U.S. shares rallied Friday to cap a four-day dropping streak on Wall Avenue. Sentiment was buoyed by much better-than-expected retail revenue knowledge and a surprise earnings conquer from Citigroup (C).
The S&P 500 surged 1.9{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}, while the Dow Jones Industrial Typical added 657 points, or approximately 2.2{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}. The tech-significant Nasdaq climbed 1.8{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}.
Blowout second-quarter final results from Citi lifted shares of banking industry friends to put up the greatest intraday rally for the sector since May perhaps, in accordance to Bloomberg information. The mega bank noted an 11{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} soar in profits for the time period to $19.64 billion, one particular day following traders mulled a established of disappointing financials from JPMorgan (JPM) and Morgan Stanley (MS). Shares of Citi shut up 13{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}. Wells Fargo (WFC) and Lender of America (BAC) received 6{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} and 7{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}, respectively.
“In a challenging macro and geopolitical setting, our group sent good final results and we are in a sturdy posture to temperature unsure situations, presented our liquidity, credit score top quality and reserve stages,” Citigroup Chief Govt Officer Jane Fraser explained in the earnings assertion.
Meanwhile on Thursday, JPMorgan manager Jamie Dimon cautioned in article-earnings remarks that dangers to the U.S. economy look “nearer than they were being before” and reported “never-ahead of-seen quantitative tightening” is envisioned to have damaging outcomes, just one particular day immediately after one more crimson-hot inflation report spurred speculation among the strategists that the Federal Reserve may perhaps go as far as to hike prices a complete share level afterwards this thirty day period.
NEW YORK, NEW YORK – JULY 12: People today make their way near to The New York Inventory Exchange, on July 12, 2022 in New York. Wall Avenue is again to falling amid economic downturn, the S&P 500 closed 1.2{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} reduce when tech stocks pushed the Nasdaq down 2.3{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}. (Photo by John Smith/VIEWpress)
“I’m only stating, you can find a assortment of possible outcomes from a soft landing to a challenging landing, pushed by how much interest costs go up, the performance of quantitative tightening, and defective, risky marketplaces,” Dimon stated in a phone with Wall Road analysts Thursday.
Retail profits rose extra than envisioned in June, pointing to continued strength among U.S. buyers even in the experience of many years-high inflation and problems around an economic slowdown, knowledge from the Commerce Department showed Friday. The broadest evaluate of retail buys climbed 1{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} in June from the prior thirty day period, though May’s figure was downwardly revised to exhibit a .1{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} fall in profits — the initially drop this 12 months. Economists surveyed by Bloomberg anticipated retail gross sales to rise .9{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} very last thirty day period.
In other places in economic releases, shopper sentiment rose a bit in July to a looking through of 51.1, for every the College of Michigan’s hottest survey. Estimates referred to as for the determine to appear in at 50, according to Bloomberg consensus facts. The report’s carefully-watched inflation anticipations facts moderated notably, with prolonged-run inflation anticipations slipping to 2.8{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} from 3.1{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} at the finish of June.
Shares of Pinterest (PINS) rallied 16{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} after the Wall Avenue Journal claimed activist expenditure agency Elliott Administration took a 9{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} stake in the social-media platform, starting to be the biggest stakeholder in the enterprise as it grapples with a decline in users.
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Alexandra Semenova is a reporter for Yahoo Finance. Abide by her on Twitter @alexandraandnyc
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Jan. 30—Two best bond credit ranking agencies, Moody’s Trader Services and S&P World-wide Scores, are giving the town of Brownsville superior marks for monetary administration and credit rating worthiness through fiscal yr 2021, regardless of challenges posed by the pandemic.
Moody’s previous 7 days assigned a ranking of “Aa3,” which is the fourth greatest rating in the agency’s long-phrase corporation obligation ranking method and signifies quite reduced credit history danger. Exclusively, the score targets $18.6 million in Certificates of Obligation the town issued and is shelling out off by way of an once-a-year advertisement valorem home tax, or surplus earnings from the municipal landfill if required.
Certificates of Obligation are a way for cities and other governmental entities to problem financial debt to pay for general public tasks without possessing to search for voter approval. The city is working with them to finance many funds infrastructure tasks.
Moody’s also preserved an “Aa3” score for on the city’s Basic Obligation Restricted Tax (GOLT) financial debt, which will equal $175.4 million when the bonds are issued, according to the company. GOLT bonds are individuals for which the governmental entity ought to elevate property taxes by a specified proportion to deal with the financial debt in the event of too much delinquency in house tax payments.
Moody’s claimed its ratings replicate “the city’s trend of beneficial fiscal functions supported by (an) growing financial state driven by cross-border trade with Mexico” and the Port of Brownsville, which the agency described as a “main energetic port.” Moody’s observed that irrespective of the city’s economic development, resident money and whole benefit of taxable residence are “incredibly weak” when compared to other entities in the exact score category.
On the as well as facet, the city’s debt and pension obligations are “manageable regardless of an elevated preset-expense profile,” in accordance to the agency.
One particular variable that could end result in a scores update would be “important enhancement in resident incomes and wealth indices,” although a weakening of the exact same could direct to a downgrade, Moody’s mentioned.
S&P delivered an “AA” rating, the agency’s 2nd greatest score, indicating a “very robust capability to meet monetary commitments.” S&P stated its ranking displays the city’s significance as a port-of-entry for global trade and commerce, with the University of Texas Rio Grande Valley exerting a “stabilizing effect on the local economic system.”
The company also cited growing residence and gross sales tax bases and strong fiscal administration. The metropolis ended up with a sizable fiscal 12 months surplus, although federal pandemic support to permitted for one particular-time capital investments although making probable a “incredibly strong fund harmony above the city’s 90-day fund equilibrium concentrate on.”
City Supervisor Noel Bernal mentioned recognition of the city’s economical administration techniques by two main score organizations is one thing to be proud of.
“These excellent and secure ratings let for the town of Brownsville to carry on making development on critical infrastructure investments that profit our general community as prioritized by our mayor and metropolis commission,” he stated.
Green vitality might be a trending buzzword throughout quite a few sectors of the economy, but it has been to some degree lackluster on the stock market. Not long ago, fiscal analysts have presented top rankings to extremely couple of environmentally friendly energy shares. Plainly, it truly is nevertheless not easy getting eco-friendly, whilst the sector reveals fantastic opportunity for the long term.
Two standouts are Suncor and Northland Energy. Both of those of these major inexperienced strength shares have attained a Sturdy Purchase rankings consensus from analysts. Let’s see what makes these earth-welcoming stocks so promising.
This Canadian corporation has been in enterprise for 33 decades, offering thoroughly clean and green electricity in North The us, Latin The usa, Asia, and Europe. The firm’s facilities use wind, solar, organic gas, and other renewable energies to develop electric power. Northland Energy strongly focuses on offshore wind electrical power in Asia and Europe.
Analysts are positive on this corporation: in the previous 3 months, 7 analysts have rated it a Get, though only two have presented it a Hold score, and none say to Promote. The regular Northland Electrical power selling price concentrate on is $37.31, representing a considerable upside of 27.8{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}.
Nevertheless, traders have been much less keen on the inventory, and the price tag has fallen by 13.3{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} more than the previous yr. The inventory appears to be far better about the extensive see, with a 5-12 months rise of 108.41{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}. Additionally, with a market cap of $6.60B, a footprint throughout the globe, and a beta of .54, the enterprise appears steady. The constant dividend is also a attract for buyers.
The past couple quarters have not been notably great for the corporation, with a sequential drop in earnings every quarter for the past 6 quarters. At the similar time, the inventory has carried out very nicely extended-phrase. Modified EBITDA grew at a 21{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} CAGR from 2017-2020, and no cost hard cash move per share grew at a CAGR of 9{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} in excess of the similar time interval.
From an ESG perspective, the corporation has also improved: in 2014, wind energy did not lead to its results at all, but by 2020, it was contributing 60{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} of its modified EBITDA. For buyers who are fascinated in a green stock with analyst backing, the recent problem just could possibly give an option to purchase the dip.
Yet another Canadian electricity organization, Suncor Electrical power, is an built-in enterprise that produces and refines oil, as very well as owns and operates 4 wind electrical power amenities. It also invests in very low-carbon, renewable fuels, and has a emphasis on minimizing greenhouse gas emissions.
Analysts are upbeat about this stock, with 11 Get rankings, two Maintain rankings, and no Sell scores. The average analyst price tag focus on of $32.72 indicates a promising upside of 27.1{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}. Also, the stock has risen 55.5{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} in the previous calendar year, and Suncor gets a “Ideal 10” Intelligent Rating from TipRanks’ stock investigation tool.
The business offers a hefty market cap of $37.56B, and its dividend grew by 94{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} amongst September and December of 2021. On a further constructive notice, EPS grew by 455{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} yr-about-yr in the most just lately documented quarter, and revenue confirmed progress as very well.
J.P. Morgan analyst Phil Gresh is amazed with Suncor’s recently increased dividend (following a 50{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} dividend cut in 2019), which has resulted in a dividend yield of additional than 5{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}. That, together with its improved annualized share buyback, which it expanded to about 7{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} of current market cap, moreover higher oil costs, guide Gresh to imagine that the enterprise will lessen its personal debt and offer “best-in-course return of money.”
Suncor could existing a fantastic getting possibility to traders wanting for a green electricity stock that is analyst suggested.
Disclosure: At the time of publication, Gilan Miller-Gertz did not have a place in any of the securities described in this article.
Disclaimer: The details contained in this article represents the views and opinion of the writer only, and not the views or feeling of TipRanks or its affiliates Read through full disclaimer >
The sights and thoughts expressed herein are the sights and viewpoints of the writer and do not always reflect people of Nasdaq, Inc.
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Moody’s Investors Products and services and the Authorities Finance Officers Association (GFOA) have identified the Town of Peoria as a person of the most fiscally sound metropolitan areas in the Valley. Peoria was awarded a Aaa bond ranking and GFOA’s Distinguished Spending plan Presentation Award.
“The Aaa bond rating is the optimum ranking offered, and I am thrilled that Peoria has been regarded for its powerful financial and economic functionality,” mentioned Mayor Cathy Carlat. “Peoria’s willpower in adhering to its Concepts of Audio Money Management assures transparency, security, and oversight. This ranking is a great price to Peoria people, as it enables us to leverage outstanding financial conditions as we provide the infrastructure and amenities that make our city great.”
In November, Moody’s Investors Companies upgraded the scores on the city’s excellent basic obligation bonds from Aa1 to Aaa. Moody’s cited “material development in Peoria’s tax foundation properly exceeded prior anticipations and sturdy financial overall performance as evidenced by increasing population, enlargement of employment, and sizeable development” as reasoning for the improve. Moody’s also observed the conservative administration and budgeting and the strong economic guidelines of the city that have resulted in “substantial strengthening of the city’s financial situation.”
On Thursday, Dec. 9, the Metropolis of Peoria shut their bond sale. Specified the city’s Aaa score, Peoria was capable to challenge $55.9 million in normal obligation bonds for a genuine fascination price of 1.65{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}. This is the cheapest desire price on new bonds for Peoria in 20 many years.
Also, the Town of Peoria gained the Distinguished Budget Presentation Award for its fiscal 12 months 2022 spending plan doc. This is the 24th consecutive yr the metropolis has been given this award and the 29th time overall. In accordance to GFOA, the award reflects the determination of the governing entire body and personnel to conference the maximum ideas of governmental budgeting.
“The bond ranking and award are a reflection of the city’s determination to conservative and accountable fiscal administration and budgeting,” stated Metropolis Supervisor Jeff Tyne. “The City of Peoria has worked tricky to solidify their solid economical place. This, in change, has allowed us to constantly provide the maximum excellent municipal expert services to our people and enterprises.”
Peoria inhabitants and enterprises profit from the Aaa bond score in that it lets the metropolis to preserve curiosity prices when making vital infrastructure these kinds of as streets, bridges, parks and general public security services. For extra info, pay a visit to www.peoriaaz.gov.
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The S&P 500 closed at a record on Thursday in a pre-holiday rally along with the Dow and Nasdaq, buoyed by positive data that suggested the Omicron variant was less likely to lead to hospitalizations. The indexes recouped losses from earlier this week after investors shrugged off worries the variant would stunt economic recovery.
The S&P closed at an all time high of 4,725.72, while the Dow ended the week just shy of 36,000. The Nasdaq Composite also closed 130 points up, or 0.85{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}.
“One of the ways pandemics end is significant mutation of the virus. It looks like Omicron may be our friend in that regard, significant mutations different enough from the parent that it doesn’t make people as sick,” True Health Initiative President Dr. David Katz told Yahoo Finance Live.
In other positive news on the COVID-19 front, Merck (MRK) received authorization from the U.S. Food and Drug Administration for its at-home COVID-19 drug, just one day after Pfizer (PFE) was also approved for use of its own treatment.
The pill developed by Merck in conjunction with Ridgeback Biotherapeutics, called molnupiravir, was shown to reduce hospitalizations and deaths by around 30{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} in clinical trial data. Pfizer’s pill was reported to be 90{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} effective at preventing hospitalizations and deaths in high-risk patients.
Shares of Merck closed down 0.54{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} in early trading at $75.75 a piece, while Pfizer’s stock closed at $58.66 per share, down 1.49{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}.
Investors weighed a trove of economic releases ahead of the holiday weekend.
The Labor Department reported that initial jobless claimstotaled 205,000, sustaining a downward trend from the highs of their pandemic peak and reflecting labor market tightness brought on by a demand for workers heading into the new year. The latest print brings the four-week moving average for new claims to its lowest in 52 years, ticking up by 2,750 week-over-week to reach 206,250.
Meanwhile, U.S. consumer prices accelerated at the fastest pace in nearly four decades as shoppers confront rising inflation levels ahead of the holidays.
“Workers have a lot of power, and that’s likely to result in continued wage gains,” Girard chief investment officer Timothy Chubb told Yahoo Finance. “What worries us from an inflation standpoint is, at what point do we potentially see some of those inflation risks sort of hand the baton to the labor market?”
Meanwhile, November sales of new U.S. homes jumped 12.4{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} to a seven-month high of 744,000, buoyed by low mortgage rates and higher demand in the housing industry.
U.S. durable goods orders rose by 2.5{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} in November, up from the prior month, boosted by a sharp rise in aircraft orders.
In Wednesday’s trading session, investors weighed an upbeat print on consumer confidence levels and the release of an upwardly revised estimate for domestic GDP, placing all three major averages in the green after a mixed open.
The Conference Board reported consumer confidence increased by a greater-than-expected margin in December, with the headline index at 115.8 during the month and higher than Bloomberg’s consensus estimates of 111.0. In November, the index had a reading of 111.9, revised from an initial report of 109.5. Meanwhile, the nation’s gross domestic product grew at an annual rate of 2.3{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} in the third quarter in the final estimate from the Bureau of Economic Analysis after the initial report of 2.1{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}.
“We’ve been saying that this is definitely a buy the dip sort of market because we expect more earnings upgrades to come,” Anik Sen, PineBridge Investments global head of equities told Yahoo Finance Live. “We think that the real debate should be about the length and strength of the economic cycle ahead.”
Thursday’s market gains may be the start of the year-end Santa Claus Rally — one in which stocks climb higher in the final seven trading sessions of a year, plus the first two trading days of the new year. Starting today, traders are looking to see whether nearly a century of data will uphold.
For reasons unclear, over the past 92 years, the S&P 500 gained 77{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} of the time during the year-end rally period, according to data from Sundial Capital Research. The average gain in this nine-day trading period tallied 2.66{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}.
4:00 p.m. ET: S&P 500 closes at a record
Here were the main moves as markets closed ahead of the Christmas weekend:
S&P 500 (^GSPC): +29.16 (+0.62{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 4,725.72
Dow (^DJI): +196.57 (+0.55{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 35,950.46
Nasdaq (^IXIC): +131.48 (+0.85{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 15,653.37
Crude (CL=F): +$1.13 (+1.55{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to $73.89 a barrel
Gold (GC=F): +$7.90 (+0.44{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to $1,810.10 per ounce
10-year Treasury (^TNX): +3.6 bps to yield 1.4930{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}
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12:32 p.m. ET: S&P 500 climbs to new high
Here were the main moves during intraday trading:
S&P 500 (^GSPC): +32.83 (+0.70{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 4,729.39
Dow (^DJI): +230.23 (+0.64{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 35,984.12
Nasdaq (^IXIC): +128.35 (+0.83{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 15,650.25
Crude (CL=F): +$0.92 (+1.26{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to $73.68 a barrel
Gold (GC=F): +$6.80 (+0.38{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to $1,809.00 per ounce
10-year Treasury (^TNX): +3.6 bps to yield 1.4930{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}
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10:21 a.m. ET: New homes sales rise to highest since April
November sales of new U.S. homes jumped 12.4{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} to a seven-month high. The Census Bureau reported that new home sales rose 82,000 last month from October to 744,000, buoyed by low mortgage rates and higher demand in the housing industry.
Forecast ranged between 737,000-850,000 across 51 estimates, with a median of 770,000, according to Bloomberg data.
The median sales price of a new home sold in November was $416,900, 14.1{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} higher than a year ago.
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9:30 a.m. ET: Markets open higher following economic releases
Here were the main moves in markets at open Thursday morning:
S&P 500 (^GSPC): +10.69 (+0.23{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 4,707.25
Dow (^DJI): +102.67 (+0.29{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 35,856.56
Nasdaq (^IXIC): +180.81 (+1.18{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 15,521.89
Crude (CL=F): +$0.12 (+0.16{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to $72.88 a barrel
Gold (GC=F): +$5.30 (+0.29{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to $1,807.50 per ounce
10-year Treasury (^TNX): +0.5 bps to yield 1.4620{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}
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9:07 a.m. ET: Consumer prices accelerate, while spending slows
U.S. consumer prices accelerated at the fastest pace in nearly four decades. The Commerce Department reported an increase of 5.7{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} over the past 12 months, reflecting the fastest gain in 39 years as shoppers confront rising inflation levels ahead of the holidays.
Meanwhile, personal spending rose 0.6{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} in November, a slowdown from last month’s print of 1.4{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}. The figure, which accounts for 70{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} of economic activity, comes amid the latest wave of COVID-19 cases, hinting at the possibility of a broader economic slowdown.
Personal incomes rose 0.4{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} in November, down slightly from the 0.5{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} increase in October.
U.S. durable goods orders rose by 2.5{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} in November, up from the prior month, boosted by a sharp rise in aircraft orders.
Core capital goods orders, a measure of business investment in equipment that excludes aircraft and military hardware, fell 0.1{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} after an upwardly revised 0.9{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} increase in October, according to Bloomberg.
The median Bloomberg estimates projected a 0.7{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} increase in core capital goods orders and a 1.8{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} rise in total durables bookings.
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8:30 a.m. ET: First-time unemployment filings remain at pre-pandemic levels
Initial jobless claimsremained at pre-pandemic lows, sustaining a downward trend from the highs of their coronavirus peak and reflecting labor market tightness brought on by a demand for workers heading into the new year.
The Labor Department reported on Thursday that new initial jobless claims totaled 205,000 for the week ending December 18, on par with consensus estimates. The latest print brings the four-week moving average for new claims to its lowest in 52 years, ticking up by 2,750 week-over-week to reach 206,250.
“The direction in the labor market recovery remains positive, with demand still strong,” Rubeela Farooqi, chief economist for High Frequency Economics, wrote in a note. “Labor shortages are persisting, preventing a stronger recovery, although these appeared to ease somewhat in November.”
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7:00 a.m. ET: Contracts on Dow, S&P, and Nasdaq edge higher ahead of open
Here’s how markets were moving in early trading on Thursday:
S&P 500futures (ES=F): +13.75 points (+0.29{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}), to 4,699.75
Dow futures (YM=F): +107.00 points (+0.30{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}), to 35,739.00
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10-year Treasury (^TNX): +0.08 bps to yield {21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} 130.66
We had some serious economic news this month, when October’s inflation rate came in at 6.2{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} annualized. It was the sixth consecutive month +5{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} year-over-year inflation gains – and the highest inflation rate seen in the US since 1990.
Billionaire Ray Dalio, founder of Bridgewater Associates, reminds investors that the worst asset to hold in this environment is cash.
“Some people make the mistake of thinking that they are getting richer because they are seeing their assets go up in price without seeing how their buying power is being eroded. The ones most hurt are those who have their money in cash,” Dalio noted.
Dalio didn’t become as successful as he is by letting inflation degrade his wealth. Aside from keeping out of cash, he also targets his investments. A savvy investor can get a good handle of equities that show the strongest prospect of guarding value by following Dalio’s purchases now.
Looking into Bridgewater’s basket of stocks, we’ve chosen three of the fund’s new holdings that TipRanks reveals as “strong buys” and offer healthy upside potential. Let’s take a closer look and see what Wall Street analysts have to say.
We’ll start in the online payment processing sector, with Global Payments. This company is one of the main competitors to the better-known PayPal, and handles over 50 billion transactions annually for more than 3.5 million customers in over 100 countries. Global Payments operates mainly on the seller side of the transactions, offering its services to merchants and vendors. Services include credit and debit card processing and data analytics.
Global Payments shares have been falling since the spring; the stock peaked above $200 in April, but is down 39{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} since then. At the same time, earnings and revenues in the Q2 and Q3 have shown sequential gains – and management reported the Q3 results as a company record. EPS came in at $2.18 per share, up 27{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} yoy.
However, despite the sound results, the company issued full-year 2021 revenue guidance that fell shy of analyst forecasts. Specifically, the company guided toward $7.71 billion to $7.73 billion, just under the $7.74 billion that Wall Street had expected.
During the third quarter, Global Payments completed its $500 million acquisition of SaaS company MineralTree, a move that will give GPN a foot into the B2B payment market. The MineralTree move was only one that GPN took during September to enhance its footprint. The company also completed an agreement with the UK financial service group Virgin Money to enable a connected payment offering for Virgin Money’s customers. Moreover, GPN was chosen as the official provider of commerce technology at Mercedes-Benz Stadium, the home field of the NFL’s Atlanta Falcons.
Keeping all of this in mind, we can look at Dalio’s purchase of GPN. He’s started a new position in this stock during Q3, totaling 12,021 shares that are now valued at $1.57 million.
This action will not be surprising to Cowen’s 5-star analyst George Mihalos, who highlights several reasons to back the stock.
“GPN has gone from trading at an average ~2x premium to the SPX over the past 4 years (Acquirer Dislocation Opportunity) to a 6x discount presently, despite what we deem as a very achievable long-term outlook (low double-digit organic revenue growth, high-teens to low 20{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} adj. EPS growth) and hardly a deceleration from pre-pandemic levels. The price action across the sector and to a much lesser extent for the networks, reflects a perception of imminent disintermediation from newer entrants and payment methods,” Mihalos opined.
To this end, Mihalos gives GPN an Outperform (i.e. Buy) rating, and his $228 price target implies room for ~76{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} one-year upside potential. (To watch Mihalos’ track record, click here)
Overall, it’s clear that Wall Street is in broad agreement with Mihalos’ outlook. The stock has 18 reviews, which include 15 Buys and only 3 Holds, for a Strong Buy consensus rating. Shares are priced at $129.69 and the $200.89 average target suggests ~55{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} upside in the next 12 months. (See GPN stock analysis)
We’ve talked a lot about inflation in recent weeks, mostly because the country appears to be hitting a period of inflationary pain that hasn’t been felt since the Carter Administration. But some companies are proving to be mostly immune. Levi Strauss, best known for its blue jeans, is one. A look at the company’s quarterly report will provide some illumination.
Levi Strauss has reported 5 consecutive quarters of positive EPS – a strong recovering from the pandemic-induced negative result in 2Q20. The company’s 48-cent EPS result in 3Q21 was the best in over 2 years. Revenue also delivered; the company reported a top line of $1.5 billion, the best result since 1Q20. Both the revenue and earnings beat Wall Street’s expectations, revenue by a 1{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} squeaker of a margin, but EPS by a much wider 29{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}.
Management was upbeat, and justly so. The company’s performance in 3Q21 was comparable to, or slightly better than, pre-pandemic 2019 levels. The turnaround was driven in part by the reopening of schools, and a resumption of back-to-school shopping.
So we shouldn’t be surprised, given the company’s strong position, that Dalio has chosen Levis for a new position. The billionaire investor bought a total of 135,430 shares in the jeans company, stake that is now valued at $3.68 million.
Evercore analyst Omar Saad notes another important point – that Levi Strauss has achieved this performance despite the supply chain crunch that has been making unwelcome headlines.
“Fears that supply chain bottlenecks and cost inflation would cause Levi’s to miss sales and earnings expectations and lower guidance (a la NKE and BBBY) proved to be unfounded as the denim juggernaut grew sales 3{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} (vs. cons +1{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}), delivered a multi-decade high 14.8{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} EBIT margin, and raised guidance… Although Levi’s is not immune to broader supply chain challenges (was a 70-bp drag on sales in 3Q and could be 2-3x that in 4Q), the combination of its diversified manufacturing base and newfound pricing power is more than offsetting the inflationary drags,” Saad wrote.
In line with his positive outlook, Saad rates the stock an Outperform (i.e. Buy) and sets a $40 price target that indicates confidence in ~46{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} upside for the year ahead. (To watch Saad’s track record, click here)
Overall, the Strong Buy consensus rating here is unanimous, based on 5 recent positive reviews. The shares are priced at $27.42 and their $37.25 average target implies a one-year upside potential of ~36{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} from that level. (See LEVI stock analysis)
We’ll wrap up with a shift in focus, to the automotive industry. The double whammy of inflation and supply chain problems have been putting strong upward pressure on automotive prices. Manufacturers are having trouble meeting demand due to shortages of semiconductor chips, dealers are having trouble filling their lots, due to lower production and delayed deliveries, and today’s used car prices are starting to look like new car sticker prices from 2015.
That’s the background to remember when we look at Lithia Motors, the third largest automotive retailer group in the US. The Oregon-based company sells both new and used vehicles through a network of locations in the US and Canada. Lithia’s network includes 264 dealerships selling 34 automotive brands. Vehicles in stock include 34,793 used vehicles and 18,485 new vehicles.
The immediate effect of inflation on Lithia has been to push up revenues. Automobile prices are up – way up. Used cars have seen a 45{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} increase, while new cars are averaging $42,000. This can be seen in Lithia’s Q3 revenue, which grew 70{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} yoy to reach $6.2 billion. EPS came in at $10.11, up 47{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} yoy. Counting cash and available credit, the company claimed $1.7 billion in available liquidity at the end of the quarter. Earnings and revenue beat the Wall Street estimates; EPS by 14{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} margin and revenue by a narrower 3{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}.
Ray Dalio was suitably impressed, and opened up his position on this stock with 7,537 shares. Due to the high share price, these shares are now worth $2.45 million.
Among the bulls is Guggenheim’s 5-star analyst Ali Faghri, who rates LAD a Buy along with a $542 price target. This figure implies share appreciation in the next 12 months of ~64{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}. (To watch Faghri’s track record, click here)
Backing his stance, Faghri noted, “LAD reported 3Q results well above expectations in a tough environment amid significant new vehicle inventory shortages. We came away even more bullish on the outlook and reiterate LAD as our Best Idea… LAD’s outperformance continues to highlight its sourcing advantages and that of its franchise dealer peers, given their access to the trade-in and off-lease channels which gives the group a structural advantage compared to standalone used car dealers which rely heavily on auction.”
Once again, we’re looking at a stock with a unanimous Strong Buy consensus, supported by 4 positive stock reviews. The average price target of $505.75 implies a one-year upside of ~53{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} from the current trading price of $329.63. (See LAD stock analysis)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
