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Banks vs. Big Tech: 4 to Buy, 4 to Sell

William Roth

Investors on Wall Street continue to contend with a choppy and uncertain trading environment, even among popular sectors like tech stocks. The harrowing losses of two weeks ago — driven by worries over rising interest rates and a hawkish Federal Reserve — have mostly faded away. But last week’s ebullient rebound has stalled, leaving the action listless.

A growing chorus on Wall Street is sounding the alarm, with analysts at Morgan Stanley warning that the large-cap stocks in the S&P 500 are the only holdout from a “rolling bear market’ that has already savaged pretty much every other asset class, including small-cap stocks, high-yield bonds, and emerging market assets. The fact that the S&P 500 is once again below its 200-day moving average supports this thesis, weighed down by bank stocks.

Yet tech stocks — which have been the performance vanguard for months — are desperately trying to climb higher. So which is right? Bank stocks or big tech stocks? For investors ready to pick a side, here are eight stocks (four from each camp) to watch:

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Tech Stocks to Buy: Amazon (AMZN)

Tech Stocks to Buy: Amazon (AMZN)

Amazon (NASDAQ:AMZN) stock is testing above the $1,800 level, remaining well above its 200-day moving average as it consolidates a 17%-plus decline from its early October double-top high. Despite the recent price unpleasantness for this and other tech stocks, analysts at Credit Suisse raised their price target this week and are now penciling in $2,400 vs. $2,100 previously.

The company will next report results on Oct. 25 after the close. Analysts are looking for earnings of $3.12 on earnings of $57.1 billion. When the company last reported on July 26, earnings of $5.07 beat estimates by $2.53 on a 39.3% rise in revenues.


Apple (AAPL)

Tech Stocks to Buy: Apple (AAPL)

Apple (NASDAQ:AAPL) stock is testing above its 50-day moving average, trying to lift off of a multiweek consolidation near the $215 level. Analysts at Wedbush recently initiated coverage with a $310 price target and an addition to its Best Ideas List. They believe the company’s market capitalization can swell towards $1.5 trillion on the continued success of the iPhone and their belief in a strong upgrade cycle in 2019.

The company will next report results on Nov. 1 after the close. Analysts are looking for earnings of $2.78 per share on revenues of $61.5 billion.

When the company last reported on July 31, earnings of $2.34 beat estimates by 16 cents per share on a 17.3% rise in revenues.


Adobe (ADBE)

Tech Stocks to Buy: Adobe (ADBE)

Adobe (NASDAQ:ADBE) stock is crawling higher, trying to move back over the $250-a-share threshold after catching a bounce on its 200-day moving average. Watch for another run at its 50-day moving average. Shares zoomed higher last week after management reaffirmed its fourth quarter guidance and said it expects fiscal 2019 revenue to be up 20%.

The company will next report results on Dec. 13 after the close. Analysts are looking for earnings of $1.89 per share on revenues of $2.4 billion. When the company last reported on Sept. 13, earnings of $1.73 per share beat estimates by four cents on a 24.4% rise in revenues.


Intel (INTC)

Tech Stocks to Buy: Intel (INTC)

Intel (NASDAQ:INTC) stock is trying to build a base of support near the lows around $44, a level first reached back in early September setting in a run at its 200-day moving average near $49. That last was last tested earlier this month. Street opinion is divided on the chipmaker, with Nomura analysts defending their recent upgrade to buy on CNBC while B Riley analysts lowered their price target ahead of Thursday’s earnings results.

The company will next report results on Oct. 25 after the close. Analysts are looking for earnings of $1.15 per share on revenues of $18.1 billion.

When the company last reported on July 26, earnings of $1.04 beat estimates by eight cents on a 14.9% rise in revenues. It’s worth a look when seeking tech stocks to buy.


Bank Stocks to Sell: Bank of America (BAC)

bank stocks to Sell: Bank of America (BAC)

Bank of America (NYSE:BAC) stock is looking downright ugly on Monday, breaking down below its early July low to return to levels not seen since late 2017. Initially, higher interest rates were seen as a boon to the banks because it meant higher net interest margins on loans as the “cost of credit” rose. Problem is, as any Econ 101 student will tell you, as prices rise demand falls. Thus, with evidence consumers are slowing down things like mortgage originations, investors are bailing out of bank stocks.

The company will next report results on Jan. 16 before the bell. Analysts are looking for earnings of 65 cents per share on revenues of $22.6 billion. When the company last reported on Oct. 15, earnings of 66 cents per share beat estimates by four cents on a 3.2% rise in revenues.


JPMorgan (JPM)

JPMorgan (NYSE:JPM) stock is threatening to fall below its mid-October low setting up a decline back to levels not seen since early July. Already down nearly 11% from its September high, a drop to that level would be worth another 4% drop from here. The selloff represents the first major violation of the 50-week moving average since the summer of 2016, so it’s a big deal.

The company will next report results on Jan. 15 before the bell. Analysts are looking for earnings of $2.27 per share on revenues of $27.4 billion.

When the company last reported on Oct. 12, earnings of $2.34 beat estimates by nine cents on a 7.8% rise in revenues.


Citigroup (C)

Citigroup (NYSE:C) stock is breaking down out of a multimonth consolidation range, returning to levels not seen since July as it falls further away from its 50-day and 200-day moving averages. The company was among the weaker performers last quarter, managing just a 7.3% return on equity vs. 14% for JPM, for instance. Shares are already down nearly 16% from their January high.

The company will next report results on Jan. 14 before the bell. Analysts are looking for earnings of $1.64 per share on revenues of $18.1 billion. When the company last reported on Oct. 12 earnings of $1.73 per share beat estimates by four cents despite a 0.2% drop in revenues.


Wells Fargo (WFC)

Wells Fargo (NYSE:WFC) stock is testing critical support near its 200-week moving average, a level that held during selloffs in April as well as in September 2017. Shares of this bank stock are already in a bear market, down more than 20% from its January high, despite a recent upgrade by analysts at Macquarie.

The company will next report results on Jan. 15 before the bell. Analysts are looking for earnings of $1.18 per share on revenues of $21.6 billion.

When the company last reported on Oct. 12, earnings of $1.13 missed estimates by four cents on a 0.4% rise in revenues.

As of this writing, William Roth did not hold a position in any of the aforementioned securities.

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