Tag: Finance

With the hotter-than-expected inflation, robust jobs data, and raised prospects of higher interest rates, the risk of a recession does not seem to be going away anytime soon. Hence, it could be wise to invest in fundamentally strong stocks, Walmart (WMT), HCA Healthcare (HCA), and Coca-Cola Consolidated (COKE), that could weather the effects of a potential recession. Keep reading….

The central bank hiked interest rates by 450 basis points over the last year to combat soaring inflation. Interest rates have now risen to their highest level since 2007. Furthermore, a higher-than-expected January inflation report indicates that the Federal Reserve’s path to sought price stability is likely to be bumpy.

The Consumer Price Index (CPI) rose 0.5% in January, compared to 0.1% in December. Over the last 12 months, inflation increased by 6.4%. Both numbers exceeded economists’ expectations of 0.4% and 6.2% respective increases.

Fed officials this Tuesday indicated that the central bank would need to keep increasing rates to fight inflation and suggested sticky price pressures driven by robust jobs growth might push borrowing costs higher than previously projected. The officials said they would keep the door open to peak the policy rate above 5.1%.

Moreover, according to the majority of economists in a Reuters poll, the Fed would raise rates at least twice in the coming months, with the risk of going higher, and expect no rate cut this year. Progressive interest rate hikes could push the economy into a recession.

Amid growing inflationary and recessionary pressures, it could be wise to invest in quality stocks Walmart Inc. (WMT), HCA Healthcare, Inc. (HCA), and Coca-Cola Consolidated, Inc. (COKE) for stable returns.

Walmart Inc. (WMT)

WMT runs retail, wholesale, and other units globally. Its segments include Walmart U.S.; Walmart International; and Sam’s Club. The company runs supermarkets, warehouse clubs, cash and carry outlets, discount stores, and membership-only warehouse clubs. It also conducts its business online under 46 different banners.

On January 12, 2023, Walmart Commerce Technologies and Walmart GoLocal announced a partnership with Salesforce, Inc. (CRM) to provide businesses with access to the tools and services that enable frictionless local pickup and delivery for customers globally. The company could gain from the improved user experience.

On December 15, 2022, WMT Canada announced its plans to open a first-of-its-kind distribution center in Quebec in addition to two distribution centers that opened earlier that year. Another distribution center in Mexico is strengthening its logistics and supply chain networks across the entire Southeast region.

Such investments should enable the company to bolster its distribution networks and offer a brisker shopping experience to its customers.

WMT’s forward annual dividend of $2.24 yields 1.55% on the current price level. Its four-year average yield is 1.68%. The company’s dividend payouts have increased at a 1.9% CAGR over the past three and five years. It has a record of 49 years of consecutive dividend growth.

WMT’s trailing-12-month cash from operations of $23.59 billion is significantly higher than the $272.90 million industry average. Moreover, its trailing-12-month ROCE and ROTC of 11.61% and 10.10% compare to the industry averages of 10.36% and 6.14%, respectively.

WMT’s total revenues grew 8.7% year-over-year to $152.81 billion in the fiscal 2023 third quarter that ended October 28, 2022. Its adjusted operating income rose 4.6% from the prior year’s quarter to $6.10 billion. Also, the company’s adjusted EPS came in at $1.50, up 3.4% year-over-year.

Furthermore, as of October 28, 2022, the company’s total current assets stood at $87.68 billion, compared to $81.07 billion as of January 31, 2022.

The consensus revenue estimate of $621.81 billion for the fiscal year ending January 2024 reflects a 3.3% year-over-year improvement. The consensus EPS estimate of $6.50 for the ongoing year indicates a 6.9% rise from the previous year. Moreover, WMT surpassed its consensus EPS estimates in three of four trailing quarters.

Shares of WMT have gained 8% over the past year to close the last trading session at $144.27.

WMT’s POWR Ratings reflect its strong outlook. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.

The stock has a B grade for Stability and Sentiment. In the A-rated 39-stock Grocery/Big Box Retailers industry, it is ranked #10.

Beyond what we stated above, we also have WMT’s ratings for Value, Quality, Growth, and Momentum. Get all WMT ratings here.

HCA Healthcare, Inc. (HCA)

HCA offers health care services. It runs general and acute care hospitals that provide medical and surgical services and psychiatric institutions that offer therapeutic programs. Also, the company manages outpatient healthcare facilities.

On February 17, it was reported that HCA had purchased some property to the south of HCA Florida Osceola Hospital. The company now owns the entire block that includes its hospital campus. The land purchase may strategically benefit the company and set the stage for future development.

On December 13, 2022, HCA announced its enterprise-wide adoption of the Enhanced Surgical Recovery (ESR) program, a patient-centered, research-based, multidisciplinary approach to surgical recovery.

The ESR program has been implemented at 167 HCA Healthcare facilities. It has shown significant benefits in surgical recovery, including a two-day average reduction in hospital stays and a 44% drop in opioid usage for specific surgeries. The company could strategically benefit by improving patient care with this program.

HCA’s $2.40 forward annual dividend yields 0.91% on prevailing prices. Its dividend payouts have increased at an 11.9% CAGR over the past three years. HCA has a four-year average yield of 0.87%.

The stock’s trailing-12-month EBITDA margin of 19.96% is 435.7% higher than the 3.73% industry average. Furthermore, its trailing-12-month CAPEX/Sales of 7.30% is 58.3% higher than the industry average of 4.61%, while its asset turnover ratio of 1.17x is 245.5% higher than the 0.34x industry average.

For the fiscal fourth quarter that ended December 31, 2022, HCA’s revenues increased 2.9% year-over-year to $15.50 billion, while its income before income taxes grew 27.7% from the year-ago value to $3.30 billion. In addition, HCA’s net income and EPS rose 32% and 26.6% year-over-year to $2.65 billion and $7.28, respectively.

Analysts expect HCA’s revenue to increase 4% year-over-year to $62.66 billion for the fiscal year ending December 2023. The company’s EPS for the current year is expected to rise 2.2% from the prior year to $17.26. The stock has gained 23.6% over the past six months to close the last trading session at $263.15.

HCA’s solid fundamentals are apparent in its POWR Ratings. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.

HCL has a B grade for Stability, Value, and Quality. It has topped the 12-stock Medical – Hospitals industry.

In addition to the POWR Ratings I’ve just highlighted, you can see HCA ratings for Growth, Momentum, and Sentiment here.

Coca-Cola Consolidated, Inc. (COKE)

COKE manufactures, sells, and distributes non-alcoholic beverages. It sells its products to other Coca-Cola bottlers and provides distribution services for several other beverage brands, such as Monster Energy and Dr. Pepper. The company sells and distributes its products directly to grocery stores, club stores, etc.

The company’s forward annual dividend of $2 yields 0.38% on current prices. COKE’s dividend payouts have increased at 7.7% and 4.6% CAGRs over the past three and five years, respectively. It has a four-year average yield of 0.32%.

COKE’s trailing-12-month gross profit margin of 36.05% is 14.3% higher than the 31.53% industry average. And its trailing-12-month EBITDA margin of 11.90% is 12.8% higher than the 10.55% industry average. Also, the stock’s trailing-12-month net income margin of 5.49% is 34.6% higher than the industry average of 4.08%.

COKE’s net sales for its third quarter, which ended September 30, 2022, increased 11.7% year-over-year to $1.63 billion. Its adjusted gross profit grew 19.7% from the year-ago value to $620.38 million, while its adjusted income from operations rose 41.3% year-over-year to $193.92 million.

Furthermore, the company’s adjusted net income came in at $138.76 million, a 46.8% year-over-year increase, and its adjusted EPS grew 46.8% from the prior-year quarter to $14.81.

Analysts expect COKE’s revenue to increase 2.7% year-over-year to $6.09 billion for the fiscal year ending December 2023. Shares of COKE have gained 5.9% over the past month to close the last trading session at $521.21.

COKE’s POWR Ratings reflect its solid prospects. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.

The stock has an A grade for Growth and a B for Quality and Value. It has topped the B-rated 37-stock Beverages industry.

To see additional POWR Ratings for Sentiment, Stability, and Momentum for COKE, click here. 

Consider This Before Placing Your Next Trade…

We are still in the midst of a bear market.

Yes, some special stocks may go up. But most will tumble as the bear market claws ever lower.

That is why you need to discover the brand new “Stock Trading Plan for 2023” created by 40-year investment veteran Steve Reitmeister. There he explains:

• Why it’s still a bear market
• How low stocks will go
• 9 simple trades to profit on the way down
• Bonus: 2 trades with 100%+ upside when the bull market returns

You owe it to yourself to watch this timely presentation before placing your next trade.

Stock Trading Plan for 2023 > 

WMT shares were trading at $145.13 per share on Friday afternoon, up $0.86 (+0.60%). Year-to-date, WMT has gained 2.36%, versus a 5.89% rise in the benchmark S&P 500 index during the same period.

About the Author: Aanchal Sugandh

Aanchal’s passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor’s degree in finance and is pursuing the CFA program.

She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.

More…

The post Recession Proof Your Portfolio in 2023 With These 3 Stocks appeared first on StockNews.com

As inflation is still at an alarmingly high level, the Fed is expected to continue with its rate hikes this year. However, experts see chances of the economy evading a recession. Therefore, it could be wise to buy quality stocks, Johnson & Johnson (JNJ), Pfizer (PFE), and Walmart (WMT) now and hold them for the long term. Keep reading.

Inflation for January 2023 increased 6.4% year-over-year, higher than the consensus estimate of 6.2%. Stubbornly high prices have increased the odds of continued rate hikes this year. Goldman Sachs expects the U.S. Federal Reserve to raise interest rates three more times in 2023 by 25 bps each.

However, the still-tight labor market is raising optimism. Kristalina Georgieva, managing director of the IMF, said, “The markets have good reason to be more upbeat because what they are finally seeing is the U.S. economy is likely to avoid recession.”

Moreover, President Biden believes that the nation will most likely avoid recession and that the risk for the same is pretty low. Furthermore, JPMorgan doubled its 2023 first-quarter GDP growth forecast to a 2% annualized rate.

Given the backdrop, investors could consider buying top-quality stocks Johnson & Johnson (JNJ), Pfizer Inc. (PFE), and Walmart Inc. (WMT) now and hold them for the long term.

Johnson & Johnson (JNJ)

JNJ and its subsidiaries research, develop, manufacture, and sell various products in the healthcare field worldwide. Its segments are Consumer Health and MedTech.

On December 22, 2022, JNJ completed its acquisition of Abiomed, Inc. (ABMD). The acquisition will help the company expand its capabilities in the MedTech sector in the coming years.

JNJ has paid dividends for 60 consecutive years. Its dividend payouts have increased at 6.1% CAGR for the past five years. Its current dividend yield is 2.84%, and its four-year average yield is 2.60%.

JNJ’s U.S. sales came in at $12.52 billion for the 2022 fourth quarter, up 2.9% year-over-year. Its adjusted net earnings increased 9.5% year-over-year to $6.22 billion, while its adjusted EPS came in at $2.35, representing a 10.3% year-over-year rise.

Analysts expect JNJ’s revenue to increase 3.1% year-over-year to $97.85 billion in the current fiscal year, 2023. Its EPS is expected to rise 3.5% year-over-year to $10.51 for the same period. It surpassed EPS estimates in all four trailing quarters. JNJ’s shares have lost marginally intraday to close the last trading session at $158.24.

JNJ’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to a Strong Buy in our POWR Rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

JNJ has an A grade for Stability and Quality and a B for Value. JNJ is ranked #7 out of 174 stocks in the Medical – Pharmaceuticals industry. Click here for additional JNJ ratings (Growth, Momentum, and Sentiment).

Pfizer Inc. (PFE)

PFE discovers, develops, manufactures, markets, distributes, and sells biopharmaceutical products worldwide. It offers medicines and vaccines in various therapeutic areas.

On January 31, 2023, Dr. Albert Bourla, Chairman and CEO, said, “As we turn to 2023, we expect to once again set records, with potentially the largest number of new product and indication launches that we’ve ever had in such a short period of time.”

PFE has paid dividends for 12 consecutive years. Its dividend payouts have increased at 5.5% CAGR over the past five years. Its current dividend yield is 3.79%, while its four-year average yield is 3.63%.

PFE’s revenues came in at $24.29 billion for the 2022 fourth quarter, up marginally year-over-year. Its non-GAAP net income increased 44.2% year-over-year to $6.55 billion, while its non-GAAP EPS came in at $1.14, up 44.3% year-over-year.

Street expects PFE’s revenue and EPS to come in at $69.29 billion and $3.47 for the current fiscal year, 2023. PFE’s shares have lost marginally intraday to close the last trading session at $42.95.

PFE’s overall B rating equates to a Buy in our proprietary rating system.

It has an A grade for Value and a B for Quality. PFE is ranked #26 in the same industry. Get all PFE ratings for Growth, Momentum, Stability, and Sentiment here.

Walmart Inc. (WMT)

WMT engages in the operation of retail, wholesale, and other units worldwide. The company operates through three segments: Walmart U.S.; Walmart International; and Sam’s Club.

On January 12, 2023, WMT Commerce Technologies and WMT GoLocal announced their partnership with Salesforce Inc. (CRM) to provide retailers access to new technologies and solutions, enabling frictionless local pickup and delivery for shoppers. This collaboration is expected to enhance the company’s customer service.

WMT has paid dividends for 49 consecutive years. Its dividend payouts have increased at a marginal CAGR over the past five years. Its current dividend yield is 1.53%, while its four-year average yield is 1.68%.

WMT’s net sales came in at $151.47 billion for the third quarter that ended October 31, 2022, up 8.8% year-over-year. Its membership and other income increased % year-over-year to $1.34 billion. Also, its total revenues came in at $152.81 billion, representing an 8.7% year-over-year rise.

WMT’s revenue is expected to increase 5.9% year-over-year to $606.66 billion in the current fiscal year, 2023. Its EPS is expected to increase by 3.7% per annum for the next five years. It surpassed EPS estimates in three of the four trailing quarters. Over the past year, the stock has gained 8% to close the last trading session at $144.27.

It’s no surprise that WMT has an overall A rating, equating to a Strong Buy in our proprietary rating system.

Also, the stock has a B grade for Stability and Sentiment. Within the A-rated Grocery/Big Box Retailers industry, WMT is ranked #10 out of 39 stocks. To see WMT’s additional POWR Ratings for Growth, Value, Momentum, and Quality, click here.

Consider This Before Placing Your Next Trade…

We are still in the midst of a bear market.

Yes, some special stocks may go up. But most will tumble as the bear market claws ever lower.

That is why you need to discover the brand new “Stock Trading Plan for 2023” created by 40-year investment veteran Steve Reitmeister. There he explains:

• Why it’s still a bear market
• How low stocks will go
• 9 simple trades to profit on the way down
• Bonus: 2 trades with 100%+ upside when the bull market returns

You owe yourself to watch this timely presentation before placing your next trade.

Stock Trading Plan for 2023 > 

JNJ shares were unchanged in premarket trading Friday. Year-to-date, JNJ has declined -10.42%, versus a 6.76% rise in the benchmark S&P 500 index during the same period.

About the Author: Riddhima Chakraborty

Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master’s degree in economics, she helps investors make informed investment decisions through her insightful commentaries.

More…

The post The 3 Best Stocks to Buy Now for Long-Term Investors appeared first on StockNews.com

The Fed is on a war path against inflation. The longer they stay hawkish, the more likely a recession forms…the more likely stocks (SPY) tumbling lower. In February there have been 2 clear strikes against the bulls. And Thursday potentially brings strike 3. What is it? What does it mean? And how should you trade this market? Read on below for the answers….

Love is in the air…so is inflation.

Why are bulls not getting the message?

Truly my brain HURTS trying to rationalize the elevated level of stocks after 2 straight strikes against a bull market.

What are those strikes? And is the 3^rd strike on the way Thursday?

All that and more is on tap for today’s Reitmeister Total Return commentary.

Market Commentary

Let’s wind the clock back to Wednesday February 1^st. That is when the Fed announces yet another rate hike followed by an extended press conference by Chairman Powell.

Every word he says is bearish to people who were already bearish.

Shockingly every word he says is also bullish to folks that were already bullish.

The bulls won that show down with the S&P 500 (SPY) sprinting up near 4,200…the highest levels since the summer rally topped out at 4,300.

Just two days later comes strike 1 against the bulls. That being a MUCH stronger than expected Government Employment situation report showing robust job gains. That sounds great on the surface til you realize it came hand in hand with very persistent wage inflation.

This was precisely what Chairman Powell warned about that previous Wednesday and why the Fed will keep rates higher for longer than the market appreciates. Bulls scoffed at the notion the first time around. However, they did get taken aback when faced with that sticky inflation once more on Friday.

Powell then made it clear the following Tuesday 2/7 at the Economic Forum that this employment reports makes him believe that they may need to push rates higher…or keep them in place for longer to get inflation back to 2% target.

This extended hawkishness is a big STRIKE 1 against the bulls.

Then came a bout of amnesia. Bulls just needed to buy something. So they got on the offensive once again on Monday with stocks up over 1% on the session.

This seemed to be short lived as Strike 2 was pitched this Tuesday. I am referring to the higher than expected Consumer Price Index (CPI) report coming in at +6.4% vs. 6.2% expectations. This is obviously a far cry from the 2% target of the Fed.

What’s even worse is that month over month inflation was +0.5% which is 6% annualized. This flies in the face of those that say inflation really just happened in early to mid 2022 and that is what shows up in the year over year numbers. Sadly, this far too high month over month tally confirms the Feds notion that the long term battle with inflation is far from over.

The immediate reaction to this news was stocks falling nearly 1% early on the Tuesday session. Yet amazingly bulls fought back once again to a nearly breakeven finish.

These bulls continue to see positive things that I am not…perhaps they are smoking things I am not as well.

Strike 3 may very well be on the way this Thursday 2/16. That is when the forward-looking Producer Price Index (PPI) index is announced at 8:30am ET. Once again, the month over month reading should be the most telling as it speaks to what is happening in the here and now.

The forecast calls for only +0.2% price increase, which is pretty tame. However, if we get served up something much hotter like Tuesday’s CPI report, then I suspect bulls will whiff on this 3^rd strike against premature bullishness.

Let me overly simplify the bear case at this time.

The Fed will keep rates high through the end of the year given the facts in hand. Plus there are typically 6-12 months of lagged effects from Fed policy. This creates a window to create a recession that extends well into 2024.

When you add that to the notion that we already have many economic readings pointing to a weak economy at this time, then you have a recipe for recession which begets lower corporate earnings…which begets lower stock prices.

I previously stated that I would likely get more bearish with any subsequent break below the 200 day moving average (3,944). That is because it would be a confirmation that the rest of the market was finally abandoning their faulty bullish view of things.

However, I am tempted to make a move before that break if this Strike 3 is thrown on Thursday. This would mean adding more inverse ETFs to profit from likely subsequent market downside if inflation is still too hot prompting ever vigilant hawkishness from the Fed.

Remember that a return to the bear market means likely touching the previous low of 3,491 set in October. Or perhaps making it down to 3,180 which amounts to a 34% decline from the highs (which is the average decline for a bear market). Or perhaps even lower.

This is not to say that the bulls have no leg to stand on. Unfortunately strike by strike in February it is becoming all the more likely they need to head back to the dugout and let the bears get back up to bat.

What To Do Next?

Discover my brand new “Stock Trading Plan for 2023” covering:

• Why 2023 is a “Jekyll & Hyde” year for stocks
• How the Bear Market Should Come Back with a Vengeance
• 9 Trades to Profit Now
• 2 Trades with 100%+ Upside Potential as New Bull Emerges
• And Much More!

Get It Now! Stock Trading Plan for 2023 >

Wishing you a world of investment success!

Steve Reitmeister…but everyone calls me Reity (pronounced “Righty”)
CEO, StockNews.com and Editor, Reitmeister Total Return

SPY shares fell $0.39 (-0.09%) in after-hours trading Tuesday. Year-to-date, SPY has gained 7.90%, versus a % rise in the benchmark S&P 500 index during the same period.

About the Author: Steve Reitmeister

Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks.

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Popular software stock Salesforce (CRM) has gained double digits over the past month. Moreover, it should witness sustained growth given its steady fundamentals and the industry’s solid prospects. So, CRM could be the ideal software stock to buy now. Keep reading.

Software stock Salesforce, Inc. (CRM) has gained 14.4% over the past month. Moreover, it has gained 8.5% over the past three months to close the last trading session at $171.08.

The company registered solid gains after activist investor Elliott Management Corp (Elliott) made a multi-billion-dollar investment in CRM. Jesse Cohn, the managing partner at Elliott, believes CRM is “one of the preeminent software companies in the world.”

In addition, activist investor Jeff Ubben’s Inclusive Capital Partners also took a stake in the software company, CNBC reported.

Furthermore, amid rapid digitalization across industries, the software industry is witnessing solid demand. The global business software and services market is expected to expand at a compound annual growth rate (CAGR) of 11.9% from 2023 to 2030. Also, investors’ interest in software stocks is evident from SPDR S&P Software & Services ETF’s (XSW) 8.3% returns over the past three months.

Here is what could shape CRM’s performance in the near term:

Solid Top Line Growth

CRM’s subscription and support revenue came in at $7.23 billion for the third quarter that ended October 31, 2022, up 13.4% year-over-year. Its professional services and other revenue came in at $604 million, up 24.8% year-over-year. Also, its total revenues increased 14.2% year-over-year to $7.84 billion.

In addition, its gross profit came in at $5.75 billion, reflecting an increase of 14.5% year-over-year. Its income from operations came in at $460 million, up 1,110.5% year-over-year.

Favorable Analyst Expectations

Analysts expect CRM’s revenue to increase 16.9% and 10.4% year-over-year to $30.97 billion and $34.19 billion in 2023 and 2024, respectively. Its EPS is expected to increase 3.1% and 17.6% year-over-year to $4.93 and $5.80 in 2023 and 2024, respectively.

Moreover, its EPS is expected to grow by 18.3% per annum for the next five years. In addition, it surpassed EPS estimates in all four trailing quarters.

Robust Profitability

CRM’s trailing-12-month gross profit margin of 72.69% is 48.6% higher than the industry average of 48.92%, while its trailing-12-month levered FCF margin of 30.62% is 345.9% higher than the industry average of 6.87%.

POWR Ratings Reflect Promising Outlook

CRM has an overall rating of B, which equates to a Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories.

CRM has an A grade for Growth, consistent with its steady growth in the last reported quarter. It has a B grade for Sentiment, in sync with optimistic analyst expectations.

In the 137-stock Software – Application industry, CRM is ranked #33.

Click here for the additional POWR Ratings for CRM (Value, Momentum, Stability, and Quality).

View all the top stocks in the Software – Application industry here.

Bottom Line

CRM possesses sound fundamentals. Moreover, Wall Street analysts expect the stock to hit $188.68 in the near term, indicating a potential upside of 10.3%. And given its positive growth outlook amid solid prospects of the software industry, I think CRM is an ideal buy now.

How Does Salesforce, Inc. (CRM) Stack Up Against its Peers?

While CRM has an overall POWR Rating of B, one might consider looking at its industry peers, Progress Software Corporation (PRGS), Xperi Inc. (XPER), and Open Text Corporation (OTEX), which have an overall A (Strong Buy) rating.

What To Do Next?

Get your hands on this special report:

3 Stocks To DOUBLE This Year

What gives these stocks the right stuff to become big winners, even in this brutal stock market?

First, because they are all low-priced companies with the most upside potential in today’s volatile markets.

But even more important is that they are all top Buy rated stocks according to our coveted POWR Ratings system, and they excel in key areas of growth, sentiment, and momentum.

Click below now to see these 3 exciting stocks that could double or more in the year ahead.

3 Stocks To DOUBLE This Year

CRM shares were unchanged in premarket trading Tuesday. Year-to-date, CRM has gained 29.03%, versus a 7.95% rise in the benchmark S&P 500 index during the same period.

About the Author: Riddhima Chakraborty

Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master’s degree in economics, she helps investors make informed investment decisions through her insightful commentaries.

More…

The post 1 Software Stock to Get in on Now if You Haven’t Already appeared first on StockNews.com

Despite a fresh bout of optimism brought in by the inpouring of favorable macro data, recessionary fears remain at the forefront. Amid such volatilities, investors could opt for quality market-crash-ready stocks Walmart (WMT), Coca-Cola (KO), and Centene Corp. (CNC) now. Read on….

The Fed’s interest rate hikes last year have already weighed heavily on stocks, with the S&P 500 tanking about 20% as financial conditions tightened. Although favorable results at the beginning of 2023 charmed investors, the Federal Reserve’s continuing hawkish stance could affect the market rally.

Fed Chair Jerome Powell said recently that the stronger-than-expected booming job report and similar data in the near term could require an even sharper rise in rates than projected until the 2% inflation target is achieved. This could lead to a stock market collapse in the near future.

In addition, Gerald Celente, a 40-year market veteran, believes that higher rates could spark significant volatility, and the market could face a meltdown this year. Moreover, Michael Burry anticipates both the S&P 500 and the Fed funds rate to eventually tumble, similar to the dot-com crash, with the Fed cutting rates as the economy weakens and asset prices slump.

Amid such turbulence, fundamentally strong large-cap stocks Walmart Inc. (WMT), The Coca-Cola Company (KO), and Centene Corporation (CNC), which can sustain volatilities, could be wise additions to your portfolio now.

Walmart Inc. (WMT)

WMT, with a market capitalization of $387.58 billion, engages in the operation of retail, wholesale, and other units worldwide. The company operates through three segments: Walmart U.S.; Walmart International; and Sam’s Club.

WMT’s drone delivery is soaring and operating in seven States, which completed 6,000 drone deliveries over the past year. The new offering should benefit the company’s prospects. Vik Gopalakrishnan, vice president, innovation & automation at Walmart U.S., said, “We’re encouraged by the positive response from customers and look forward to making even more progress in 2023.”

On January 12, 2023, Walmart Commerce Technologies, one of WMT’s companies, and Walmart GoLocal recently announced a partnership with Salesforce, Inc. (CRM) to give retailers access to the tools and services that enable frictionless local pickup and delivery for customers worldwide.

WMT’s trailing-12-month ROCE of 11.61% is 11.6% higher than the 10.40% industry average. Its trailing-12-month ROTC of 10.10% is 63.9% higher than the 6.17% industry average.

WMT’s total revenue increased 8.7% year-over-year to $152.81 billion in the fiscal third quarter that ended October 31, 2022. Also, its net sales came in at $151.47 billion, up 8.8% year-over-year. Its adjusted EPS came in at $1.50, representing a 3.4% year-over-year rise.

Analysts expect WMT’s revenue to increase 3.9% year-over-year to $145.72 billion for the fiscal first quarter ending April 2023. Its EPS for the same quarter is estimated to be $1.38, up 6.5% year-over-year. It surpassed EPS estimates in three out of four trailing quarters, which is impressive.

Over the past six months, the stock has gained 8.7% to close the last trading session at $143.72. Over the past year, it has gained 6.2%.

WMT’s POWR Ratings reflect this promising outlook. It has an overall A rating, equating to a Strong Buy in our proprietary system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

It has a B grade for Stability and Sentiment. Within the A-rated Grocery/Big Box Retailers industry, it is ranked #8 out of 39 stocks.

Click here for the additional POWR Ratings for Growth, Value, Momentum, and Quality for WMT.

The Coca-Cola Company (KO)

KO is a popular beverage company that manufactures, markets, and sells various non-alcoholic beverages worldwide. The company provides sparkling soft drinks, flavored and enhanced water, sports drinks, juice, dairy, plant-based beverages, tea and coffee, and energy drinks. It has a $257.83 billion market capitalization.

KO’s trailing-12-month EBIT margin of 28.90% is 280.3% higher than the industry average of 7.60%. Also, its trailing-12-month net income margin of 23.44% is 487.3% higher than the industry average of 3.99%.

For the fiscal third quarter that ended September 30, 2022, KO’s non-GAAP net operating revenue came in at $11.05 billion, up 10% year-over-year. Its non-GAAP gross profit increased 6.5% year-over-year to $6.54 billion. Furthermore, its non-GAAP net income per share increased 6.2% year-over-year to $0.69.

KO’s revenue has grown at 5.6% and 2.6% CAGRs over the past three and five years, respectively. Moreover, its EBIT has grown at a 6.5% CAGR over the past three years.

For the fiscal first quarter ending March 2023, analysts expect KO’s EPS to come in at $0.63. Street expects its revenue to increase marginally year-over-year to $10.60 billion for the same quarter. Moreover, KO topped consensus EPS and revenue estimates in all four trailing quarters.

The stock has declined marginally over the past five days to close its last trading session at $59.62.

KO’s POWR Ratings reflect its solid prospects. The stock has an overall rating of B, which translates to Buy in our proprietary rating system.

KO is also rated an A for Sentiment and a B for Stability and Quality. Within the A-rated Beverages industry, it is ranked #15 of 37 stocks.

To see additional POWR Ratings for Value, Growth, and Momentum for KO, click here.

Centene Corporation (CNC)

With a market capitalization of $40.06 billion, CNC is a multinational healthcare company that provides government-sponsored and commercial healthcare programs, focusing on underinsured and uninsured individuals. It operates through the Managed Care and Specialty Services segments.

On January 3, 2023, the company’s Health Net of California subsidiary received new Medi-Cal direct contracts from the California Department of Health Care Services (DHCS). This should enable CNC to reach more people, provide member-focused care, and enhance health outcomes.

CNC’s trailing-12-month asset turnover ratio of 1.76x is 422.8% higher than the 0.34x industry average. Its trailing-12-month ROCE is 4.73%, compared to the negative 39.80% industry average.

CNC’s total revenues came in at $35.56 billion for the fourth quarter that ended December 31, 2022, up 9.2% year-over-year. Its adjusted net earnings and EPS stood at $485 million and $0.86, respectively.

In addition, its total current assets came in at $30.13 billion for the period that ended December 31, 2022, compared to $28.50 million for the period that ended December 31, 2021.

CNC’s EPS is expected to grow 9.4% year-over-year to $2 in the fiscal first quarter ending March 2023. Street expects its revenue to come at $36.14 billion for the same quarter. It surpassed EPS and revenue estimates in each of the four trailing quarters.

CNC’s shares have gained 2.4% over the past five days and 1.7% intraday to close the last trading session at $72.74.

CNC’s strong fundamentals are reflected in its POWR Ratings. The stock’s overall A rating indicates a Strong Buy in our proprietary rating system.

CNC has a B grade for Value, Sentiment, and Quality. In the A-rated 11 stock Medical – Health Insurance industry, it is ranked #4.

Click here for the additional POWR Ratings for CNC (Stability, Momentum, and Growth).

Consider This Before Placing Your Next Trade…

We are still in the midst of a bear market.

Yes, some special stocks may go up. But most will tumble as the bear market claws ever lower.

That is why you need to discover the brand new “Stock Trading Plan for 2023” created by 40-year investment veteran Steve Reitmeister. There he explains:

• Why it’s still a bear market
• How low stocks will go
• 9 simple trades to profit on the way down
• Bonus: 2 trades with 100%+ upside when the bull market returns

You owe it to yourself to watch this timely presentation before placing your next trade.

Stock Trading Plan for 2023 >

WMT shares were unchanged in premarket trading Monday. Year-to-date, WMT has gained 1.36%, versus a 6.70% rise in the benchmark S&P 500 index during the same period.

About the Author: Sristi Suman Jayaswal

The stock market dynamics sparked Sristi’s interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy.

Having earned a master’s degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors.

More…

The post 3 Market-Crash-Ready Stocks to Buy Right Now appeared first on StockNews.com

Consumer sentiment has been buoyed by the recent cooldown in inflation and encouraging economic data. However, with interest rate hikes expected to continue, the risk of the economy tipping into a recession remains. Hence, fundamentally strong stocks Coca-Cola (KO), Merck & Co (MRK), and Valero Energy (VLO) that pay reliable dividends might be solid buys. Read on.

Easing inflation and a strong labor market are helping consumers feel better about the economy this month. Moreover, the preliminary consumer sentiment index released by the University of Michigan shows an upward movement.

While economists were expecting the headline index to increase slightly to 65, according to consensus estimates on Refinitiv, the preliminary consumer sentiment index for February rose to 66.4 from 64.9 in January, the university reported Friday.

On the other hand, the number of Americans filing new unemployment claims rose to 196,000 for the week ended February 4, the Labor Department said on Thursday, higher than the 190,000 expected by economists. However, the labor market is still tight.

The Federal Reserve Chair Jerome Powell recently said that the US central bank’s fight to tame inflation could last “quite a bit of time,” in a nod to January’s blowout job gains. Since March, the Fed has hiked its policy rate by 450 basis points from near zero to a 4.50%-to-4.75% range, and prolonged interest rate hikes might tip the economy into a recession.

Therefore, fundamentally strong stocks The Coca-Cola Company (KO), Merck & Co., Inc. (MRK), and Valero Energy Corporation (VLO), which pay reliable dividends, might be solid buys now.

The Coca-Cola Company (KO)

KO, the beverage giant company, manufactures, markets, and sells various non-alcoholic beverages worldwide. The company also provides sparkling soft drinks, flavored and enhanced water, sports drinks, juice, dairy, plant-based beverages, tea and coffee, and energy drinks.

In September 2023, KO and Molson Coors Beverage Company (TAP) expanded their exclusive agreement to develop and commercialize Topo Chico Spirited, a line of spirit-based, ready-to-drink cocktails. It is set to be launched in more than 20 markets across the country in 2023, which should benefit the company.

KO’s four-year average dividend yield is 3.06%, and its annual dividend of $1.76 translates to a 2.93% yield at the current price level. Its dividend payouts have grown at a 3.2% CAGR over the past three years and a 3.5% CAGR over the past five years. Also, the company has a record of 60 consecutive years of dividend growth.

KO’s non-GAAP net operating revenues increased 10% year-over-year to $11.05 billion in the fiscal third quarter that ended September 30. Its non-GAAP gross profit rose 6.5% from the prior-year quarter to $6.54 billion.

Also, the company’s non-GAAP net income increased 6.7% year-over-year to $3.01 billion, while its non-GAAP EPS came in at $0.69, representing an increase of 6.2% year-over-year.

Analysts expect KO’s EPS and revenue to increase 7.4% and 10.7% year-over-year to $2.49 and $42.80 billion, respectively, in the fiscal year 2022. It has surpassed the consensus EPS and revenue estimates in each of the trailing four quarters, which is impressive.

The stock has declined marginally intraday to close its last trading session at $59.62. It has a 24-month beta of 0.61.

KO’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

KO is also rated an A for Sentiment and a B for Stability and Quality. Within the B-rated Beverages industry, it is ranked #15 of 37 stocks.

To see additional POWR Ratings for Value, Growth, and Momentum for KO, click here.

Merck & Co., Inc. (MRK)

MRK operates as a healthcare company worldwide. It operates through two segments: Pharmaceutical and Animal Health.

On January 27, MRK announced that the U.S. Food and Drug Administration (FDA) had approved KEYTRUDA, its anti-PD-1 therapy, as a single agent, for adjuvant treatment following surgical resection and platinum-based chemotherapy for adult patients with stage IB II, or IIIA non-small cell lung cancer. This should boost the company’s revenue streams.

While MRK’s annual dividend of $2.92 yields 2.69% on the prevailing price, its four-year average yield is 2.95%. The company has paid dividends for 12 consecutive years. Its dividend payouts have increased at 9.1% CAGR over the past three years.

MRK’s total sales rose 2.3% year-over-year to $13.83 billion for the fourth quarter that ended December 31, 2022. Its Pharmaceutical segment revenue increased marginally year-over-year to $12.18 billion. Its non-GAAP net income stood at $4.13 billion, and its non-GAAP EPS came in at $1.62.

MRK’s EPS and revenue are expected to come in at $7.18 and $58.28 billion for the current fiscal year, 2023. The company has surpassed the consensus EPS estimates in all four trailing quarters.

Over the past year, the stock has gained 41.8% to close the last trading session at $108.57. Its 24-month beta is 0.18.

It is no surprise that MRK has an overall rating of B, which equates to a Buy in our POWR Ratings system.

MRK has a B grade for Value, Stability, and Quality. MRK is ranked #20 out of 172 stocks in the Medical – Pharmaceuticals industry.

Beyond the POWR Ratings above, we have also given MRK grades for Growth, Sentiment, and Momentum. Get all MRK ratings here.

Valero Energy Corporation (VLO)

VLO manufactures, markets, and sells transportation fuels and petrochemical products. The company operates through its three broad segments – Refining; Renewable Diesel; and Ethanol.

On January 31, 2023, VLO and Darling Ingredients Inc. (DAR) announced that the companies had made the final investment decision on the sustainable aviation fuel (SAF) project at the DGD Port Arthur plant, owned and operated by Diamond Green Diesel Holdings LLC, a 50/50 joint venture between VLO and Darling.

After completion of the project in 2025, the plant will be able to upgrade approximately 50% of its 470 million gallons annual production capacity to SAF. Post-completion, DGD will be one of the largest SAF manufacturers in the world.

VLO’s Chairman and CEO Joe Gorder said, “This project is a natural extension of our liquid fuels manufacturing expertise and demonstrates our growth strategy through innovation in renewables.”

Moreover, on the same day VLO announced an increase in the company’s regular quarterly cash dividend on common stock from $0.98 per share to $1.02 per share. The dividend is payable on March 16, 2023.

VLO pays a $4.08 per share dividend annually, which translates to a 2.90% yield on the current price. Its dividend payments have grown at a CAGR of 2.5% and 6.4% over the past three and five years. The company has a four-year average dividend yield of 5.02%. Also, it has paid dividends for 25 consecutive years.

During the fourth quarter that ended December 31, 2022, VLO’s revenues increased 16.3% year-over-year to $41.75 billion. Its operating income rose 169.5% year-over-year to $4.30 billion. Adjusted net income attributable to VLO increased 226.6% year-over-year to $3.23 billion. In addition, its adjusted EPS came in at $8.45, representing an increase of 250.6% year-over-year.

Street expects VLO’s EPS to increase 189.6% year-over-year to $6.69 for the current quarter ending March 31, 2023. Its revenue is likely to rise 2.6% year-over-year to $39.54 billion for the current quarter. It has surpassed the consensus EPS estimates in each of the trailing four quarters.

Over the past year, the stock has gained 56.6% to close the last trading session at $140.73. VLO has a 24-month beta 0.51.

VLO’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.

The stock has an A grade for Momentum and a B for Growth, Quality, Sentiment, and Value. Within the B-rated Energy – Oil & Gas industry, it is ranked #5 out of 91 stocks.

Click here to access VLO’s rating for Stability.

Consider This Before Placing Your Next Trade…

We are still in the midst of a bear market.

Yes, some special stocks may go up. But most will tumble as the bear market claws ever lower.

That is why you need to discover the brand new “Stock Trading Plan for 2023” created by 40-year investment veteran Steve Reitmeister. There he explains:

• Why it’s still a bear market
• How low stocks will go
• 9 simple trades to profit on the way down
• Bonus: 2 trades with 100%+ upside when the bull market returns

You owe it to yourself to watch this timely presentation before placing your next trade.

Stock Trading Plan for 2023 >

KO shares were unchanged in premarket trading Monday. Year-to-date, KO has declined -6.27%, versus a 6.70% rise in the benchmark S&P 500 index during the same period.

About the Author: Kritika Sarmah

Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor’s degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.

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The post If You Could Only Own 3 Stocks, It Should Be These appeared first on StockNews.com

Manic melt-up in most shorted stocks like CVNA,W, and MSTR has finally found some semblance of sanity with a sell-off.

It has definitely been a rip-roaring start to 2023 for stocks. As of the close on February 2, the NASDAQ 100 (QQQ) was up an astounding 17.06%. The S&P 500 (SPY) tacked on nearly 9%. The lower beta Dow Jones Industrials (DIA) gained only 2.75%.

Spectacular gains to say the least. Indeed, it was the best start to a year since 2001 for QQQ. Yet the crazy gains to start the year in the most shorted stocks makes the outsized gains in the QQQ seem tame in comparison.

The top 10 most heavily shorted stocks by short interest had a truly mind-boggling average gain of 75.28% from January 1 to February 2. The top 3 most shorted stocks by short interest (Carvana, Wayfair, and MicroStrategy) all had gains of well over 100% in that same time frame. Carvana rose over 200%.

The table below shows that performance, along with the comparative performance of the major stock ETFs.

Interesting to note that all three of these massive outperformers were not only heavily shorted, but also carried extremely low ratings from a POWR ratings perspective. CVNA and MSTR were Strong Sell (F rated) stocks, while W was a Sell (D rated) stock. Even more reason to be wary of the red-hot rally.

Fast forward to the latest close on Friday and you can see that the biggest outperformer (QQQ) to start 2023 has become the biggest underperformer over the past week. NASDAQ 100 dropped 4.5%, S&P 500 gave up just over 3% while the Dow Jones Industrial have pretty much traded sideways with a loss well under 1%. Mean reversion is beginning. The relative performance gap is starting to narrow.

The ridiculous red-hot rally in the high beta Nasdaq names in reminiscent of 2001 in performance. As mentioned earlier, 2023 was the best start to the year since 2001. There’s a caveat, though. In 2001, the Nasdaq (QQQ) fell 20% in the remaining 11 months. A great start to a year does not at all guarantee smooth sailing.

This is readily evident in the recent performance of the top short squeeze stocks. All reached extremely overbought levels on a technical basis before starting to crater.

The 3 most heavily shorted names that previously led the insane short squeeze rally higher have finally fallen back to earth in a big way. Below is a quick synopsis of each.

Carvana (CVNA)

Carvana has dropped 24% since making the February 2 close of $14.25. Shares actually traded all the way up $19.87 on that day only to reverse course and finish near the lows. This type of price action is called a key reversal day and is many times a reliable indication of a top in the stock. The buyers have gotten exhausted, and the sellers are back in charge.

Wayfair (W)

Similar price pattern for Wayfair. Stock has fallen over 28% in the past week. Made an intra-day high at $74.25 on February 2 only to close much lower on the day. Another key reversal day.

MicroStrategy (MSTR)

Once again, chasing manic momentum on low rated names never seems to pay. MSTR has dropped 16.69% since the highs on February 2. Yet another poster child for a key reversal technical pattern.

Now that the rally is being to stall, I expect the higher quality, lower beta names to outperform the lower quality, higher beta (and speculative names) over the coming months.

It will likely be a market to pick the best stocks, not just pick any stocks. Don’t fight the Fed has become more of a liability than an asset for the bulls.

That is where the POWR Ratings provide a big edge. Since inception, the highest A rated Strong Buy stocks have beaten the S&P 500 by more than 4x since 1999.

Of course, shorting stocks to take advantage of situations like we have just seen can be expensive-and risky.

Luckily, POWR Options provides a straightforward and simple solution. Buying puts on the low rated and over-extended stocks like CVNA, W and MSTR provides a defined risk way to magnify your returns at a low cost-just $500 or so per trade. Plus we wait for the market to tell you when the rally has run out before initiating a short position.

The POWR Options portfolio did such a trade on one of these short squeeze names just recently with good success so far.

POWR Options

What To Do Next?

If you’re looking for the best options trades for today’s market, you should check out our latest presentation How to Trade Options with the POWR Ratings. Here we show you how to consistently find the top options trades, while minimizing risk.

If that appeals to you, and you want to learn more about this powerful new options strategy, then click below to get access to this timely investment presentation now:

How to Trade Options with the POWR Ratings

All the Best!

Tim Biggam

Editor, POWR Options Newsletter

MSTR shares closed at $243.37 on Friday, down $-5.67 (-2.28%). Year-to-date, MSTR has gained 71.91%, versus a 6.70% rise in the benchmark S&P 500 index during the same period.

About the Author: Tim Biggam

Tim spent 13 years as Chief Options Strategist at Man Securities in Chicago, 4 years as Lead Options Strategist at ThinkorSwim and 3 years as a Market Maker for First Options in Chicago. He makes regular appearances on Bloomberg TV and is a weekly contributor to the TD Ameritrade Network “Morning Trade Live”. His overriding passion is to make the complex world of options more understandable and therefore more useful to the everyday trader.

Tim is the editor of the POWR Options newsletter. Learn more about Tim’s background, along with links to his most recent articles.

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Unfortunately, we’re back to our ol’ 2022 pattern of “wait and see,” where the S&P 500 (SPY) kind of churns sideways until the next big CPI report or Fed meeting. But there are three things I’m watching for over the next few weeks. Read on to find out what they are.

(Please enjoy this updated version of my weekly commentary originally published February 10^th, 2023 in the POWR Stocks Under $10 newsletter).

Market Commentary

Each of these could make a meaningful difference in the direction the market moves next.

Important Technical Support/Resistance Levels

Since September, the S&P 500 (SPY) has been trying to break back above the 4,100 level. This price has been an important support/resistance level for the index since February 2022 (and even further back, depending on who you talk to).

After breakouts failed in September, November, and December, we finally had a significant break above this level in February…

…only for things to crash back below after this week’s selling.

Every time we fail to successfully break above and STAY ABOVE this level, the psychological resistance gets even stronger and subsequent breaks/failures become even more meaningful.

This doesn’t mean we’re going to see a rapid selloff (maybe some light selling) next week, but it does mean this level will likely remain our ceiling until March’s FOMC meeting unless we get a big surprise.

January CPI Report

…which we could potentially get as soon as next week.

This is going to be the most important report to watch, and it will be released early on Tuesday morning. (Move over, Valentine’s Day.)

Hopefully, investors will LOVE the results and our bull market will get some more foundational support instead of the semi-exuberance that seems to have propelled the market in the first month of the year.

Analysts are currently expecting a small decline in inflation. The Fed has started acknowledging encouraging trends in the latest data releases, as well. (I mentioned some of this back in my January 13 analysis of the December CPI report.)

But there’s a chance the data won’t be as reassuring as we hope. Certain energy prices like crude are no longer declining, and wage growth and the labor market have both remained strong.

The big wild card will be “shelter,” which has the largest single weighting in the CPI report, which has analysts mixed on whether that will be higher or lower.

Either way, the details will show us whether Powell’s concerns are deserved and whether we’ll get many more rate hikes at the next few FOMC meetings. Which brings us to…

CME FedWatch Tool

This is a really neat tool that I’m sure some of you are already aware of. It’s the CME FedWatch Tool, and it shows you exactly what’s “priced in” to the market in terms of future rate hikes.

And with the market hanging on the Fed’s every word, it’s one of the most important risk-assessment tools we have at our disposal.

…in other words, we have a real-time look at how many rate hikes traders are actually expecting over the next year, based on the price action we’re seeing in fed funds futures.

So, right now, we can see that 100% of traders believe we’re going to get some sort of rate hike at the Fed’s March 22 meeting. The vast majority of traders believe we’ll get another 25-bps hike, while about 10% believe we could see a 50-bps hike.

But what’s really interesting is that it also shows what traders were thinking one day ago, one week ago, and one month ago. Notice that, back on January 10, as many as 15% of traders thought there was a chance that we would have NO rate hike in March.

But after Powell’s February 1 press conference (where he emphasized there was still more work to be done) and the surprisingly strong January labor report, that number had dropped to only 2.6%.

Once people had a little more time to digest that news, the number dropped to 0%.

It’s no wonder the market rally has moderated. We’re still operating under the idea that there’s a ceiling preventing any kind of continued bull breakout for as long as we continue to see increasing interest rates.

These numbers perfectly correspond to what we’re seeing in the market…

January: “Hey, we might even be done with this whole rate hike thing by March! Let’s party!”

changing to

Feb. 3: “Hmmm, we’re probably going to get some kind of rate hike in March, but DEFINITELY not a big one. Maybe I should stop buying so much.”

changing to

Last Week: “Well, we’re DEFINITELY going to get a 25-bps hike in March… and maybe even a 50-bps hike. Maybe I should take some of these January gains off the table…”

Maybe that’s a little Monday morning quarterbacking, but you can’t deny that the market’s biggest driver has been (and still is) monetary policy and how high and how long the Fed is going to hike rates.

We’ve been talking for months about the disconnect between what Powell says and how the market acts and this tool helps you monitor that in real time.

Conclusion

I know this commentary feels pretty bearish, but it’s actually more about being cautious. I think there’s still a chance that we’re through the thick of it and we have more up in our future than down, but that’s not a sure thing yet.

So we’re going to play things safe for now… and gear up for next week!

What To Do Next?

If you’d like to see more top stocks under $10, then you should check out our free special report:

3 Stocks to DOUBLE This Year

What gives these stocks the right stuff to become big winners, even in this brutal stock market?

First, because they are all low priced companies with the most upside potential in today’s volatile markets.

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Click below now to see these 3 exciting stocks which could double or more in the year ahead.

3 Stocks to DOUBLE This Year

All the Best!

Meredith Margrave
Chief Growth Strategist, StockNews
Editor, POWR Stocks Under $10 Newsletter

SPY shares closed at $408.04 on Friday, up $0.95 (+0.23%). Year-to-date, SPY has gained 6.70%, versus a % rise in the benchmark S&P 500 index during the same period.

About the Author: Meredith Margrave

Meredith Margrave has been a noted financial expert and market commentator for the past two decades. She is currently the Editor of the POWR Growth and POWR Stocks Under $10 newsletters. Learn more about Meredith’s background, along with links to her most recent articles.

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The post 3 Key Signs for the Week Ahead appeared first on StockNews.com

What does the most recent earnings season tell us what is in store for the stock market (SPY)? Steve Reitmeister, CEO of StockNews.com, dives into the latest earnings season results and points out the key points that some could find bullish…but most will find bearish. That is why he remains cautious on the future market outlook. Discover all that and more in this up to date stock market commentary below.

“At the end of the day, all price action comes down to earnings.”

The above is a quote from Ben Zacks…the famed money manager over at Zacks Investment Management that I worked for over twenty years ago.

Indeed that quote is 100% true. In particular as it refers to expectations for future earnings. That is why we are going to dive into the latest earnings season to see what it tells us about the future for stock prices.

Market Commentary

While the investment world was focused on inflation and the Fed a very interesting earnings season took place. The details of which tell us about recent price action and what may lay ahead.

In short, I would say it was a bad earnings season because earnings estimates continue to come lower for the year ahead. However, expectations were so low that it created an easy hurdle to climb over giving some logic behind the early 2023 rally.

There is no shortage of data one could analyze. However, I believe the following chart is the best way to assess how Wall Street feels about this earnings season.

Let me add some color commentary to make sense of these trends.

What you see here is the change of future earnings growth expectations for the S&P 500 in each quarter for 2023. Clearly things have been moving in the wrong direction for quite some time and only got worse as earnings reports rolled out over the last several weeks. Most notable is how the next 3 quarters are showing negative earnings growth when +10% earnings growth is the norm during bullish times.

The most optimistic view is to say that Q1 earnings estimates ONLY slipped from -6.29% to -8.62%. Because the average recession comes with 20% earnings declines then it could be said that the modest revisions keep the hopes alive for a soft landing. That would say the worst is behind us and new bull market emerging.

The more pessimistic view is to appreciate that Wall Street is usually behind the curve at the onset of a new recession. And thus estimates being cut by 20% or more may still be on the way. That negative outcome is most certainly not priced into stocks at this time and points to the potential for much more serious downside ahead.

Boiling it all down…the earnings outlook depends on the economic outlook…which depends a good deal on the Fed.

On that front Powell was decidedly more hawkish after last Friday’s strong employment report which showed far too much wage inflation. He was quite candid in his Economic Forum interview that this may lead the Fed to raising rates higher than previously expected…or for longer than expected.

This flies in the face of the bullishness experienced to start 2023. Which likely explains the haircut we have taken this past week.

Let’s dial into that price action for a moment.

The initial sell off from a recent high of 4,200 just seemed like your typical digestion after eating up a lot of gains. However, Friday we saw a very clear sector rotation away from Risk On assets and back towards Risk Off.

The poster child for Risk On is Cathie Wood’s ARK Innovation Fund (ARKK) which dropped a whopping -3.33% on the session even when the S&P closed in positive territory.

On the other end of the spectrum we saw defensive Risk Off groups like healthcare, utilities and consumer staples were STRONGLY in positive territory on the day.

If this defensive rotation continues, then it means that more investors appreciate the false start of the 2023 rally and why there are still many reasons to be bearish. That includes the declining earnings picture as shared today coupled with a increasingly hawkish Fed.

The key for price action in the near future is the possibility to break out of the current range of 4,000 to 4,200 for the S&P 500 (SPY). In particular, being mindful of a break below 4,000 and right after the very important 200 day moving average at 3,945.

A break below that would start a likely stampede back to the bearish side. Let’s remember that 3,491 was the previous low. And the average bear market decline of 34% would have us retreating to 3,180.

Here are some upcoming events that could serve as catalysts for future price action:

2/14 Consumer Price Index

2/15 Retail Sales

2/16 Producer Price Index

Indeed anything is possible when it comes to the economy and how investors react. But given the facts in hand, I still believe that extension of the bear market is 2X more likely than emerging into a new bull market at this time.

Trade accordingly.

What To Do Next?

Watch my brand new presentation: “Stock Trading Plan for 2023” that will help you assess the full bull vs. bear case to create the right trading strategy. It covers vital topics such as…

• Why 2023 is a “Jekyll & Hyde” year for stocks
• How the Bear Market Could Come Back with a Vengeance
• 9 Trades to Profit Now
• 2 Trades with 100%+ Upside Potential as New Bull Emerges
• And Much More!

Watch “Stock Trading Plan for 2023” Now >

Wishing you a world of investment success!

Steve Reitmeister…but everyone calls me Reity (pronounced “Righty”)
CEO, StockNews.com and Editor, Reitmeister Total Return

SPY shares were trading at $408.01 per share on Friday afternoon, up $0.92 (+0.23%). Year-to-date, SPY has gained 6.69%, versus a % rise in the benchmark S&P 500 index during the same period.

About the Author: Steve Reitmeister

Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks.

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No matter how impressive the recent rally appears, please do not assume this bear market is over. History provides many lessons on how bear markets work and thus why the S&P 500 (SPY) could easily fall another 20% or more from current levels. 40 year investment veteran Steve Reitmeister shares his market outlook, trading plan and top 7 picks in his “Updated: Bear Market Game Plan”. Read on below for more.

This week I shared a brand-new live presentation to investors at the MoneyShow’s Online Expo that reveals my updated latest market outlook and trading plan. The title kind of says it all. So, start watching now…

Updated: Bear Market Game Plan >

In this timely presentation I share full details on:

• Bull Case
• Bear Case
• And The Winner is ???
• Trading Plan
• 7 Top Picks for Today’s Market
• And much, much more

Far too many investors are being enamored with the early 2023 rally.

Unfortunately, there are still far too many reasons to believe the bear market is not yet done mauling investors.

The reasons for that…and the game plan to not just survive, but thrive in the days and weeks ahead await you in this timely investment presentation. I highly recommend you watch before placing your next trade.

Updated: Bear Market Game Plan >

Wishing you a world of investment success!

Steve Reitmeister
…but everyone calls me Reity (pronounced “Righty”)
CEO StockNews.com & Editor of Reitmeister Total Return

SPY shares were trading at $407.55 per share on Thursday afternoon, down $3.10 (-0.75%). Year-to-date, SPY has gained 6.57%, versus a % rise in the benchmark S&P 500 index during the same period.

About the Author: Steve Reitmeister

Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks.

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