Displaying items by tag: Growth
Many are currently having trouble choosing between growth and value stocks. On the one hand, growth stocks look outrageously expensive, yet have momentum on their side, while value stocks look like a great buy because of their discount compared to the market. However, there are a handful of stocks where you get the best of both. These stocks have both growth and value characteristics. Here are some of the diverse names to look at: General Motors, State Street, Marathon Petroleum, H&R Block, and Qualcomm.
FINSUM: If you can get good earnings growth and strong value in the same package, what is not to like?
Every investor is trying to figure out if coronavirus is going to have a major impact on markets this year, or will soon just be a forgotten blip. Goldman Sachs has weighed in on the issue and says investors should not worry much, as coronavirus’ impact will be “limited”. The bank says coronavirus could slow US growth by 0.5 percentage points in the first quarter, but that would easily be made up in Q2 and Q3. According to Goldman, “Investors who believe the economic consequences of the coronavirus will be limited should increase exposure to cyclicals and value stocks”.
FINSUM: We aren’t sure we entirely agree. A lot of this depends on how long the virus keeps China shut down. Growth there is not as great as during SARS in 2003, so this could actually lead to a global recession.
Stocks are roughly flat on the year, and there is a growing body of evidence that we may have finally come to the end of this economic and market cycle. Commercial construction is slowing, car sales have peaked, and banks are tightening lending standards even as demand is falling—all signs of an economy headed downward. According to Mike Larsson of Weiss Ratings “It is the type of stuff you see at the end of credit and economic cycles … I am concerned about the durability of this market and economic expansion”.
FINSUM: Only time will tell if the economy slows down. If so, markets will probably follow suit. Q4 GDP numbers were not nearly as good as they looked, as without trade war related boosts, growth would have only been 0.6%.
Yes, Amazon looks expensive and has seen massive gains in recent years. This makes many fearful of the stock. But the reality is that the stock is a free cash flow rocket ship that is going to keep surging higher, according to 47 of the 49 Wall Street analysts who cover it. Amazon trades for 69x 2020 earnings, but it still looks pretty inexpensive on a free cash flow basis. The company’s past growth initiatives are now paying off, which means Amazon is throwing off free cash flow in a big way.
FINSUM: Amazon has averaged a 35% gain per year since it went public. We don’t see any big reasons why it cannot continue this year.
Standard Life analyst Andrew Milligan made two great calls this time last year. He picked Microsoft and Equinix as two breakthrough stocks for 2019. They rose 55% and 64% respectively so far this year. Now he has his 2020 picks ready. Milligan says to take a look at Visa, Mastercard, and 5G companies like Marvell technology. He also still likes Microsoft, for what that is worth.
FINSUM: We like the call on 5G. The new tech has sort of been in the background of mainstream investing consciousness, but next year could be when it explodes to the forefront.