Tom Lee from Fundstrat has garnered attention for his “Granny Shots” portfolio, a curated list of stocks aimed at outperforming the S&P 500 while maintaining a risk-conscious approach. For August 2024, the portfolio included a mix of well-established companies spread across various sectors, designed to capitalize on tactical opportunities. The stocks on this list generally focus on sectors with favorable macroeconomic conditions and companies with strong fundamentals. While the specific stocks for August 2024 have not been made public for free, the general strategy includes heavyweights in tech, healthcare, and consumer discretionary sectors.
What Are Granny Shots?
“Granny Shots” is a term coined by Tom Lee to describe a portfolio of stocks selected to outperform the S&P 500. The term comes from basketball, where a “granny shot” refers to a high-percentage, low-risk underhanded free throw. Similarly, the Granny Shots portfolio aims to achieve higher returns with a controlled level of risk, making it appealing for investors looking for consistent performance rather than speculative gains.
Historical Performance
Historically, Tom Lee’s Granny Shots portfolio has performed admirably. Since its inception in 2019, the portfolio has consistently outpaced the S&P 500. For example, in 2023, the Granny Shots portfolio delivered a return of over 19%, compared to the S&P 500’s 13.9% gain. This consistent outperformance can be attributed to Lee’s strategic sector allocations and stock picks, which often align with broader market trends and macroeconomic factors.
Should You Consider Purchasing Some of These Granny Shots?
Investing in the Granny Shots portfolio might seem tempting, especially given its historical outperformance. However, it’s crucial to approach this decision carefully. Here are a few considerations:
- Understand the Strategy: The Granny Shots portfolio is designed to beat the market while minimizing risk. However, no investment strategy is foolproof. Understanding the underlying sectors and individual stocks in the portfolio is key to assessing whether they align with your investment goals.
- Risk Tolerance: Although the Granny Shots aim to reduce risk, investing in equities always involves some degree of uncertainty. Consider your own risk tolerance and investment horizon before diving into this strategy.
- Diversification: The Granny Shots portfolio is diversified across sectors, which helps in risk management. However, make sure your overall portfolio remains diversified and not overly concentrated in these picks.
- Do Your Own Research: One of the golden rules of investing is to conduct your own research. While Tom Lee’s track record is impressive, it’s vital to understand the rationale behind each stock pick and how it fits into your broader investment strategy.
- Economic and Market Conditions: The performance of the Granny Shots portfolio, like any other, is influenced by broader economic and market conditions. Stay informed about macroeconomic trends and how they might impact the sectors represented in the Granny Shots.
What Should You Know Before You Invest?
Before jumping into any investment, especially one based on a specific strategy like the Granny Shots, here are some key points to consider:
- Investment Horizon: Make sure that your investment timeline aligns with the goals of the Granny Shots portfolio. This strategy is not a get-rich-quick scheme but a more measured approach to achieving market-beating returns over time.
- Market Volatility: While the Granny Shots portfolio is designed to be resilient, market volatility can impact its performance. Be prepared for short-term fluctuations and invest with a long-term perspective.
- Economic Indicators: Pay attention to economic indicators that could affect the sectors in which the Granny Shots are invested. Interest rates, inflation, and geopolitical events can all have significant impacts.
- Rebalancing: Tom Lee periodically rebalances the Granny Shots portfolio to reflect changing market conditions. It’s important to stay updated on these changes and consider rebalancing your own portfolio accordingly.
- Cost of Following: Keep in mind the transaction costs if you decide to replicate the Granny Shots portfolio. Frequent buying and selling can erode returns if not managed carefully.
Tom Lee’s August 2024 Granny Shots: A Closer Look
Tom Lee, a well-known strategist from Fundstrat, has curated his latest “Granny Shots” list for August 2024. This selection includes stocks that he believes are positioned to outperform the S&P 500, with a focus on balancing risk and reward. Here’s an overview of the sectors and companies that are catching attention:
- Technology and Innovation:
- Big Data and AI: Companies like Palantir Technologies (PLTR) are making waves with their advanced data analytics and AI capabilities. With the increasing reliance on big data across industries, Palantir’s strategic positioning could offer substantial growth, although its high valuation might be a concern for some investors.
- Ad Tech and App Development: AppLovin Corp (APP) stands out in the mobile app space, offering tools for app monetization and marketing. As mobile usage continues to rise, AppLovin’s services become ever more crucial, though the company faces stiff competition and regulatory scrutiny.
- Industrial and Manufacturing Strength:
- Essential Manufacturing: Mueller Industries Inc (MLI) continues to benefit from strong demand in housing and industrial sectors, with its broad product range in copper and brass products. The company’s stability is attractive, but investors should remain aware of commodity price fluctuations.
- Semiconductor Services: Ultra Clean Holdings Inc (UCTT) and Veeco Instruments Inc (VECO) are both involved in semiconductor manufacturing, a sector that has seen robust growth. These companies offer crucial subsystems and equipment for semiconductor production, although the cyclical nature of the industry poses risks.
- Financial and Niche Banking:
- Fintech Focus: Bancorp Inc (TBBK) is a niche player in the financial sector, providing banking services to fintech companies. Its innovative approach and strong partnerships position it well for the future, but the rapidly evolving regulatory landscape is a factor to consider.
- Healthcare Innovations:
- Precision Medicine: Blueprint Medicines Corp (BPMC) is at the forefront of precision oncology, developing targeted therapies that offer personalized treatment options. This is a high-potential but high-risk area, as success depends heavily on clinical trials and regulatory approvals.
- Green and Electric Mobility:
- Electric School Buses: Blue Bird Corp (BLBD) is a leader in school bus manufacturing, with a growing focus on electric buses. This shift is supported by increasing governmental efforts to promote greener transportation. However, the company’s performance can be influenced by government contract cycles and funding availability.
Should You Invest?
While these stocks have been highlighted for their potential to outperform, it’s essential to conduct your own research. Each of these companies operates in sectors with strong growth potential, but they also face unique challenges. For example, companies in the semiconductor space could be impacted by market cycles, while those in healthcare must navigate the uncertainties of drug development.
Final Thoughts
Tom Lee’s “Granny Shots” are a well-considered selection of stocks that aim to outperform the broader market. However, like all investments, they come with risks. Diversification, understanding your own risk tolerance, and staying informed about the sectors these companies operate in are key to making sound investment decisions.
For more detailed analysis and the full list, you may want to consult Fundstrat’s reports directly.
Happy Investing!