For Immediate Release
Chicago, IL –July 23, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Amazon AMZN, Yandex YNDX and Synnex SNX.
Here are highlights from Monday’s Analyst Blog:
Earnings Season Intensifies: Global Week Ahead
In the Global Week Ahead, 139 firms release their latest earnings result inside the S&P 500.
The Q2 earnings season will intensify -- both in terms of the number of reporting firms and the breadth of sector coverage.
Key names: Facebook, Alphabet, Twitter, Intel, Amazon, UPS, Boeing, Caterpillar, AT&T, McDonald’s, Starbucks, Ford, Coca-Cola, Visa, Invesco, Lockheed Martin and 3M.
For Q2, 16% of S&P 500 firms have reporting results. 79% reported a positive EPS surprise. 62% reported a positive revenue surprise.
· For Q2 2019, the earnings decline for S&P 500 firms is -1.9%.
· If -1.9% is the actual S&P 500 quarterly earnings decline, it will mark the 1st time the index reported two straight quarters of y/y declines since Q1-16 and Q2-16.
· Net profit margins may have peaked in Q3-2018.
· Valuations trade rich too, in anticipation of a looming Fed rate cut.
· The forward 12-month P/E ratio for the S&P 500 is 17.0.
To tighten up the global markets narrative, next are Reuters’ five big world market themes, re-ranked for equities.
(1) FAANG Stock Earnings Reports Take Center Stage
Netflix kicked off earnings for FAANG stocks on a bleak note.
Shares of the video-streaming service swooned 10.2% after it reported its first U.S. subscriber drop in eight years.
Of course, it doesn’t mean shares ofFacebook, Amazon and Google-parent Alphabet will do the same when they report their result over coming days. But it’s a worry, since FAANGs’ earnings and their shares have been crucial contributors to record-breaking Wall Street rallies this year and last.
The Netflix nosedive weighed on the group. Even so, it is up 21% this year, exceeding the roughly 19% gain in the S&P 500, though it lags its fellow FAANGs, except for Alphabet.
Facebook, which reports on Wednesday, has enjoyed a 50%-plus share surge so far in 2019. But the shares have fallen in recent days amid calls for greater regulation of the company’s handling of private information. It’s also under fire in Washington for its plan to launch a cryptocurrency, Libra.
Alphabet releases results on Thursday. Politicians are calling for it to be more regulated, capping its year-to-date gain at 8.5%. Amazon, up about 30% in 2019, reports the same day amid worries that rivals Walmart and Target are getting more competitive with online sales and deliveries. The fifth FAANG, Apple, opens its books on July 30. By then the effect on market sentiment should be clear.
(2) The European Central Bank Meets on Thursday
Just seven months after ending a three-year long bond-buying program, the ECB is expected to signal at its Thursday meeting that an interest rate cut is imminent to boost stubbornly low inflation.
Already, on June 18, ECB boss Mario Draghi stunned investors by flagging a return to stimulus. Money markets have moved swiftly since then to price a roughly 60% chance of a 10 basis-point cut at the July 25 meeting. A September cut is considered a done deal. Commerzbank even predicts a 20 bps cut this month. Some argue that moving before the U.S. Fed cuts rates on July 31 would prevent the euro rising against the dollar.
How low could the ECB go? Talk is swirling that the bank may tweak the way it targets inflation, enabling it to cut rates more and keep them low even if inflation goes above target. And, of course, investors will be listening for any hint that the ECB will resume bond-buying and if so, when.
(3) Wednesday Has Key PMI Readings Out
Purchasing Managers’ Indexes (PMI), generally reliable gauges of economic trends, have been painting a pretty gloomy picture in recent months. Soadvance July PMI readings for Japan, the Eurozone and the United States, due July 24, will be of particular interest, given the bets on monetary easing in all three countries.
PMIs so far show a lot of manufacturing gloom while pointing to relatively robust services activity. In the Eurozone, services PMIs came in at 53.6 in June, versus a 48.5 reading for manufacturing. Similarly U.S. factory activity barely grew last month, while services stayed above the 50-mark.
The worry now is that manufacturing weakness will start to seep into services, dealing a further blow to growth. Currently, JP Morgan’s global composite PMI index is holding just above 50 — the mark denoting economic expansion — while a new orders PMI fell under 50 in May for the first time since 2012.
If July PMIs show the composite gauge dipping into contraction territory, it would confirm that economies are indeed in need of policy stimulus.
(4) Wake Up to a New British Prime Minister on Wednesday, July 24th
Investors will wake on July 24th to a new British prime minister.
Boris Johnson, the face of the Leave campaign in the 2016 Brexit referendum, is — if betting markets are to be believed — almost certain to capture the majority of Conservative Party members’ votes and become the new leader, beating foreign minister Jeremy Hunt into second place to succeed Theresa May.
Sterling has sunk to its lowest in 27 months as the two candidates tried to outdo each other with hard Brexit rhetoric, including pledges to leave the EU with or without a transition trade deal, come the Oct. 31 deadline.
There is a view that once in power, the new prime minister will tone down the rhetoric and begin renegotiating an arrangement with Brussels. UK lawmakers have also backed a plan to make it tougher for the government to force a no-deal Brexit.
But Johnson may have boxed himself into a corner with his promises so investors are bracing for more sterling pain — they expect a sharp rise in volatility in the currency around Oct. 31. Banks warn of a pound at or near parity with the euro and dollar should a no-deal Brexit come to pass.
Voting in the leadership race concludes on Sunday, results are expected on Tuesday and a new prime minister should be in place by the end of the week.
(5) Turkish Monetary Policy and Turkish Lira in Focus
On July 25, Turkey’s central bank meets for the first time since President Tayyip Erdogan sacked its former head for not moving fast enough on cutting interest rates, now at 24 percent.
No prizes then for predicting that new governor Murat Uysal will deliver a rate cut on Thursday, the only question being by how much. Money markets are pricing in at least 300 basis points, while a Reuters poll of economists reckons 250 bps. Consensus: the only way is down.
Given the lira only recently stabilized from last year’s 30 percent dive, a rate cut would raise the risk of the currency buckling again. There is one difference now, however: almost every central bank in the world, from the United States to Ukraine, is limbering up to cut rates. So for once Turkey won’t stand out.
And on top of that U.S. President Donald Trump doesn’t seem to be in any rush to sanction Turkey for buying Russia’s S400 missile defense system. But a week can prove a long time in politics.
Top Zacks #1 Rank (STRONG BUY) Stocks
Amazon:At a staggering market cap of $1.96T, the granddaddy of the FAANG stocks is a fresh Zacks #1 Rank stock this week. The Zacks Value score of D does not seem to matter, as long as the Zacks Growth score of B holds up.
Yandex: This is the $12.6B market cap ‘Russian Google’ stock. It also sports a D for Zacks Value that is being overlooked to chase the B for Zacks Growth.
Synnex: A final stock to round out my full length tech stock list this week. This ticker lists a $5B market cap Business Software Services stock. The Zacks Value score of A and the Zacks Growth score of A keep looking tasty.
Zacks Investment Research
800-767-3771 ext. 9339
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Yandex N.V. (YNDX) : Free Stock Analysis Report
SYNNEX Corporation (SNX) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research