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Key Points
Overall Market
A Higher Personal Consumption Expenditures Price Index Combined With a Lukewarm Change in Personal Income Deflated the Market's Momentum on Friday
The stock market indices had a good day for the most part of the trading day until the last hour when suddenly all three indices dropped to near zero.
The core personal consumption expenditures price index increased by 3.1% compared to a year ago. This is one of the key indicators the Fed uses to gauge the inflation rate. Combine that with the fading impact of the stimulus checks on personal income, and I'm not surprised to see the market has lost its momentum today. The next important economic indicator is the monthly jobs report expected to come out next week. I'd expect more market volatility as monthly economic data gets released. Let's monitor and discuss the impact next week. By the way, stock markets are closed on Monday, May 31st in observation of Memorial Day. We all get to do some fact-based research without the usual market chatter. What's Up
Excellent Quarterly Earnings Reports and an Upward Full-year Forecast Pushed Salesforce.com's (CRM) and Veeva Systems' (VEEV) Stock Prices Up
Shares of Veeva Systems (VEEV) were up more than 10%. Shares of Salesforce.com (CRM) were up by more than 5% as well. Veeva uses Salesforce.com's tech infrastructure to deliver customer relationship management solutions to the healthcare industry.
It's interesting to see the two stocks are moving together. Veeva released an excellent quarterly earnings report, with a 29% year-over-year revenue jump. Salesforce.com also releases a strong quarterly earnings report, adjusting its full-year revenue forecast upward. I own both stocks and believe both are excellent stocks to hold for the long term. If you don't own them, consider adding them to your watchlist. If you ever find these two stocks dragged down by the market's pessimism, consider adding a few shares to your portfolio. Both companies are cash-rich, well-managed, and well-established companies. That's what I did the last time these stocks dropped! What's Down
Despite the Price Drop, Costco (COST) Continued to Deliver Strong Results and Future Upside Potential
Shares of Costco (COST) were down more than 2% after the company released its latest earnings report. It's quite unusual these days to see Costco's stock price down. It's also double surprising to see the price dropped even though the company announced it's bringing back popular food court items and food sampling.
Diggin into the earnings report, revenue was up across the board, including an excellent eCommerce growth rate. Quite a few financial analysts also upgraded their price target for Costco to a higher level. There is no apparent reason for the price drop today. While the stock price drop is small, it may be a good time to pick up some shares, especially if you are building a dividend-focused portfolio. Want to receive this daily stock market recap report in your mailbox?Key Points
Overall Market
After the Lowest New Jobless Claims Report Since the Start Of the Pandemic, the Market Stayed Flat in Anticipation Of the Core Inflation Report Coming Out Friday
All three indices finished the day relatively flat, only slightly below or above the flat line. The news jobless claims report hit the lowest pandemic-era level at 406,000. The second estimate of Q1 GDP growth in the U.S. came at around the same 6.4%, reiterating that the economy is on it's recovery track.
Investors are waiting for Core Inflation and Consumer Spending reports coming out tomorrow to confirm whether inflation is as problematic as they think so. What's Up
Shares of Boeing Jumped More Than 4% as New Plane Orders Are Rushing In
AMC continued to rally more than 35% today as WallStreetbets traders continue Yoloing their way pumping the stock up. As I scrolled through Reddit's Wallstreetbet thread, I came across this one post claiming to have invested "All his/her savings into AMC!!!" and asking folks to wish him/her luck. The "you online live once" (YOLO) strategy is the talk of the town these days. To be 100% transparent, I have invested $1,000 in AMC's stock at $15 per share, and I literally wrote "stupidity" as my strategy. I just want to have a stake in some of the most exciting phenomena on Wall Street!
Getting back to a more serious side of investing, Boeing (BA) shares were up more than 4%. Despite 737 challenges, airline customers need more planes, and when there are only two major aircraft manufacturers in the world, inevitably, Boeing would be a winner. As a reminder, I own a few Boeing shares and a put option at $205 per share, which I hope would expire at no cost to me. More plane orders are good news for Boeing and me, alike. WHAT'S DOWN?
Shares of Okta dropped more than 9% after the company revised its full-year earnings forecast downward
From the list of today's biggest losers, shares of Okta (OKTA) were down more than 9%. The company creates a platform that allows people to use single user names and passwords to log in to all their work-related systems. If you work for a big company, there are several systems you need to work with. From your email, to your paystub, to IT services, each one is a different system you'd need to have a username and password for. Okta makes it easy for you to have one login credential, and for your IT department to give you access securely.
The company released its latest earnings report, and the result was better than expected. Investors got spooked over the new bottom-line forecast for the rest of the year that is dragged down by a recent acquisition. This is one of those moments when Wall Street penalizes a stock for investing in its future. The new acquisition allows Okta to own its competitors and expand its market. Moreover, if you focus on the company's performance, you can see solid operations. Last quarter, Okta managed to retain 120% of its revenue, which means it's customers stayed and paid up for more seats, products, and services. Okta's business model is already generating free cash flow, and analysts' price target is higher than the current price. While based on valuation metrics such as price-to-sales or price-to-book value, the stock is overvalued. This is one stock to watch and consider for your portfolio. I own just a few shares, and I may add a few more. Want to receive this daily stock market recap report in your mailbox?
Key Points
Overall Market
The Market Is Worried About Inflation and Possible Geopolitical Risk From the Growing Tension Between the U.S. and China
The stock market indices finished Wednesday in the green, but only barely. The Dow moved slightly, and the other two indices stayed near the zero line for most of the trading day. The uneventful stock market is the reflection of a relatively quiet news day.
Moreover, it seems the 10-year Treasury yield has remained flat for now, thanks to calming commentary by the Fed officials. Stock Picks Day
Weekly Stock Picks Summary
Folks, before we jump into the winner and loser stocks of the day, let's talk about the latest stock picks by Stock Card's portfolio publishers. If you've been with us for a while, you'd know that every Wednesday, we send a wrap-up email that summarizes all the portfolios that were updated during the week. I looked at today's wrap-up email, and it seems quite a few portfolio publishers have bought or sold stocks in the last few days. For example, Beaten Down portfolio has a new stock added, and Bow Tie Nation portfolio has a few sell orders. Also, take a look at the two new portfolios on the Stock Pick page. Sean Rose just published his Young Investor Dividends portfolio, and Dale Thompson, a YouTuber and Discord channel admin, took his Think Thank Trading portfolio live. I'm quite excited about both. Make sure to visit their portfolios and follow them if you like Sean and Dale's investment strategies. What's Up
Shares of Zscaler Jumped More Than 13% Thanks to A Better-Than-expected Forecast For the Year
From the list of most-viewed stocks on our Stock Card platform, it seems the so-called meme stocks had a good day. AMC was up more than 20%, so was GameStop, with more than a 15% jump.
Also, I noticed Zscaler (ZS) was up more than 12%. That's no meme stock, and shares are up after the cloud security provider announced better than expected earnings. Revenue was up more than 60%, and the company increased its full-year outlook. It seems the Colonial Pipeline cyberattack has revived the global interest in cybersecurity. The cyclicality of the cybersecurity industry is very interesting. There is always a jump in demand for cybersecurity providers after a major attack. It reminds organizations to tighten up their security measures. NEw Watchlist
Best Cybersecurity Stocks To Watch
Let's put together a cybersecurity watchlist. Type in "cybersecurity" in the search bar on top of your Stock Card account, and get the list of 45 companies fighting the global cyber threat.
Let me take it one step further: I went to the screen page and applied one more filter to the list. I'm looking for cybersecurity companies with no cash concerns. The final result is a list of 13 strong cybersecurity stocks you may want to watch if you'd like to add a few shares to your portfolio. Want to receive this daily stock market recap report in your mailbox?Key Points
Overall Market
The Market is Worried About Inflation and Possible Geopolitical Risk From The Growing Tension Between the U.S. and China
The stock market indices ended Tuesday in the red. One of the economic reports we discussed yesterday came out refueling investors' worries about inflation. The S&P CoreLogic CASE-SHILLER INDEX report came out and indicates a 12% jump in home prices in February.
We've discussed that information quite extensively in the last few episodes. The piece of information that grabbed my attention is BlackRock's warning on the lack of attention to the U.S.-China tension and the technical decoupling of the two economies. BlackRock believes investors are ignoring such an important factor, and that could take them off guard. President Biden has continued with President Trump's tough stance on China, and the tension between the two countries has increased. Possible cyberattack or geopolitical unease in emerging countries could be the potential risk to the market that investors ignore at this point. We need to consider other possible factors that may drag down the market, at least in the short term. What's Up
Why is Apple's (AAPL) Stock Fairly Priced, and Is It Time to Buy?
Today, I looked at my Stock Card feed and noticed Apple's (AAPL) stock is reasonably priced. If you go to the company's Stock Card and click on "fair share price," you can see the analysts' price target for Apple is $157.55 per share, which is relatively higher than the current $126 per share.
Moreover, looking at its price-to-earnings ratio of 28.53, Apple is priced at the same level as its relative sector. The stock is off of its 52-week high of $145 per share partially due to the legal battle with Epic games over its App store fees. If you like Apple for its small 0.66% but stable dividend, this may be an excellent time to pick up a few shares. What's Down?
IAC/InterActive (IAC) Dropped More Than 37% After Its New IPO Vimeo (VMEOV) Didn't Get The Customary Warm Welcome New IPOs Look For
On top of the biggest losers for the day, I noticed IAC/InterActive (IAC). Shares were down more than 37%, which is quite unusual for a well-managed company such as IAC.
It is the parent company to several internet brands, including investors' favorite Investopedia. It is also the parent company to YouTube challenger Vimeo (VMEOV), who just went public under the VMEOV ticker. The problem is that the new IPO didn't get the usual warm welcome IPOs get these days. Take the analysts from KeyBanc. They don't quite believe Vimeo can sustainably achieve its long-term revenue target of 30%. Unlike YouTube, the company makes money from enterprise clients who use the platform to publish their video content. The IPO price fell more than 17% in the after-hours, and IAC's stock got hammered. This seems to be a rather over-exaggeration on behalf of investors. Vimeo was about 9% of IAC's 2020 revenue, and it's the 11th IPO spin-off from IAC, which includes Match Group (MTCH), Expedia (EXPE), among many other successful IPOs. I'd expect IAC to do just fine despite the disastrous Vimeo's IPO. Want to receive this daily stock market recap report in your mailbox?KEY POINTS
Overall market
The market recovered last week's losses, partially, as investors expect a few critical economic indicators later this week.
All three indices started the week in the green. Later this week, we expect a few important economic indictor reports, including the Consumer Price Index, Consumer spending, and Personal income changes reports that may have an impact on the market. Let's keep an eye on them and discuss the implications for the market when they are out.
What's Up?
Beyond Meat (BYND) jumped more than 9% after analysts confirm an upside from restaurants' reopening.
Remember I discussed and invested in Beyond Meat's (BYND) dip on May 11th? While my reasoning to invest in the company was long-term, it's doesn't hurt to see that the stock is up more than 9% today.
It got a nod of approval and upgrades from financial analysts, including Alexia Howard from Bernstein. The analyst's logic is that the restaurants' reopening would accelerate Beyond's revenue in the near future. This is precisely what Beyond's CEO said in the last earnings call. Beyond Meat is, indeed, a good bet on the future of food, especially when it gets beaten down for no reason other than the market's pessimism. What's Up - Part II
There is a short squeeze possibility for Virgin Galactic (SPCE) after the recent price rally.
We discussed Virgin Galactic (SPCE) on Friday. The stock jumped more than 27% today after it completed its first human test flight on Saturday.
Now the rumors have it that the company's stock is primed for a short squeeze. On the company's Stock Card, if you click on Sentiment, you can see more than 14% of the company's float (shares available for trading) is shorted. When the stock jumps a few days in a row, including today's rally, all those short orders have to buy the stock at the new price to return the shares they had borrowed when they bet against the stock. This is called covering shorts and typically pushes the company's stock price higher thanks to a sudden increase in demand. The short squeeze isn't guaranteed because we don't know at what price the stock was shorted, but it is an interesting phenomenon to monitor in the market, especially if you own a few shares as I do. |
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