Naughty Flicks

Skip NavigationMarketsBusinessInvestingTechPolitics & PolicyVideoWatchlistInvesting ClubPROLivestreamMenu(This is The Best Stocks in the Market , brought to you by Josh Brown and Sean Russo of Ritholtz Wealth Management.) Josh — So sorry for not getting our regular Monday column out to you this week. Apparently I am now old enough to get injured while tying my shoe. One second I’m sitting on a soft bed reaching down toward my foot, the next second I’m seeing stars — curled up like a ball with my entire lower back in spasm. My orthopedist is on vacation this week, of course, so a virtual visit landed me in physical therapy while I wait for an MRI. This is disc stuff, so it never truly goes away for good. It’s like the Vix that way — you don’t want to celebrate an extended period of calm too loudly, lest you tempt the market gods who cannot wait to start kicking down our dominos. Anyway, we’re back in the saddle today. We’re doing our regular weekly look at the high level stats in our Best Stocks in the Market research. Then we’ll show you set-ups in Apple (AAPL) which just announced a slew of new products and Restaurant Brands International (QSR) . QSR is the parent company of Burger King, which has just unseated Wendy’s as the second largest burger chain in America . It also owns Tim Horton’s and Popeyes, so you health nuts out there are probably pretty familiar with the product. Both of these stocks hit 52-week highs within the last few weeks and have gently pulled back. We’re betting the pullbacks are refreshers rather than rally-enders for both names. Sean’s going to take over here first and then we’ll be back with the fundamentals and technicals, as always. As of Sept 9, there are 206 names on The Best Stocks in the Market list. Top sector ranking: Top industries: Top 5 best stocks by relative strength: Sector spotlight: Apple, Inc. (AAPL) Sean — We wrote about Apple on March 23rd with the stock sitting right on its 200-day and Josh told you the level had to hold or we were looking at a change in trend. Well, the buyers held the line. Apple bottomed at $246.63 a week later and has returned 30.7% since, good for 21.1% YTD. It ran to $340.08 in late July before giving some back. Apple trades at a premium because of its earnings quality and stability. Apple has now printed three straight record quarters. The June quarter (fiscal Q3, reported July 30) did $109.4 billion in revenue, up 16% year over year, with iPhone at $54.3 billion (+22%), Mac at $10.4 billion (+29%) and Services at a record $30.7 billion (+12%). EPS of $2.02 was up 29%, though $0.11 of that came from tariff refunds. Gross margin hit 50.1%, which also included roughly two points of tariff-refund benefit. Their forward guidance continued to show quality and stability. Management called for 9% to 11% revenue growth in the September quarter, a slowdown from 16%. Tim Cook was explicit that this is not a supply problem but a demand forecast problem — iPhone and Mac are selling better than Apple planned and there’s a limit to how much they can pull forward (good problems to have). Gross margin was guided to 47% to 48%, and management said memory costs more than fully explain the step down (we wrote about this happening to Dell last week). Apple has already raised prices on Macs, iPads, HomePod and Apple TV this year while leaving the iPhone alone. Cook said they’re evaluating all options, and noted the DRAM market has three suppliers, which is difficult to navigate. We’d be remiss not to mention John Ternus taking over as CEO on September 1, ending Tim Cook’s spectacular 15-year run. Cook is now executive chairman at Apple. This is a chart that Matt Cerminaro from our research team put together – AAPL has been on an incredible run, with nearly $785 million in market cap added every day since Tim Cook became CEO in 2011. Yesterday, John Ternus gave his first keynote as Apple’s CEO, and he did not ease into it. At the “Surprise and Shine” event, Apple introduced the iPhone Duo, its first foldable phone at $1,999. This is the first new iPhone form since 2017. It came alongside the iPhone 18 Pro and Pro Max at $1,199 and $1,299, both $100 above last year’s models, plus AirPods 5 and the Apple Watch Series 12 and Ultra 4. Wall Street is split on it. Citi kept its Buy and called the Duo Apple’s biggest new hardware category since the Apple Watch and AirPods, and Goldman was constructive on the view that the staggered launch and the $100 Pro increases should support average selling price growth. There were skeptics too. Oppenheimer stayed at Perform, expecting the Duo to be the best-selling foldable on the market but seeing supply capped near 8 to 10 million units this year, and Needham held their rating at Hold arguing a bigger screen doesn’t fix the AI gap Apple has been criticized for. The stock barely moved, closing at $315.34, down 0.28% on the day. Josh — Apple gapped down hard earlier this summer, leaving an air pocket that took the stock all the way from the $320s down to the $300 area. That gap has now been filled. A stock reclaiming a gap it fell into shows the sellers have been absorbed. The buyers worked through all that supply and came out the other side. That’s the tell. The stock battled back up through the entire air pocket and is sitting at $317 with the 50-day right here at $317 as well. RSI is 51. Back to neutral after everything this stock has been through since the summer highs. The momentum indicator reset without the trend breaking. There is room to run from here. Traders can use $300 as their line in the sand. That is the bottom of the gap, and a weekly close back below it means the fill has failed and the sellers are back in control. The 50-day is noise here. Price has been crossing above and below it too frequently to read anything into it. Investors can anchor to the rising 200-day at $284, which has been the floor on this chart all year. Below that on a weekly close and something more significant has changed. Restaurant Brands International, Inc. (QSR) Sean — We spotlighted QSR (Burger King, Tim Hortons, Firehouse and Popeyes) on April 2nd when it was fighting through $75, the ceiling it had been stuck under for a year. The stock is up 5.8% since and 19.8% year to date, with a high of $81.67 along the way. The grill is hot! The Burger King story we wrote about kept working. Second quarter results (August 6) put BK U.S. comparable sales up 8.5%, more than nine points ahead of the U.S. burger QSR industry, and Burger King passed Wendy’s to become the second-largest U.S. burger brand by system-wide sales – a spot it had lost six years ago. International comps were up 5.5% with system-wide sales up 10.7%, the 21st straight quarter of positive comps. Firehouse Subs system-wide sales grew 7.5% with 8.1% net restaurant growth. Consolidated comps for the company were 3.8% and adjusted EPS of $1.07 beat expectations by three cents on revenue of $2.52 billion. It was a good quarter for the King (and the Firehouse). Until then, Pershing Square adding 14% to their position in Q2 is not the kind of institutional behavior that ends badly. Expect a return to positive Popeyes same store comps in the back half without putting a number on it. The other drag is beef, running north of 20% inflation and squeezing franchisee profitability, something Shake Shack, McDonalds and Wendy’s are all struggling with. Management set a $2.60 dividend target (up 5%, the 11th straight annual increase) and guided to roughly $500 million of buybacks. Net leverage came down to 4.1x from 4.2x against a low-to-mid 3x target by 2028 as S & P moved the credit to BB+ in May. Last but certainly not least, Pershing Square, which we mentioned as a foundational holder in April, added about 14% to its position in the second quarter. Here’s Josh on where we stand with the stock technically. Josh – QSR has been forming a cup and handle pattern for months, and it is right on the edge of breaking out. The stock ran up to $82 earlier this year, pulled back, consolidated, and has now crept back up to that same level. That $82 area is the line. A convincing close above it and this thing goes. The stock has been knocking on that door. A close above it with conviction and traders will chase this. RSI is 48. Back to neutral after the stock spent time at higher levels earlier in the year. The momentum indicator has reset completely without the trend breaking. That gives this breakout attempt room to run if buyers show up at $82 with conviction. Nothing broken here. Traders need to see a weekly close above $82 to confirm this is real. Without it, you are still inside the pattern. If the breakout fails, the 50-day at $76 is the first level of support. Below that, the 200-day at $73 is your floor. A weekly close under $73 and the setup has broken down entirely. If you’re going to trade the name, I’d take a half-position here and use a buy stop limit at $82.50. Your brokerage account will automatically double you up if and when she finally goes. Your average cost will be in the high seventies. You won’t be fully committed until the buyers show their hand. 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