(0:45) - Is The Market On The Edge Of A Bubble?
(6:10) - How Does The Fed’s Policy Impact The Market?
(16:15) - Why Is The Market Pushing Even Higher?
(23:30) - Should Investors Be Buying Into Growth Stocks?
(28:35) - Where Should Investors Be Looking In 2020?
(39:00) - Episode Roundup: SNE, SQ, NVDA, XLK, ITV, V, MA, SHAK, CMG, LULU
Welcome to Episode #207 of the Zacks Market Edge Podcast.
Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.
This week, Tracey is joined by Kevin Cook, Zacks Senior Equity Strategist, for a look at the hot stock market in 2020.
Stocks picked up where they left off in 2019, with new highs. The growth stocks continued to be on fire and large cap growth names were hitting new highs nearly every day of 2020.
Many have taken to asking whether or not this is just a bull market or if it’s turning into something more ominous, like a bubble.
Defining a Bubble
Want to know what the definition of a bubble is and what characteristics to look for?
Tracey got out her Fourth Edition copy of Charles Kindleberger’s great book “Manias, Panics and Crashes” where he discusses the history of financial crises ranging from the South Sea bubble, to tulips to Japan’s bubble in both real estate and stocks in the 1980s.
Several characteristics leap out including:
1. Investors like to join the bandwagon.
2. Central banks and governments flood the market with easy money.
3. Where there’s one bubble, sometimes there are others at the same time.
Is this stock market a bubble? Kevin and Tracey discuss it.
Should You Be Buying the Hot Stocks Here?
1. Sony SNE just hit a new 5-year high. PlayStation 5 is rolling out this year which should be a huge earnings driver for the company. It’s only trading at 17x. That’s positively cheap for tech and entertainment company.
2. Square SQ has lagged the red-hot stock market over the last year as shares are up just 6.4% while the S&P 500 has jumped 27%. Is this a buying opportunity in one of the well-known growth names?
3. NVIDIA NVDA is back. After hitting new highs in late 2018, and then plunging on an earnings warning, the shares have rebounded, gaining 67% over the last year. They’re still expensive, at 42x, but earnings and sales are expected to rebound next fiscal year.
4. Lululemon LULU is one of the top retailers on the Street. Investors dove in 2019, pushing the shares up 74% over the last year. Shares are now trading at 48x. Is it growing fast enough for its valuation?
5. Apple AAPL continues to hit new highs but it’s now trading at 22x forward earnings. Shares are up 101% over the last year. How much fuel is left in this engine?
If the market sees a pullback or sell-off, should investors be buying into these hot growth names?
Find out the answer to this question and more talk about bubbles on this week’s podcast.
[In full disclosure, Tracey owns shares of LULU in her personal portfolio.]
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>
Click to get this free report Square, Inc. (SQ) : Free Stock Analysis Report Sony Corporation (SNE) : Free Stock Analysis Report Apple Inc. (AAPL) : Free Stock Analysis Report lululemon athletica inc. (LULU) : Free Stock Analysis Report NVIDIA Corporation (NVDA) : Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research