portfolio.

The entire stock market has enjoyed a gain in the past week. The S&P 500 is up about 3% in that span, including a pop in the last couple of days. Wednesday, the Fed announced a small interest rate hike, but markets interpreted Chairman Jerome Powell’s comments to mean that the end of rate increases is coming soon.

The rally has helped the average stock in the Barron’s portfolio post a 3.8% gain in the past week. The measure differs from a value-weighted index like the S&P 500, where stocks with bigger market capitalizations have bigger effects on the index.

Almost three quarters of 86 stocks in the Barron’s portfolio are up in the past week, with some of the winners posting mammoth gains. Top performers include
(POOL) and
(OLPX), which gained 15%, 14% and 19%, respectively in the past week.

Some stocks posted even larger gains.

(TSLA) gained 22% since last Thursday’s close. In its fourth quarter of 2022 reported on Jan. 25, sales of $24.3 billion beat expectations for $24 billion, while earnings per share of $1.19 came in above estimates of $1.12. Wall Street is confident that, even with the company lowering prices as consumers feel the pain of higher rates, Tesla can keep boosting sales and profit growth. Analysts expect vehicle deliveries to grow 40% from a year earlier to almost 1.85 million in 2023, better than the 31% growth seen in the reported quarter.

“The key debates from here will be on whether vehicle deliveries can reaccelerate (we expect that they will especially starting in 2Q23),” writes
Goldman Sachs
analyst Mark Delaney.

Barron’s recommended Tesla stock on Jan. 6, arguing that the the worst of the company’s challenges—including delivery growth—are behind it. The stock is up 67% since then.

Lithia Motors
(LAD), a $7 billion by market capitalization auto dealer, has seen its stock rise 23% in the past week. It reports fourth-quarter earnings Feb 15, but the stock has risen as the picture for auto sales has improved. Tesla’s quarterly performance helped, but so did General Motors‘ (GM). The automating giant reported better-than-expected sales and EPS and said on its earnings call that 2023 will be a “strong year,” one in which analysts expect sales growth.

Barron’s recommended Lithia Motors in April 2022, arguing that the stock was cheap and that production constraints that held sales back would soon be a thing of the past. Since then, the stock is up about 4%.

Lucid Group
(LCID), a $20 billion electric vehicle and battery maker, is up 39% since last Thursday. Earnings are Feb. 22, but strong auto trends already have helped. Lucid, too, is expected to lower prices and aggressively grow deliveries. The stock got a pop late in January on speculation that Saudi Arabia’s Public Investment Fund could buy the rest of the company. The fund recently invested $1.5 billion and holds just over 60% of the company.

Unfortunately, Barron’s recommended shorting the stock in November, and it is up 17% since then.

Write to Jacob Sonenshine at [email protected]

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