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Singular Research November Director's Letter


Singular Research’s November 2020 Director’s Letter


In November, the first signs of a successful vaccine sent markets higher as investors could see a future when economies were once again normal. Pfizer/BioNTech, Moderna, and AstraZeneca all had strong results in the efficacy of their vaccines. However, the good news of the vaccines was also paired with growing Covid cases throughout the United States. On November 4, the U.S. reported, for the first time, 100,000 new Covid cases in a single day. States and counties throughout the U.S. have enacted harsher Covid restrictions in an attempt to keep hospitalization rates from growing out of control. The news was torn between a dark winter with increasing Covid cases and a release of vaccines, but the market continued higher. 

The October Purchasing Managers Index® (PMI) registered 59.3 percent, an increase of 3.9 percentage points from the September reading of 55.4 percent. Similarly, the Conference Board Leading Economic Index® (LEI) increased 0.7 percent in October to 108.2 (2016 = 100), following a 0.7 percent increase in September and a 1.4 percent increase in August. Both the PMI and LEI strengthened from September as investors were enthusiastic over economic expansion from a successful vaccine. The unemployment rate fell to 6.9% in October (7.9% in September) as businesses have started the rehiring process. The November PMI and LEI were not available at the time of this writing.


For the month of November, the Singular coverage list continued to outperform the S&P 500 and the Russell 2000 by 736 and 10 basis points, respectively. Year-to-date, the Singular coverage list has underperformed the S&P 500 and outperformed the Russell 2000 by 209 and 130 basis points, respectively. Since our 2004 inception, the Singular coverage list has outperformed the S&P 500 and Russell 2000 by an annualized 315 and 299 basis points, respectively.

singular top 5 nov 2020

For November, MGNI has continued to receive market enthusiasm from RUBI’s merger with Telaria.  The firm announced that their Connected TV (CTV) revenue grew 50% in the third quarter.  MGNI has been our top performer for the second consecutive month.  Similarly, LUNA, ROKU, and TA all had strong months as they announced better than expected earnings for the third quarter.  KIRK also performed well as vaccine hopes encouraged investors to purchase retail.  It is worth noting that this month marks TA’s second consecutive month on the Top Five Performers list.

singular worst 5 nov 2020

NAK was our worst performer for the month as the company failed to obtain a key permit from the U.S. Army Corps of Engineers.  SA and AMRK, although posting good quarters, did not fare well in November because of investors’ enthusiasm to economies re-opening and growth ideas.  BYND posted earnings and revenue results below market expectations; however, many investors viewed BYND’s selloff as a buying opportunity and the stock has made a strong recovery. 

For the month, we initiated coverage on EBIX, EVC, and NAK.  EBIX is a leading international supplier of on-demand infrastructure exchanges to the insurance, financial, and healthcare industries; EVC is a Spanish-language media company owning diversified television, digital media, and radio assets that reach Hispanic consumers across the U.S. and parts of Mexico; NAK is a mineral exploration company and holds an interest in mining claims in southwest Alaska.

nov 2020 new initiation


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Robert Maltbie, CFA
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Three Stocks to Sell Due to Trump Dump Election Loss



Three Stocks to Sell Due to Trump Dump Election Loss


New York Times (NYT) - Sell

Recent price $41.19      |      Price target $24


three stocks to sell due to trump dump election loss


The NYT has benefited greatly from the increased news consumption during the Trump presidency.  Since the start of 2016, the stock is up over 300% driven purely by multiple expansion (from ~6x to ~21x) on the success of the company’s digital news offering.  Subscriptions increased from just over 1 million to almost 4.7 million in 3Q20.  However, overall EBITDA has been flat as growth in the digital business has only offset the continued secular headwinds facing the print business. 

We believe that a decline in consumer interest in news following the departure of President Trump could result in subscriber declines.  Digital subscribers - particularly those who are not on...



Singular Research Portfolio Update for November 20, 2020



Portfolio Update Week of November 20

  • The great rotation gathers steam!
  • Since our call in early September, small caps (measured by the small cap ETF IWM) have outperformed the QQQ by nearly 19%.
  • The market has all but accepted the presidential election as a Biden win as a fate complete. Barring a hail Mary in the Courts, the response has been bullish.
  • Small caps have been behaving like they want to make up the last cycle's significant underperformance in the next month.
  • Our long-term leaders in our model portfolio have been Roku (ROKU), initiated at $40 now $276 +580%, Acme United (ACU) +309%, GoodNatured Products (GDNP.V) +250%, and Magnite (MGNI) +160%. Our worst call was to short Zoom (ZM) -150% this year.
  • Our new initiations have been strong this month led by EBIX (EBIX) +25% and Entravision Communications (EVC) +15%.
  • Please join us for our 15th annual Best of the Uncovered Webinar on December 10th at 6:00 a.m. PST where we will feature our top growth and value small cap ideas selected for continued outperformance in this great rotation.

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Buys and Buys Long-Term Weekly Digest

buys and buys long term weekly digest nov 2020



Singular Staff

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Private Client Call with A-MARK Precious Metals Inc. (AMRK) with Mr. Gregory N. Roberts CEO & Director



Private Client Call with A-MARK Precious Metals Inc. (AMRK) with Mr. Gregory N. Roberts CEO & Director


Join us for a webinar on Nov 18, 2020 at 9:00 AM PST.




A-MARK Precious Metals Inc. is a full-service precious metals trading company offering a wide array of products and services. Products include gold, silver, platinum and palladium for storage and delivery in the form of coins, bars, wafers and grain. Services include financing, leasing, consignment, hedging and a variety of customized financial programs

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Market Election Correction - How Deep Will It Be? | MMI Report October 2020



October 2020 MMI Report

Will pre-election jitters hit the market?


market sentiments


Market Sentiment: Negative

After the late September and early October rally, bulls outnumber bears 1.08 to 1 and the NYSE is overbought at .71.  The put to call ratio on CBOE equity also is low at 0.47.  Only the VIX and VXN remain elevated at 27 and 35.  Also the confidence index is positive as spreads between high quality and junk remain wide.  Only two of our 10 indicators in this category are bullish.


Technical Indicators: Bullish

Eight out of ten of our data inputs register a bullish tone.  On the NYSE, new highs out number new lows by a 2.4 to 1 ratio.  Aggregate advancing volume outweighs declining volume 1.51 - 1.  Advancing issues outnumbered declining issues by 1.74 to 1.  All major market indices are comfortably above their 200-day moving average, led by the NASDAQ at +18.3% followed by the micro-cap index at +13.2% and then the small cap index at +11.7%.  This is upward trend is confirmed by equal weighted indices on the S&P 500 up 9.8% and on the small cap index up 11.7%.  This phenomenon may be an indication that the overall market is slightly extended.


Exhibit 1: 1-Year Chart of Nasdaq 100

exhibit 1 1 year chart of nasdaq 100


Liquidity Indicators:  Negative

Margin accounts are showing high leverage on a long-term basis but are within normal parameters in the near term at about 33% cash to debit balances.  Cash in money funds are at significantly outsized levels at $4.35 trillion, representing nearly 12% of total equity market cap, nearly twice the historical mean.  However, monthly net cash flows are negative at $(33) billion.  There have been a dearth of buybacks and M&A deals with the Morgan Stanley buyout offer of Eaton Vance for $7 billion taking the headlines.  IPOs are dominated by SPACs, comprising over 50% of all offerings.  This highly popular financing vehicle gives investors an advantage, a put feature where if they do not like the deal proposed with their funds within 2 years, they can redeem at par.  IPOs and secondaries have amounted to $15 billion.  Hedge fund outflows are estimated to be $17.4 billion per Eureka Hedge.  In summary, our liquidity indicators are negative with an aggregate outflow over the last 4 weeks of approximately $65 billion.


EPS Momentum:  Positive

25% of all equities currently have reported and upside surprises have exceeded downside surprises by 4 to 1.  Q3 2020 EPS estimates have been revised higher as have Q4 and full year 2021 estimates.


Valuation: Negative

The equity market indices continue to underscore the wide divergence between growth and value in large and small-cap stocks.  Small and mid-cap growth stocks are on the cusp of overvalued, measured by our proxy the T. Rowe Price New Horizons fund, trading approximately 1.5 times the current S&P 500 P/E ratio.  Examining these divergences further, we currently find the Russell 2000 trades at 15.9 times TTM earnings, the Russell microcap at 11.5, and the S&P 500 at 25.9.  Our valuation model shows the S&P 500 should trade at 28.5 times.  Therefore, we project 2020 earnings at $130.08 which generates a fair value of 3,716, +7.25%.  When we apply an equity market discount of 10%, we arrive at a fair value of 3,345, (3.4)% from last week’s close at 3,457.  This overvalued condition is confirmed by our contemporary equivalent of the Tobin's q ratio.  We find that the total market cap of our equity markets exceeds total GDP by 1.85 times.  This amount exceeds our fair value level of 1.5x so it is elevated but still below the all-time high registered in the year 2000 of 2.3 times.  Our relative valuation indicator which compares the earnings yield versus the BBB corporate bond yield shows an equity market that is slightly undervalued.  The current EPS yield exceeds the corporate bond yield by 36 basis points.  Equities would have to rise approximately 10% to reach parity to bonds.


Monetary Indicators:  Positive

Due to the extreme actions of the Fed to stimulate the economy in the face of the pandemic, M2 growth year over year currently exceeds 23%.  This outstanding growth faces heavy headwinds due to a decline in recession-driven money velocity of -22.8%.  The net result is a mild excess liquidity stimulus of 29 basis points.  Q2 nominal GDP was -4.97%, clearly heavier monetary stimulus is necessary.


Exhibit 2: TTM Growth of M2

exhibit 2 ttm growth of m2


The term spread of the treasury yield curve slope is positive.  The forward rate of the one year T-bill is also stimulative forecasting +0.17.

Fed funds trade at a slight discount to 3-month T-bills, but also positive.
And finally, the yield spread of high yield to treasuries is bullish at +413 basis points.

As we move into the uncertainty of the 2020 presidential election outcome, the net result is that the market is slightly overvalued and slightly extended from a technical perspective.  Intermediate underpinnings are positive led by improving earnings momentum and EPS growth trends.  This positivity is supported by solid near-term technical momentum while sentiment has become slightly too bullish.  We believe a five to ten percent correction is warranted based on our data.


Robert Maltbie, CFA

President, Singular Research


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Buys and Buys Long-Term | Singular Research Weekly Digest



Buys and Buys Long-Term Weekly Digest

buys and buys long term weekly digest


Portfolio Update Week of October 23

  • As the presidential election holds the market hostage until clarity is reached, it may be signaling ambivalence with Biden leading by 6% in the IBD / TIPP survey, one of the more accurate polls from 2016. The Rasmussen poll (another accurate poll from 2016) shows that 51% approve of Trump's performance.
  • As the election approaches, we are likely to hear more negative news about Covid-19.
  • In Europe, new Covid-19 cases are spiking to much higher levels than earlier this year, like what occurred in the U.S. in the early summer in Florida, Arizona, and Texas where cases spiked but mortality did not. It is likely the same effect where younger less vulnerable members of the population are re-entering their normal daily routines and catching Covid-19 yet nearly all are promptly recovering.
  • Deal or no deal? As Congress battles, bickers, and promises to hammer out a deal on a possible $2 trillion stimulus package for the economy, small businesses and workers remain in limbo, without any results at this juncture.
  • Meanwhile, an outbreak of positive economic news has occurred. Last week the labor department said first time jobless claims have come in better than forecasted.  Sales of existing homes have risen for the fourth month in a row.  New housing starts are also on the rise sequentially, gaining over 9% from August.
  • The index of leading economic indicators increased by 0.7 during September.
  • Retail numbers surprise and retail stocks move higher.
  • In the Singular Research Coverage universe, Good Natured Products (GDNP.V) has broken out, jumping nearly 100% in the last two weeks, following in the path of fellow plant-based foods industry leader Beyond Meat (BYND), up nearly 150% since we initiated coverage in January.
  • New initiation Esports Entertainment Group, Inc. (GMBL) had a good start, increasing nearly 20% before selling off.
  • New initiation TravelCenters of America, Inc. (TA) has held its 20% move from last week.
  • Meanwhile, ever so quietly behind the scenes the great rotation continues since September 1st as QQQ is down 5% and IWM is up 4%.
  • Q3 earnings season has started with beats outweighing misses by a 4/1 margin. 
  • Soon, we will know the results of the election, likely have a viable vaccine, and have the economy fully reopened.

We continue to like undervalued, out of favor equities in industrial, retail, and financial, all economically sensitive sectors.


Singular Staff

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Macy’s, Inc. (M) Action Call | Buy | 12 Month Price Target $10.55


Action Call – Buy
Macy’s, Inc. (M)

macy action call


12 Month Price Target, $10.55

Macy's, Inc., (M), an omnichannel retail organization, operates stores, websites, and mobile applications under the Macy's, Bloomingdale's, and bluemercury brands. The firm sells a range of merchandise, including apparel and accessories for men, women, and children, cosmetics, home furnishings, and other consumer goods. As of February 1, 2020, the company operated 775 store locations in 43 states, the District of Columbia, Puerto Rico, and Guam. Macy's, Inc. was founded in 1830 and is based in New York, New York. As Covid shopping restrictions ease in some states and as the Holiday season starts, we believe Macy’s, Inc. will benefit from an increase in in-store consumer shopping, the company’s extensive infrastructure for curb-side pickup, and growing digital sales. We believe M is an attractive investment because:

1. The company is largely undervalued relative to its peers on a Price to Sales, Price to Book, and Enterprise Value to EBITDA basis.


macy action call img 1


2. According to the U.S. Census Bureau on October 16, 2020, headline August retail sales (excluding automobiles) sequentially increased 1.5% and 5.4% year-over-year. This percentage growth beat consensus expectations of 0.4%. Clothing and accessories led the gain with an 11% sequential increase. The unexpected gain in retail sales comes after historically high rates of savings, specifically the consumer savings rate reached a high of 33.6% in April and was 14.1% in August. Furthermore, as states ease Covid shopping restrictions, consumers will have more options of where and how to purchase gifts for the Holidays. For example, some California counties are now increasing store occupancy rates from 25 to 50% as risk levels abate which further suggests a potential increase to M’s top-line.


3. Management has been taking appropriate actions to navigate through the pandemic. Management has invested in M’s strong online presence, accounting for 54% of total sales in Q2 with 53% growth year-over-year. Second, M has a large infrastructure for a curb-side pickup option (775 stores now open). Third, M recently signed a five-year partnership with Swedish buy-now, pay-later group, Klarna, that enables customers payment flexibility with the ability to make payments in four interest-free installments. M is the only apparel website that offers this feature. Fourth, M has partnered with DoorDash to allow for same-day delivery service at nearly 500 of its stores nationwide. And lastly, management is cutting expenses and is on track to reduce them by $2.1 billion by the end of 2021. With an increase of four million new online shoppers over the last three months, the closing of competitors such as J.C. Penney, Lord & Taylor, Neiman Marcus, and Pier 1, and $1.4 billion of cash and $3.0 billion of untapped credit capacity, Macy’s management believes the firm will not only weather the storm, but gain market share.


4. Valuation. We equally blend valuations from M’s P/S, EV/EBITDA, and P/B ratios. Given the deterioration of M’s sales due to the pandemic and management’s efforts to improve profitability, we are forecasting M’s P/S ratio to expand to just 25% of the average peer group over the next 12 to 18 months. Over the next two quarters, it is worth mentioning that M’s sales have positive seasonality and should further see strength and improvement from quarantined Americans that are eager to purchase new apparel both for themselves and for their loved ones in a safe, Covid-free environment. Therefore, if we assume no growth to sales (even with stores reopening and easing Covid shopping restrictions) and apply 25% of M’s peer group average P/S ratio of 0.87, we forecast a 12-month price of $14.63. Furthermore, if we assume as well that M’s EV/EBITDA ratio expands to 75% of M’s peer group average EV/EBITDA ratio of 22.78, we forecast a 12-month price of $9.06. Similarly, if we assume M trades at book value (a conservative estimate given M’s peer group average is 6.64), we forecast a price of $7.95. The average of these three prices is $10



  • M has trouble increasing in-store sales due to restrictive quarantine measures.
  • Holiday apparel spending is not as strong as anticipated.
  • The Corona virus has a second outbreak, leading to more store closures.


-Singular Staff

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