The old axiom, “sell in May and go away” is feeling pretty accurate right about now.

Ever since new the S&P hit a new high on January 26th, the market has been thrashing around. And despite the mid-June bounce in the S&P, the breadth feels worse than ever.

This unsettling feeling isn’t just a hunch. The number of stocks making a 52-week high on the NYSE is 23 today versus 76 making 52-week lows.

You would think with the U.S. economy humming along, picking good stocks would be easy. But it’s not. The uncertainties regarding tariffs, interest rates and the direction of the EU and Asian economies have the upper hand right now.

It will take some time for the turmoil to settle down but I suspect we can find some great buys while the big funds rotate their portfolios.

I think most of the heaviness in the market is due to lack of new funds. Higher rates are finally starting to take a toll on the amount of “fresh money” entering the market. Barron’s Magazine noted this weekend that one-third of all new money invested in the stock market is allocated to low-risk money market or bond-like funds.

This slowdown in the supply of new stock buyers doesn’t mean we don’t have a chance of making money in long ideas. It just means it might be a rockier ride. I’ve been doing a bit more sector research in an attempt to find the best ideas in groups that are rising. I would rather wait for a group to finish bottoming out before recommending stocks to buy.

In a bull market, investors can do less research and find stocks that will rise. In a challenging market, my years of due diligence should help us find ones that will deliver superior returns. I’m doing my best and have a few new ideas to send along to you shortly.

Thank you all for the questions and comments posted on StockTalk. I try to respond as quickly as possible. However, often I’m knee-deep in research, and there is a short delay.

Around the Portfolio:

Air Transport Services (NSDQ: ATSG) saw its stock upgraded to Buy from Hold at Stifel.  Analyst David Ross raised his price target to $26 from $23 saying shares are attractive at current levels. He noted that not only is the company an “Amazon play” but has that the overall development of air networks to service the ever-expanding demands of e-commerce give the company real growth potential.

Lindsay Corp (NYSE: LNN) beat earnings estimates by 15% but beat revenue by only $2 million or 1%. The company had a much more significant than expected restructuring charge, which makes me suspicious that perhaps some costs were re-allocated or re-categorized to this “one-time” expense bucket.

Infrastructure sales were stronger than expected, due to the delivery of two large orders that had been sitting in backlog. Infrastructure orders include the zipper system barriers that you see during major road projects. These are very profitable sales, so it’s possible this was the reason for the earnings beat.

Backlog dropped by 38% from the prior quarter. I  spent some time analyzing LNN’s historic backlog trends, quantifying orders booked in the quarter versus new orders added to the backlog. Booked orders are those recorded in revenue and billed orders are those signed but not delivered. Billed orders are added to the backlog. The most bullish sign for a company is a book to bill ratio that is higher than one. A number great than one means you are bringing in more orders than those being pulled through the income statement.

LNN’s book to bill is .8 in the recent quarter, the lowest level in ten quarters.

New orders dropped 15% this quarter, the most substantial decline in at least two years. The drop is particularly concerning as the May quarter is LNN’s largest quarter of the year for backlog orders.

My interpretation from the conference call is that management is giving a soft guide down on earnings due to the earlier than expected booking of some infrastructure revenue.

The Chemours Company (NYSE: CC) continues to be weak. I’ve been digging to find out why. The best I can find is that Chemours and Honeywell (NYSE: HON) are now appealing to the Supreme Court for help in overturning a 2017 case that disallowed the EPA from banning HFCs, the chemicals that Chemours’ and Honeywell’s products replace. While this is a setback, substitute products have been selling in the US even without an outright ban. I am still working to quantify what if any, impact the lower court ruling has on their estimates. I have never seen an earnings model that ASSUMES a court ruling is reversed, so my gut is that estimates are safe. 

Steven Madden (NYSE: SHOO) stock was initiated with an Outperform at Macquarie Research. Analyst Laurent Vasilescu gave the stock a $62 price target saying it is a best in class operator with no debt, mid-single cash flow yield, and now a dividend. The company started paying a dividend last quarter, and the stock currently yields 1.5%.

Tapestry (NYSE: TPR) was initiated with a Conviction Buy at Goldman Sachs.  Analyst Alexandra Walvis sees an undervalued growth story with an attractive risk/reward profile and attractive valuation. Walvis contends that recent trends in Kate Spade and the strength of the Coach brand overwhelm any challenges at its high-end shoe division, Stuart Weitzman.