Markets got quite a boost this week.
For one, the worst may be over for Apple Inc. (AAPL), say analysts.
Granted, the company did post revenue of $84.3 billion – down nearly $4 billion year over year. And it did offer lower than expected guidance of $55 billion to $59 billion, as compared to $61.1 billion year over year. However, the guidance was not as bad, as feared.
In addition, the company said gross margins for services like Apple Music, iCloud and Apple Pay was 63% for the quarter, which was also better than expected.
Two, the Federal Reserve just suspended its plans to raise rates this year.
According to The New York Times, “The case for raising rates has weakened somewhat,” Mr. Powell said, pointing to sluggish inflation, slowing growth in Europe and China, and the possibility of another federal government shutdown.”
Both news events played a big role in the Dow Jones’ 400+ point rally on Wednesday.
As markets slowly recover, here’s where we’re finding opportunity.
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Opportunity No. 1 – Apple Inc. (AAPL)
Apple needs no introduction.
At the moment, it’s still aggressively oversold with improving fundamentals. Plus, with the trade war likely to cool off near-term, Apple will benefit from that, too. Better yet, major analysts are now saying, “The bad news is over” for the stock.
For example, according to CNBC, Morgan Stanley’s Katy Huberty’s post earnings take was titled, “Reasons to be bullish.” She noted that, “Importantly, Apple made investors feel better about several recent debates – 1) weaker iPhone demand, 2) gross margin risk, and 3) Services growth deceleration, which we address below in more detail…”
UBS analyst Tim Arcuri increased his price target to $185 from $180, and said, “we think the worse of the bad news is over for a while…”
Opportunity No. 2 — Activision Blizzard Inc. (ATVI)
ATVI has had a rough outing over the last few months on soft sales. However, there are two key reasons to like the stock here.
One, while we wait on the ATVI recovery, we can get paid to wait. The company pays a current dividend yield of 0.71%. The best part – the company has a history of raising its dividend every year. Also, the stock is trading at its lowest valuation in years, despite an outlook for growth in earnings that are set to be double digits each year.
Opportunity No. 3 — NIO Inc. (NIO)
Known as the Tesla of China, NIO is the country’s leading high-end EV manufacturer. Given China’s desire to increase EV adoption rates, and the impressive rollout of its ES8 SUV, the company is seeing significant catalysts. As of December 2018, the company announced the delivery of 11,348 of the SUVs for the year.
“With 11,348 ES8 deliveries in 2018, we exceeded our delivery goal for our first calendar year as a public company,” said William Li, founder, chairman and chief executive officer of NIO. “2018 has been a milestone year for us, as we produced and delivered over 11,000 ES8s and launched our second production car, the ES6, a 5-seater high-performance premium electric SUV on NIO Day in December 2018. We will continue to focus on market penetration by delivering high-quality products and holistic services to our users and to improve the system efficiency of our development and operations.”
From last weeks’ 1/27/19 watchlist we had some great performers, including:
- CannTrust Holdings (CNTTF) closed at $6.87 on Friday, January 25, 2019 and currently trades at $7.25 a share.
- Vipshop Holdings Ltd. (VIPS) closed at $7.62 on Friday, January 25, 2019 and currently trades at $7.70 a share.