Master your fundamental research. Join 79,012 investors who trust our platform and content.
Save 54+ hours of fundamental research with free access to Stock Card.
We only ask your name and email address.
A Mixed News Day Resulted in a Mixed Market
After a volatile day, the market closed with a mix of green and red.
A few economic news and indicators pulled the market in opposite directions today, like a yo-yo.
For one, the Treasury Department released its U.S. Trade Deficit Data. March’s $75 billion goods and services deficit was the highest level we have seen since 1992. April narrowed the gap by about $6 billion, causing the 10-year Treasury yield to fall slightly.
President Joe Biden has been going through the back-and-forth legislation discussions surrounding a new infrastructure bill. A White House study found critical supply chains to be very dependent on imports, and Democrats are preparing the bill tomorrow for a vote in the House. They hope to aid domestic manufacturing and production.
Retail Traders’ Newest Meme Stock: Wendy’s (WEN)
As I went through the winners and losers list of stock on Stock Card, I noticed Reddit and retail investors have crowned their most recent meme stock, and it’s none other than your favorite fast food restaurant: Wendy’s (WEN).
The birthplace of the Baconator saw a 25.85% rise in its stock price by market close. This comes unexpectedly at the hands of the infamous Wallstreetbets sub-forum. Investors piled on today, claiming that a small retail share float and a meme-savvy marketing team is the perfect firestarter.
Despite such technical reasoning and hype, the company's operations and fair share price calculations don't support this new price. For example, during the COVID-19 shutdowns, Wendy’s did not hold up as well compared to its competitors. Looking at the company's revenue in the last fiscal year, it seems it only grew by 1.45%. Moreover, based on the common valuation ratios such as price-to-earnings or price-to-sales ratio, the stock is overvalued.
The stock may be a good addition to a dividend-paying portfolio, but even that is questionable because of its high debt-to-equity ratio. Overall, aside from betting on the meme-driven upside potential, the stock doesn't seem to be a solid pick at this point.
MarketAxess (MKTX): Buy The Dip?
As we exit the pandemic chapter, we see many pandemic-era stock prices are adjusting and consolidating. For example, from my 2021 Watchlist, look at MarketAxess (MKTX). The stock is down to $440 per share from its 52-week high of $660 per share.
MarketAxess (MKTX) deals with trading fixed-income securities. Credit volatility plays a big part in its business model. Therefore, whenever it announces a decline in trading volume, investors' sentiment turns bearish. Lower volume affects its fees, commissions, and ultimately revenue.
Despite such short-term volatility impact let's not forget that securities and bonds are integral parts of the financial world, and MKTX is a leader in the field. Judging by its Stock Card, the company has solid operations, a track record of beating the market, it's profitable, and generates free cash flow.
With the recent price fall, it’s worth considering picking up some shares. This is a great opportunity to get exposure to the bond market without directly investing in them.
Want to receive this daily stock market recap report in your mailbox?