Russia's invasion of Ukraine remained at the forefront of investors' minds this week, as global markets continued to react. The updates from the crisis have been consistently alarming. In just a fraction of the news, a 40-mile convoy of Russian military vehicles was seen on its way to the Ukrainian capital of Kyiv on Tuesday, while Friday brought word that Russia had seized Ukraine's largest nuclear power plant. Meanwhile, oil prices surpassed significant levels throughout the week, with West Texas Intermediate Crude (WTI) jumping to its highest level since 2011 on Thursday. 

It was a volatile week for the Dow Jones Industrial Average (DJI), S&P 500 Index (SPX), and Nasdaq Composite (IXIC). All three major benchmarks finished with their second-straight monthly losses on Monday, as Wall Street weighed the implications of sanctions against Russia. Though the market staged a major comeback on Wednesday, all three indexes remained on track for steep weekly losses at this point on Friday.

Retail Earnings in Focus

Earnings season was still in full swing this week, with plenty of reports for investors to sift through, and attention focused on the various outlooks for 2022. In particular, several retailers reported earnings results, with many sharing holiday season details, including Target (TGT), Dollar Tree (DLTR), Nordstrom (JWN), Big Lots (BIG), Best Buy (BBY), and Costco (COST). 

Best and Worst Stocks This Month

Though March has already kicked off, there's still time to check out some of the best and worst stocks to own this month. Twitter (TWTR) was in focus after a bear note from Benchmark, along with news that Russia's state communications regulator is targeting the social media giant. Now looks like a good time to steer clear of the stock, as it just appeared on Schaeffer's Senior Quantitative Analyst Rocky White's list of 25 worst performing S&P 500 Index (SPX) stocks for March. Also on this list, Deere (DE) has a history of underperforming this month. 

Conversely, General Mills (GIS) and Citrix Systems (CTXS) both landed on White's list of SPX stocks that averaged the highest March returns over the last decade. GIS saw a 4.2% one-month return, while CTX boasted an average 5.8% one-month return -- both positive eight of the 10 months. 

 

Quiet Week Ahead in Terms of Data

Though earnings season is winding down, there will still be reports coming from the likes of Bumble (BMBL), Campbell Soup (CPB), CrowdStrike (CRWD), Dick's Sporting Goods (DKS), JD.com (JD), Oracle (ORCL), Petco Health and Wellness (WOOF), Poshmark (POSH), Stitch Fix (SFIX), Ulta Beauty (ULTA), and Wheaton Precious Metals (WPM).

Next week will be relatively quiet in terms of economic indicators, though investors will be watching for inflation data. In the meantime, see what could be ahead for the broader market, as White takes a look at this rare SPX ignal, while Senior Vice President of Research Todd Salamone dives into the sentiment front.

Subscribers to Chart of the Week received this commentary on Sunday, February 27.

In our Chart of the Week publication, we like to bring forward any unique stocks, trendlines, or patterns that may be of interest to the majority of our subscribers. This week we are diving into Kroger Co (NYSE:KR), which -- as pointed out by our very own founder and CEO Bernie Schaeffer -- has several redeeming qualities going for it; both technical and historical. Below, we are going to dig further into several theories and drivers, which could be indicating that now is the perfect buying opportunity for bulls to move in on KR.

Although the shares of grocery chain KR have cooled off since hitting their January record peak of $50.15, the equity has been a long-term outperformer, and only looks to be readying for its next surge higher. Kroger stock has tacked on 42% over the past 12 months, and with aid from the 80-day moving average, has been able to bounce back from several brief pullbacks. In fact, Bernie noted that the moving average has been shown nothing but respect from KR shares -- whether it was performing as support or resistance over the past several years; an uncanny characteristic for such a trendline.

More specifically, according to data from Schaeffer's Senior Quantitative Analyst Rocky White, comparable pullbacks have occurred six times over the past three years. The security enjoyed a positive, one-month return almost 70% of the time, while averaging a 3.4% pop. A similar move from the equity’s current perch of $46.22 would put KR back within a chip-shot of its January record peak.

Meanwhile, looking toward the options pits, puts rule the roost. This is per Kroger stock's 10-day put/call volume ratio of 1.37 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). That ratio sits higher than all but 6% of readings in its annual range, suggesting a much healthier-than-usual appetite for puts in the last two weeks.

Echoing this is the security's Schaeffer's put/call open interest ratio (SOIR) of 1.57, which ranks in the 90th annual percentile -- highlighting a massive appetite for puts among short-term speculators, as well. Those options traders are in luck, because the stock's Schaeffer’s Volatility Scorecard (SVS) sits at a 79 out of 100. This means the security has exceeded option traders' volatility expectations during the past calendar year.

While trendlines and technical data can be subjective, the historically bullish signal that is now flashing toward Kroger stock is an intriguing takeaway. Amid the broader geopolitical tensions that have triggered a volatile market for both stocks and commodities, such a foundation could bode well for even a low-risk bull looking to bet on KR.

Semiconductor stock Marvell Technology Inc (NASDAQ:MRVL) is up 0.3% at $65.42, after reporting slightly better-than-expected fourth-quarter results. To follow, four analysts slashed their price targets, including Wells Fargo to $70 from $80, while Rosenblatt Securities raised its price target by $5 to $125. 

On the charts, MRVL has been consolidating below the $69 level for the past few weeks, with pressure from its 160-day moving average. Year-to-date, the equity is down 25.2%. 

Unsurprisingly, Marvell stock's options pits are flooded with activity this morning. So far, 48,000 calls and 20,000 puts have crossed the tape -- nine times the intraday average -- with options volume pacing for the top percentile of its annual range. Expiring today, the weekly 3/4 70-strike call is the most active, and new positions are being bought to open there. 

Analysts are overwhelmingly bullish on MRVL, with 21 of the 24 in coverage carrying a "buy" or better rating. Plus, even after today's various price-target cuts, the 12-month consensus price target of $96.88 is still a 47.4% premium to current levels. 

The week will wrap up today and feature nonfarm payrolls data, the unemployment rate, average hourly earnings, the labor force participation rate, and info on consumer credit. 

The following public company is slated to release corporate earnings today, March 4:

Hibbett Inc. (NASDAQ:HIBB -- $47.74) engages in the retail of athletic-inspired fashion products in small and mid-sized communities in the United States. Hibbett will report its Q4 earnings of 2021 before the open today.

Looking ahead to next week, it will be a relatively quiet week as far as economic data goes, with wholesale inventories and the foreign trade deficit out early on. All the action will happen at once on Thursday, with a new round of inflation data to digest, courtesy of the core consumer price index (CPI). Investors will also get a glimpse at the Federal Reserve's budget deficit, and latest quarter's domestic nonfinancial debt and household wealth numbers that day as well.  

There will only be a few corporate reports to sift through next week as earnings season settles, including those from Bumble (BMBL), Campbell Soup (CPB), CrowdStrike (CRWD), Dick's Sporting Goods (DKS), JD.com (JD), Oracle (ORCL), Petco Health and Wellness (WOOF), Poshmark (POSH), Stitch Fix (SFIX), Ulta Beauty (ULTA), and Wheaton Precious Metals (WPM).

All economic dates listed here are tentative and subject to change.

Software stock Citrix Systems Inc (NASDAQ:CTXS) has experienced muted price action over the past couple months. However, its chart could soon become more interesting, as CTXS just appeared on Schaeffer's Senior Quantitative Analyst Rocky White's list of stocks on the S&P 500 Index (SPX) that averaged the highest March returns over the last 10 years. 

Per White's data, Citrix Systems stock boasted an average 5.8% one-month return in March over the past decade, with eight of the 10 months finishing positive. A similar move from the security's current perch of $102.10 would put CTXS at $108.02 -- its highest level since early October. Plus, the stock would likely break past pressure at its 200-day moving average, which has been keeping a tight lid on gains. Year-to-date, the equity is up 7.9%.

A round of upgrades could also give CTXS a boost. Of the six analysts in coverage, three carry a tepid" hold" rating, with three a "sell" or worse. There is plenty of room for price-target hikes as well, as the 12-month consensus price target of $99.89 is a 2.1% discount to current levels. 

As volatility grasps Wall Street, investors are looking for solid entry points into the market. One stock in particular that stands out as an interesting portfolio addition this month is General Mills, Inc. (NYSE:GIS). The security has recently pulled back from its Jan. 14, five-year high of $69.95, though it still sports firm support at the 100-day moving average, which has been in place since October. Last seen up 1.4% to trade at $67.71, the security also stands out as one of the 25 best performers in March, going back 10 years. 

To be more specific, GIS just appeared on Schaeffer's Senior Quantitative Analyst Rocky White's list of stocks on the S&P 500 Index (SPX) that averaged the highest March returns over the last decade. General Mills stock averaged a 4.2% one-month return, with eight of these months positive. A move from its current perch would place the equity above the $70 mark for a fresh five-year peak.

An unwinding of pessimism among the brokerage bunch could create more tailwinds for General Mills stock. Of the 10 analysts in coverage, six still call the equity a tepid "hold" or worse, while the 12-month consensus target price of $66.01 is a 2.5% discount to current levels. This leaves plenty of room for upgrades and/or price-target hikes.

Short-term options traders already lean bullish. This is per the security's Schaeffer's put/call open interest ratio (SOIR) of 0.39, which stands higher than just 7% of readings from the past 12 months. This means short-term options traders have rarely been more call-biased.

After the rollercoaster ride that kicked off 2022 on Wall Street, it's time to spend some energy understanding what's happening in the cannabis stock sector. With federal legalization continuing to be teased, as well as state-by-state legalization chugging along, what is next for the cannabis industry?

Today we sat down with Rob Sechrist, President of Pelorus Equity Group, the leading provider of value-add bridge commercial real estate loans to companies in the cannabis sector, and has more than 18 years of experience in the real estate finance industry. Rob’s primary role at Pelorus Equity Group is the development of strategic alliances with both private and institutional investors, formation of equity partnerships, coordinating the company’s growth into new markets, and as an underwriter of transactions. Rob also oversees the direction of the marketing programs to borrowers, brokers, and investors. Today, Pelorus raises several million a month through the company’s investors and equity partnerships.

Schaeffers: What major opportunities do you see in the cannabis industry?

Cannabis is a segment of real estate representing about a $50 billion asset class, making it one of the largest new asset classes in the country, with cannabis properties generating up to 10 to 15 times more revenue than non-cannabis tenants.

We see a huge investment opportunity in this arena, which is why we operate the largest privately held mortgage REIT in the sector. We have over a quarter of a billion dollars in assets under management, and our investment vehicle is private, meaning that our share price never changes. This means that there is no volatility on the balance of your principal investment – what you're going to get back when you redeem out of our fund. In addition to that, our target yield for our fund is 15% net IRR. We've achieved that every single year we've been in full operations, and we just achieved 15.8% for the last year.

Schaeffer's: What major obstacles do you see in the cannabis industry?

Cannabis-use buildings require very specific infrastructure (specialty-use equipment, HVAC/power, and water), so carefully managing these investments are at the core of a successful operation. Currently, federal laws cause many traditional lenders to stay away from financing cannabis real estate, especially since requirements for stand-alone financing of projects are unsustainable for a large scale lender. And even when financing is found, it’s still a complex and laborious process. Delays are typical and often cost millions of dollars. 

Cannabis' legal status gives insurers and other third parties the ability to deny a claim. They also provide lender protections, such as errors and omissions insurance, title insurance, and property insurance, which state that if you're doing something federally illegal, the policies may be null and void. Getting your real estate situation right the first time is vital. If done incorrectly, you risk losing significant time and money. That’s why property owners need to find the right lenders to understand an opportunity, structure a logical solution, and execute a timely close. 

Schaeffer's: What motivated you to join this stigmatized industry?

After working in the lending world for decades, we saw an opportunity when our local Congressperson, Dana Rohrabacher, passed the Rohrabacher-Blumenauer Amendment in 2014. We realized that cannabis was the largest newly created asset class for lending in the country, and after analyzing the space for a couple of years, we originated our first transaction in 2016. Shortly thereafter we became the first dedicated lender to the sector. We were often the first to do a lot of things in lending, both in product types and asset types, so this was something that was intriguing to us. We also believe in the many benefits cannabis brings to the U.S. and wanted to be a part of getting people off of opiates. So we had a vested interest on that side as well.

Schaeffer's: What do you think the next 'big thing' in cannabis will be?

One exciting trend is the ability to use more robust data to understand all the different markets for cannabis-use properties. Pelorus made a significant investment in developing this data and now has the most extensive real estate data available for cannabis-use real estate across the country. Pelorus made a significant investment to build our own proprietary database to pinpoint – in each state, county, city, or each of these zones – what types of licenses there are, who owns the licenses, their addresses, who owns the properties, where they're situated, who the lenders are, etc.. We wanted to know the current capacity for any one market, for different types of licenses, and know when the market was going to be approaching saturation.