Finance-related Stocks Were Front and Center on Financial Advisors' Radars to Start 2019
The U.S stock market is off to a roaring start in 2019, providing a much-needed respite for investors who just suffered through its worst year since the 2008 financial crisis. The Dow Jones gained 7% in January following 6.7% losses in 2018, while the Nasdaq and S&P 500 gained 9.7% and 7.9% respectively in January following heavy losses of their own last year.
The U.S government shutdown did not stop the US economy from adding jobs for the 100th consecutive month in January, a streak which dates back to October 2010. 304,000 jobs were added during the month, following the surprise addition of 312,000 jobs in December. The record run for that metric is now over twice as long as the previous record of 48-straight months, which ended in the middle of 1990. However, seasonally adjusted wage growth of 0.1% during January was well below expectations of 0.3%.
Early signals suggest that the housing market also enjoyed a surge in demand during January when compared to the second-half of 2018. Those sliding sales were the result of rising mortgage rates and sky-high home prices, both of which have eased over the past couple of months. Home prices were up by just 4.7% year-over-year in December, the lowest total in six years, while 30-year fixed mortgage rates have also come down since pushing above 5% in November.
Retail sales figures for December have yet to be released due to the government shutdown, but several retailers have reported underwhelming holiday sales and that trend is expected to persist into 2019. The National Retail Federation (NRF) is predicting retail sales gains of between 3.8% and 4.4% this year, which would fall below predicted 2018 gains of 4.6%. Online sales could grow even more in 2019 however, with the NRF predicting annual growth of as much as 12% following 10.4% growth last year.
Perhaps for that reason, Financial Advisors were not overly interested in retail stocks during January. Aside from online behemoth Amazon (AMZN), Best Buy (BBY) was the only other retail stock to rank among FA’s 20 most searched for stocks during the month. According to TrackStar, InvestingChannel’s official newsletter that captures and analyzes the trends of Financial Advisors, they were instead looking prominently to finance-related stocks as potential boons to their clients' portfolios.
5 of their top 11 most searched for stocks during January were either financial services companies or software companies with asset trading platforms. Among the stocks that Financial Advisors were most interested in during January were:
- Adams Natural Resources Fund (PEO)
- HNI Corporation (HNI)
- The Trade Desk (TTD)
- Micron Technology (MU)
- Align Technology (ALGN)
- China Recycling Energy Corporation (CREG)
- The Coca-Cola Company (KO)
- Canopy Growth Corporation (CGC)
Let's take a deeper look at one company FAs were most interested in during January and analyze what may have prompted them to become so enthralled by it. That company is The Trade Desk Inc (TTD), which ranked third among their most-searched-for stocks.
The self-service digital advertising platform's stock bucked the overall market trend in a big way during 2018, gaining over 150%. That impressive run continued throughout January, as the stock gained another 23%, and it's been more of the same so far in early-February. All told, the stock has been one of the best performers in the market since its IPO in September 2016, gaining 425%.
Two more companies adopted The Trade Desk's unified ID solution during January, TripleLift (the largest programmatic native advertising platform according to comScore) and Sharethrough (one of the largest native ad exchanges in the world). According to Sharethrough's chief product officer Curt Lawson, the company's match rates have already jumped by 21% since it adopted the unified ID solution, allowing the company to achieve its highest coverage yet.
The Trade Desk's unified ID solution helps advertisers better track their targets across the web, giving them sharper insight into their patterns to enable them to launch more effective ad campaigns. Demand-side platforms, data providers, and publishers, all benefit from the platform as well through increased coverage, more accurate data gathering, and faster page loading times.
During an interview with ZDNet at CES 2019 in early-January, The Trade Desk's CEO Jeff Green discussed the company's intriguing AI platform Koa, which was launched last June. Thanks to the company's ability to collect robust amounts of data from its network of clients, its AI can provide advertisers with the best audience for their ad buys saving them exhaustive analytical work and freeing time up to focus on the creativity and effectiveness of their campaigns.
Since the introduction of their AI-based product offerings, The Trade Desk's bottom line results have improved greatly, with the company raising guidance and beating earnings results in every quarter since their release. According to Green, advertisers have been getting a greater return on their investment through The Trade Desk's enhanced capabilities, which has convinced them to spend more as a result. He likened it to Amazon's Prime service, noting that the goal is for The Trade Desk's offerings to become a no-brainer for clients in the same way by offering unrivalled value.
In the middle of January, Susquehanna stated that The Trade Desk's momentum remains strong according to its checks, and that the company has several further catalysts on the horizon, including its upcoming Q4 results (to be released February 21), new products, a burgeoning opportunity in connected TV, and its potential to expand into additional markets. The Trade Desk is already making inroads into the largest of those potential markets, China, having inked deals with Chinese tech giants Alibaba (BABA), Tencent (TCEHY), and Baidu (BIDU) in November which could give its clients access to China's immense internet population of nearly 800 million users.
Given all that, it's not surprising that The Trade Desk was a stock that financial advisors and investors were captivated by in January, and the love affair doesn't appear ready to end any time soon.