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[. Do my make friends? I was . Sometimes things just get out of whack with stocks at the beginning of the year. No worries. The market has an estability to correct itself right in front of you. It can look inconsistent, even crazy when it all happens. But it's all part of a natural order of rationalization you need to embrace if you want to be a successful investor.
So, in a day when the Dow rallied 270 points, S&P edged up 0.1%. NASDAQ declined 444%. Let's go under the hood and figure out the method behind the market's madness. I'm going to start with two. It's a little cute, I know, but I'm going to give it a shot. Two big constellations. Constellation Energy, the independent power producer, and Constellation Brands, the beer, wine, and spewers business.
The big hyperscalers are obsessed with clean energy. That's why they're in love with Constellation Energy, CEG, which is the nation's most visible nuclearpowered utility. It's as clean as it gets if you want reliable electricity. Constellation's been loved to the point where the stock is up over 175% over the last two years.
Stock seems invincible. Sells for 28 times this year's earnings, which was pretty darn pricey, especially for a utility. Now, how about Constellation, the beer company STZ? It's been one of the worst stocks in the entire market over the last years. It is down over 40%. This one's been a total parade of horses.
Beer's gone up a great deal in price. Call it labor in cans. Younger people no longer drink like the older cohort. And it's only going to get worse as the heavy drinking baby boomers age out. The company imports beer from Mexico. Very high packaging tax. And the president's policies heard it. Their customer base leans Hispanic, which means those customers don't want to go out as often thanks to the immigration crackdown.
And yes, the omnipresent GOP-1 weight loss drugs make beer taste like nothing. Expensive nothing. So what's happening this year? Constellation energy stock has already fallen from 353 to 322. I see no signs of this stock bottoming. To me, it looks dangerously expensive. As for constellation brands, I'm going give you a full explanation later in the show, but let's just say that the stock is now at 13 times earnings and I think that may have overcorrected.
In short, the value of two constellations got out of whack and a company that makes flicker is certainly worth more or at least something we don't know what than uh under 13 times earnings. That's too low given the constellation does make the beer with the most US revenue. That's Melo especi Well, this is really interesting.
See, last year was Walmart's year. The stock was up over 23% as the market recognized that this was the store of choice for cashstrapped consumers. Walmart even began to pull more customers from the upper middle class because CEO and now retiring sadly Doug McMillan made the stores more appealing while keeping prices low.
Everyone loves low prices. However, Walmart's price journey ratio, how we measure whe the stocks cheap or expensive, it skyrocketed to the 40s. That was incredible. How about Costco? The sainted Costco. Well, first it lost its long-standing CFO, Richard Glant. In more than 38 years, he was the heart and soul of Costco.
He knew pricing, knew merchandise, knew the customer like no other CFO and most CEOs. Second, the renewal rates after a steady as she goes upward march finally faltered, growing more slowly, certainly more slowly than the street was looking for. For that, we were paying more than 50 times earnings early last year.
Come on. So, of course, this stock just got clobbered, becoming an almost permanent denison on the 52- week low list by late last year. While the S&P 500 was up 16%, Costco stock actually declined 6%. But since the new year began, oh, it's a different story. Walmart's done nothing. While Costco's stock has rallied from 862 to 9:15, including a monster 3.7% did gain today after some good numbers last night.
And I don't think it's done. Earlier this week, I told you Larry Williams, the great technician, saying Costco is screaming screaming by. That number that they got last night much better than expected monthly sales. I liked every single bit of it. The comparable sales accelerated in December with digital stepping up versus November.
The year-over-year number showed a terrific gain. It was the best beat from the company that I've seen in quite a while. I think the estimates are now too low. I think you're going to see a host of earnings bumps and price target increases. Costco, I like it. Or take Nike. Oh boy, the stock of Nike.
What had it been? The House of Pain. This thing spiked when they canned the previous CEO and put in an old hand, Elliot Hill. He's had to work fast with his win now initiative that includes returning the company to his roots as a sportsbased business. Still, if you take a longerterm view, this stock has been a nightmare.
Okay. Uh, but late last month, three board members, including Hill and Tim Cook. Yes, the CEO of Apple bought a ton of stock with Cook actually putting almost $3 million to work. Boy, talk about a handover fist foot of confidence. Today, analyst from Needam decided to downgrade Nike. Sell, sell, sell from uh buy to hold.
I'm going to quote cuz I thought it was just I thought it was kind of outrageous. Quote, the turnaround is progressing slower than we expected. We're concerned about the recent level of selloff in the North American wholesale channel. China appears highly problematic and street numbers for the next 12 to 24 months look too not uh look too high for us to us.
Quote, did the stock get hammered in response to that incredibly negative sent? No, it closed up more than 3%. Were Nike's buyers simply mocking this bearish analyst? Actually, it's a new year and there's a lot of value in Nike. North America has already turned. China is a disaster, but Hill knows it.
He has a plan. I want to invest alongside Cook and Hill. I'm not dissuaded by what what Nam says. Not at all. In fact, I'm cheered. When a stock goes up after such a sharp downgrade, you know, I think it's been immunized against the negativity. I predict analysts will come out from their from their foxholes, from their shelters, and say, "Bye bye bye."
Nike. Finally, the home builders. Hardly a day goes by without an analyst downgrading these stocks, cutting the price targets. But today turned out to be a cut too far and the home builders actually bounced. Do I want to own them? I don't know. But I do want to own the stock of Home Depot. A leading indicator rallied 3% today.
Lots of people have given up on the stock because it's so tied to housing turnover. Something that would get a real boost though if the president can force institutional investors that own single family homes to dump them on mass. We own Home Depot for the Chow Trust proudly. our only housing exposure and I am beginning to feel pretty darn good about this situation which has been tough.
Now some of these rebounds are because hope can spring eternal optimism tends to bloom at the beginning of the year but that optimism does not come with new money. The cash to buy these things coming from somewhere else today the these stocks were bought with gains from last year's winners chiefly tech winners.
These stocks have become sources of funds. It's not by luck that the worst performing MAG7 stock in 2025 is Amazon. It's the best performing stock of the group so far in 2026. On the other hand, no matter what good Nvidia says, it's doing nothing. Nobody seems to care anymore. And that stock's being sold and that's providing a lot of cash for all the other stocks I talked about.
I don't know how long this rotation from high performing stocks to low performing stocks will last. The valuations are shifting rapidly. I've seen this kind of early year action time and time again in my 44 years of trading and investing. Can you believe that? Sometimes it lasts about five days. Other times I've seen it go for two weeks.
Equilibrium tends to be reached by week three. But the bottom line for now, brace yourself. It's still in time. Dy ln kind. Uh so keep your eyes open because the wheels still in spin for the loser now will be later to win because the times they are uh changing. Jim in California. Jim, congrats, Jim, for your Eagles winning their division once more as a defending 2025 Super Bowl champs.
Well, thank you. We do have a big game Sunday at 4:25 against the NerS. The Lion is giving 4 and a half to the NerS, but I'm going to be out in San Francisco missing the game. Why? Because I'm an idiot. But I'm also covering the JP Morgan healthcare. So, what's going on? Hey, um I've also been enjoying the meteoric rise of the SoFi share price and we purchased it thinking that the fintech stocks would rise because of their expectations of falling interest rates, AI integration and their 100% digital model even though share price has recently been punished with a recent funds raise.
Is this an opportunity to buy more at these lower levels? I think actually, believe it or not, Jim, I think the stock has not come down enough. I think the stock acts what I call heavy. There's a lot for sale. I want you to wait. I'm not going to give you the go-ahhead to buy it. And by the way, I've liked the stock since five.
I'm on record telling Anthony Nuto, I think it was right. So, I've got some what I call gravitas. All right. Anyway, I don't know how long the rotation is going to last. I want you to brace yourself because as the great Bob Dylan once said, the times they are changing. I'm money. Several sectors stood above the rest in 2025.
I'm going to reveal which areas outperform the market and if they can continue their run in the new year. Then for every winner there is a loser. I'll run through the sectors that performed the worst in 2025. Give you my take on which ones can rebound in 2026 and the aforementioned constellation brands the beer kind today after reporting a top and bottom beat.
So are the stars finally aligning for a turnaround? I'm breaking down the quarter to find out. I want you to .
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