MarketBeat Week in Review – 7/3 - 7/7

Key Points

• The markets were volatile, mostly to the downside, in a shortened trading week. 
• Conflicting, but mostly positive, jobs data appears to make an interest rate hike in July more likely.  
• The latest readings on CPI and PPI due out next week will provide investors with the last data point before the Fed meeting.   
• The end of next week also marks the beginning of the earnings season.  
• Here are some of the most popular articles from this week.  

A short trading week still managed to deliver volatility to the equity markets. The primary catalyst was the employment outlook. The ADP report on Thursday showed job growth that was double the analysts’ projection. But the Jobs Report on Friday showed a slight miss. 

So, what’s the real story? As long as programs like the Employee Retention Credit (ERC) remain in place, it may be hard to say. That answer is unlikely to satisfy Fed watchers who are looking for clues to the Fed’s next move.  

For that, you’ll want to follow the path of inflation. And investors will get the latest readings on the Consumer Price Index (CPI) and the Producer Price Index (PPI) next week as well as the latest read on consumer confidence. The end of next week will also mark the kickoff to the next quarterly earnings season.  

That’s a lot of potentially market-moving news. And the MarketBeat team will be here to help you make sense of all of it. Here are some of the most popular articles from this week.  

Articles by Jea Yu 

As demand for artificial intelligence (AI) applications expands, so will the need for the surrounding infrastructure. This week Jea Yu was looking at three companies that are well-positioned in the emerging AI infrastructure sector. 

Pure Storage Inc. NYSE: PSTG is a leader in next-generation data storage designed with AI in mind. As Yu writes, the company’s direct-to-flash architecture and pay-for-consumption model are two drivers of current and future revenue.  

Yu also wrote about Applied Digital Co. NASDAQ: APLD which is a leader in high-performance computing (HPC) data centers. APLD stock is up 400% in 2023 as it locks in contracts with companies looking for data centers that specialize in accommodating AI companies.  

The chip sector will also benefit from the demand for AI, and lasers play a vital role in the fabrication process. That’s one reason Yu was looking at Coherent Co. NASDAQ: COHR which recently underwent a name change that reflects a simplified business model. Specifically, the company’s primary business involves making laser systems and components for optical fiber and semiconductor equipment.  

Articles by Thomas Hughes 

Thomas Hughes also had his eye focused on the AI sector this week. With spending expected to grow exponentially in coming years, Hughes offered up three AI stocks that could move sharply higher in the coming quarter.  

Tesla, Inc. NASDAQ: TSLA reported its Q2 production and delivery numbers this week and showed why it’s the leader in the EV market by a wide margin. The company set records in both numbers that show its strategy to lower prices is working. As Hughes writes, analysts are now sharpening their pencils and moving their forecasts higher in anticipation of a strong earnings report.   

And Mullen Automotive, Inc. NASDAQ: MULN continues to fascinate MarketBeat subscribers. The polarizing EV penny stock made news this week on several fronts, and all appear to be bullish for MULN stock. Hughes has been all over this company in 2023, and his recent article breaks down what all of this means for investors.   

Articles by Sam Quirke 

If you’re an investor that primarily uses fundamental analysis to make investing decisions, then you’re very familiar with the relative importance of a stock’s price-to-earnings (P/E) ratio. In general, investors are looking for a P/E ratio that is below the sector average or the average of an index like the S&P 500.  

Low P/E stocks often point to stocks that are undervalued. That’s why Sam Quirke was guiding investors to two airline stocks that have historically low P/E ratios even as airline traffic continues to exceed expectations. This combination could make them intriguing choices in the coming quarters.  

By contrast, an above-average P/E ratio is usually a sign that a stock is overvalued. This is particularly true for a stock like Amazon.com, Inc. NASDAQ: AMZN which has a P/E that is well above many tech competitors. As Quirke writes, this can happen after a stock has been undervalued, but that doesn’t mean investors should chase AMZN stock at this time.  

Articles by Chris Markoch 

Is this a bull market or just a head fake? If you believe the former is true, then Chris Markoch suggests you look at small-cap stocks. Historically, these stocks take the lead when the economy begins to wake up from its slumber. And Markoch gives investors three stocks on the Russell 2000 that have strong growth potential for the rest of the year. 

Markoch also wrote about the upside earnings surprise delivered by American Outdoor Brands, Inc. NASDAQ: AOUT. The company has an e-commerce first model that is getting attention from consumers and analysts. The real growth may not happen for another year or two, and the company would be acutely affected by further economic weakness. But for investors looking for value, AOUT stock is one for the watchlist.  

Articles by Kate Stalter  

Traders often use technical signals to time entry and exit points. One signal can come from looking at areas where a stock is meeting resistance. If a stock breaks through an area where it has previously met resistance, that is usually a bullish sign.  

That’s what Kate Stalter observed with three stocks that have recently pushed past overhead price resistance. The significance to traders, however, is that Wall Street hasn’t caught on yet so investors can get in while the stock is still in buy range. 

Commercial real estate continues to draw the attention of investors, but mostly in the sense that they are staying away. As Stalter writes, this has been the case with office real estate investment trusts (REITs). But recent news is sending office REIT stocks higher.  

And while REITs are known for paying strong dividends, semiconductor stocks are not. That's why Stalter is pointing investors to three large semiconductor stocks that offer attractive dividend yields.  

Articles by Ryan Hasson 

One of the major news stories this week was OPECs announcement that it was looking to do whatever it takes to raise the price of oil. This is a time when investors should take what the market is giving them. And right now, that means there’s a long-term bullish case for oil stocks.  

With that in mind, Ryan Hasson writes that Occidental Petroleum NYSE: OXY is a favorite of Warren Buffett who recently increased his stake in OXY stock for the second time this year. Correlation doesn’t always amount to causation. But in this case, it could be a reason to buy OXY stock. 

Hasson also had his eye on one startup and one old guard in the EV sector. Hasson analyzed the recent price move in Rivian Automotive, Inc. NASDAQ: RIVN after the company shattered production and delivery estimates in the second quarter.  

Hasson was also analyzing the situation with Ford Motor NYSE: F. The stock has climbed 22% in the last month alone. But investors may want to wait until the company reports earnings to see if the production numbers match expectations.  

Articles by Gabriel Osorio-Mazilli 

Over the last year, there’s been considerable talk about the inverted yield curve. While this is almost always a recession signal, Gabriel Osorio-Mazilli writes that traders and investors should analyze it in terms of how it affects where money has been and where it’s going.  

Another story making headlines this week is China’s export restrictions on several key metals that are of great significance to the semiconductor industry. This highlights the recent move by many chipmakers to onshore their manufacturing. Osorio-Mazilli offers up one potential winner and one likely loser as this new battle with China heats up. 

Osorio-Mazilli was also writing about Meta Platforms, Inc. NASDAQ: META and its recent move to compete with Twitter in short-form written content. The company’s “Threads” initiative will come at the expense of the company’s free cash flow. The immediate question is whether investors will sell this news as it did when it announced its investment in the metaverse.

Articles by MarketBeat Staff 

Who doesn’t love a good flying car story? That’s the question the MarketBeat staff was asking on the recent pop in Joby Aviation, Inc. NASDAQ: JOBY. The company just received FDA approval to begin flight testing its “air taxis.” This is an industry still in the very early innings, but speculative investors may want to take notice.  

However, this is still a time when many investors will want to avoid unnecessary risks. And that means looking for companies that are generating large amounts of cash. For an investment that is more firmly grounded, the staff points you toward three cash-rich dividend stocks with plenty of upside to go.  

The same can’t be said of Overstock.com, Inc. NASDAQ: OSTK. The company is rebranding itself to take on the Bed, Bath & Beyond name along with several key digital assets from the bankrupt company. It’s a bold strategy that seeks to breathe life into a company that lacks name recognition. But as our staff writes, it’s way too early to buy the company’s stock.