MarketBeat: Week in Review 7/18 – 7/22

The market was in rally mode this week, but investors should be careful not to read too much into it. On the one hand, with some notable exceptions (we see you Snap), earnings are coming in “less bad.” But guidance is still weak and investors are still unclear about what the Fed’s next step will be. There is still some sentiment that the Federal Reserve will increase the Fed funds rate by 100 basis points when it meets next week. And if the Fed forecasts a 75 basis point hike for September, there may be more repricing of stocks to come. That’s not the only big story on tap next week. Many of the big name tech stocks including Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL) report next week. The MarketBeat team continues to sift through the headlines to find the stocks and stories that are likely to move the market. Here are some of the stocks our analysts were looking at this week.

Articles by Jea Yu

Semiconductor stocks are back in the news and Jea Yu was analyzing the outlook for Nvidia (NASDAQ:NVDA) which presents an interesting dilemma for investors. Specifically, the stock is down over 40% while revenue and earnings continue to grow on a sequential and year-over-year basis. The company issued lower guidance for the upcoming quarter, but as Yu points out the weaker guidance is a low bar to climb over for a company that appears to be firing on all cylinders. Yu was also looking at Costco (NASDAQ:COST) as another company that continues to show strength in a slowing economy. Similar to the pandemic, consumers continue to benefit from the company’s warehouse model that allows them to buy in bulk to mitigate the effects of inflation. And with membership growing, Costco continues to expand its footprint while holding off on increasing membership rates. On the other end of the spectrum, PayPal (NASDAQ:PYPL) stock continues to lag the broader market and even the company’s management is finding it hard to forecast what the immediate future of digital payments will look like. Nevertheless, Yu shares an analysis of why PYPL stock may be forming a bottom for risk-tolerant investors.

Articles by Thomas Hughes

The relationship between price and value is critical for investing success, particularly when your portfolio is on the smaller side. With that in mind, Thomas Hughes was on the hunt for some stocks that offer the potential for double-digit upside and can be purchased for less than $50 per share. Hughes was also looking at the chip sector which is offering a trio of undervalued stocks and have surprisingly high dividend yields. One of the big names to report earnings this week was Tesla (NASDAQ:TSLA) which beat on both the top and bottom lines. This may have lifted the spirits of investors concerned about  Elon Musk’s remarks about the company’s factories in Austin, Texas and Berlin being  “money furnaces.” Hughes analyzes the company’s results and writes “The analyst activity in Tesla remains mixed but the sentiment is firming and the price target stabilizing.” And this comes despite persistent supply chain challenges in China. If the automaker sees improvement in the supply chain, TSLA stock may be ready for a strong move higher.

Articles by Sam Quirke

We told you that semiconductor stocks were in the news this week. And if you’re interested in learning about the catalysts for the sector moving forward, you’ll want to check out the two-part series by Sam Quirke. In part one, Quirke reviews the current state of play for the sector including the reasons that there may still be headwinds. However, long-term investors with a tolerance for some volatility might consider nibbling on quality stocks in the market. In part one, Quirke makes the case for Advanced Micro Devices (NASDAQ :AMD). Then in part two, he continues his analysis with a review of the current catalysts for Nvidia (NASDAQ:NVDA).  

Articles by Chris Markoch

Chris Markoch was looking at a pair of dividend stocks that investors can rely on if the economy continues to soften. The first was Johnson & Johnson (NYSE:JNJ) which is a defensive stock for defensive stocks. As Markoch points out this means that investors gain “exposure to multiple sectors all of which provide essential products and services for consumers.” And it also has the pricing power to grow revenue and earnings in a recession. The second was AbbVie (NYSE:ABBV) which will have to convince analysts that its strategy to replace the revenue from Humira are still on track. But long-term investors can count on the company’s growing dividend and expansive pipeline. And Markoch was also looking into the semiconductor sector and offers investors his opinion on the current situation with Advanced Micro Devices (NASDAQ:AMD). While Markoch concedes the bears are in control, he points out there is a lot to like in the company’s fundamentals.

Articles by Matthew North

Matthew North was looking at two tech stocks that have been beaten down for different reasons. If you believe history could repeat itself, then North suggests investors should look at Alibaba (NYSE:BABA). As China begins its reopening across the country complete with newly announced stimulus packages, some analysts are predicting an economic recovery similar to what occurred in the United States in 2021. North was also analyzing much-maligned Meta Platforms (NASDAQ:META). Although some reasons for concern remain, some analysts now consider META stock to be undervalued. North takes a deeper dive into the company’s financials so you can decide if the stock is a recession hedge. And North was also analyzing the (less bad?) results from Netflix (NASDAQ:NFLX). The streaming giant’s stock is on the rise after the company beat on the top and bottom lines and announced it lost fewer subscribers than forecast.

Articles by Parth Pala

The investing axiom of “selling the news” was on full display this week when Apple (NASDAQ:AAPL) announced it was going to be slowing hiring and reducing its spending across certain divisions into 2023. With investors looking for any reason to sell, AAPL stock dipped over 2% on the news and took the rest of the market down with it. Parth Pala notes that the company has several issues that concern analysts which makes their upcoming earnings report all the more important. Pala was also looking ahead to the Federal Reserve’s decision on interest rates and positioning investors with three stocks that benefit from rising interest rates. On a related note, higher interest rates are strengthening the U.S. dollar and Pala highlights four stocks that stand to benefit from a stronger dollar.

Articles by Kate Stalter

One of the emerging global trends that will impact investors for the next several years will be the balance between traditional fossil fuels and the expansion of alternative and renewable clean energy sources. And this was in focus as Kate Stalter analyzed the recent price movement in ExxonMobil (NYSE:XOM). ExxonMobil stock remains a strong performer even as the energy sector has cooled off. As Stalter notes, the question moving forward will be how the company handles anticipated suppressed demand from higher interest rates. When looking at Ford (NYSE:F), Stalter notes that F stock is rallying, but advises caution. As Stalter notes this may be a case of investor sentiment (and maybe nostalgia) getting ahead of the company’s fundamentals. Stalter was also looking at the disappointing earnings report delivered by Verizon (NYSE:VZ). In this case, the strength of the company’s dividend is an important consideration to weigh against softer guidance. Specifically, Stalter notes, “The stock’s price is down 8.3% year-to-date, but when you include dividends, the total return is -1.87%.”