Stocks have been under pressure as investor sentiment has cooled down amid signs of inflation and rising infection rates across the U.S. The three major indices saw declines last week, partly due to the revelation that the Fed may begin to taper its bond-buying program sooner than expected. Geopolitical concerns relating to Afghanistan and China could continue to weigh heavily on markets this week.
This week, investors will be focused on a slew of economic reports around manufacturing, home sales, and consumer spending. First up, the existing home sales for July come out on Monday, and new home sales will be released on Tuesday. More evidence that the red-hot housing market is cooling is expected.
On Friday, U.S. personal spending and inflation expectations figures will be released for July, and we know that spending slowed dramatically last month. Friday’s report will provide more detail on where spending slowed the most and how big a role inflation played in the slowdown.
The distinction between a successful investor and a not-so-successful one boils down to what goes into decision-making. Research, having a trading education and considering what could make a stock or industry move are essential for success. That’s where we come in. Our team is scouring markets day and night to bring you timely and pertinent information.
Each Sunday evening, our community members receive our weekly watchlist, where we delve into a handful of promising investment opportunities and discuss factors that could benefit investors in the days, weeks, and months to come.
This week, we’re highlighting three compelling stocks to watch as we move into the fall.
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Nike (NKE) stock has held up against the most strenuous of conditions. Last month the company reported stellar fourth quarter and fiscal 2021 numbers that far surpassed analyst expectations, proving once again that demand for their products remains strong, even in the face of uncertainty.
Fourth-quarter reported revenues were $12.34 billion, up 96% from the prior year and 21% from Q4 of 2019, topping estimates of $11.01 billion. Earnings per share were $0.91, a great deal higher than the $0.51 expected.
In North America, Nike’s biggest market, sales more than doubled to a record $5.38 billion. The company surged from a year earlier when the Covid pandemic hit the retail industry the hardest. The region’s sales were up 29% on a two-year basis.
Full-year reported revenues increased 19% to $44.5 billion. “Nike’s strong results this quarter and full fiscal year demonstrate Nike’s unique competitive advantage and deep connection with consumers all over the world,” said John Donahoe, President & CEO. “FY21 was a pivotal year for Nike as we brought our Consumer Direct Acceleration strategy to life across the marketplace. Fueled by our momentum, we continue to invest in innovation and our digital leadership to set the foundation for Nike’s long-term growth.”
Looking ahead, the global sporting goods company offered a better-than-expected sales outlook for the upcoming year, driven by the enthusiasm surrounding its women’s category, apparel business, and Jordan brand. In fiscal 2022, Nike is expecting revenue to grow a low double-digit percentage, surpassing $50 billion. Analysts were looking for annual revenue of $48.5 billion. The company anticipates the first half of the year to grow faster than the second half.
The athletic apparel and footwear company’s long-term growth narrative remains strong. To this end, Oppenheimer analyst Brian Nagel left his Buy rating as is. Further demonstrating his optimism, Nagel bumped up the price target from $150 to $195, bringing the upside potential to 18%.
“We believe Nike enjoys further room to run. In our view, recent investments are only beginning to pay off, and the market is underappreciating meaningfully enhanced intermediate- to longer-term EPS power of a digitally-driven NKE model,” Nagel cheered.
Of 29 analysts polled, 25 rate the stock a Buy, and 3 rate it a Hold. There is only 1 Sell rating for NKE stock. A median consensus 12-month price target of $185 represents a 10.28% increase.
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Stitch Fix has had its ups and downs since the company’s IPO in 2017. The personalized online styling service is unique in its concept and business model. In fact, the company has no true peers on the market. Investors who are bullish on the stock see it as a disruptor in the $500 billion domestic apparel market.
Stitch Fix seems to be at an inflection point; new CEO Elizabeth Spaulding took the reins earlier the month. The company launched its “direct buy” option to new customers, effectively expanding its addressable market to all clothing shoppers.
Now could be an excellent buying opportunity as the stock has pulled back considerably following impressive Q3 earnings. Shares are down nearly 40% from the pop after its June earnings report when it blew past revenue estimates — sales surged 44% to $536 million as the company lapped the lockdown quarter a year ago. There’s no clear reason for the decline in the stock since then.
In addition to the strong third-quarter report and the direct buy launch, Stitch Fix also seems well-positioned as a reopening stock, as Americans need to refresh their wardrobes as they return to the office and social events.
Stitch Fix will report fourth-quarter earnings on September 21st, and a strong report could spark a turnaround. In a recent CNBC interview, Spaulding already said that fiscal 2021 was a record for customer additions, a bullish sign for the fourth quarter. Analysts expect revenue growth of 23.6% to $547.9 million for the current quarter and a per-share loss of $0.13 when the company reports.
The 15 analysts offering 12-month price forecasts for Stitch Fix have a median target of $70, representing a %76.50% increase from the last price of $39.66. Of 16 analysts offering recommendations for the stock, 6 rate it a Buy, 7 rate it a Hold and 3 rate it a Sell.
Jeff Bezos Just Poured $10 Billion Into This…
Not many people know this story… But in 1998, Bezos invested $250,000 of his own money in Google, when the company was just getting started out of a garage in California. When Google went public in 2004, that $250,000 investment translated into 3.3 million shares of Google stock. Nobody knows if Bezos has sold any shares. If he hasn’t, today they’re worth more than $5.6 billion.Jeff Bezos is betting big on a new trend. This time he’s planning to invest $10 billion of his own money in this exciting new trend. That’s 40,000 times more money than what he invested in Google. That’s how big he thinks this could be. [Full Story…]
Biopharma is a great place to look for growth stocks to pack into your portfolio because there’s always an illness that can be treated more effectively in the future than it is being treated today. Vertex Pharmaceuticals (VRTX) is the undisputed leader of cystic fibrosis therapies. Its portfolio of approved CF drugs will deliver at least an estimated $7.2 billion this year, made possible by an intense level of market penetration and decades-long devotion to research and development in the space.
So far, the company hasn’t had trouble convincing regulators that its drugs are safe and effective for wider and wider populations of patients. It has also managed to remain strongly profitable and continued to expand revenue within the CF market.
If management’s plans for expanded approvals for younger age cohorts continue to come to fruition over the next few years, Vertex will eventually be treated as many as 90% of all people with CF. That means investors can look forward to a steadily increasing drumbeat of new revenue and expanded approvals, both of which should buoy the stock’s price significantly.
Furthermore, the company is moving its pipeline beyond CF with a handful of mid-stage clinical programs for kidney diseases, genetic hematologic disorders like sickle cell disease, and pain relief. In other words, even if it eventually completely corners the entire market for CF therapies, there will still be other growth opportunities. And over the next decade, that’s bound to enrich investors.
Patience is key when it comes to biotech and pharma investing. It takes an average of 7 years to make a drug and get it approved by regulators. So, you might need to hold a biopharma stock longer than you would something from another sector. We believe that VRTX seems likely to reward patient investors as the steadily growing biopharma company seems ripe for expansion for years to come.
Of 27 analysts offering recommendations for VRTX, 21 rate the stocks a Buy, 5 rate it a Hold and only 1 rate the stock a Sell.
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But you have to act now, because a catalyst coming in a few weeks is set to take this company mainstream... And by then, it could be too late.
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TRUE MARKET INSIDERS:
Warning: Move Your Money ASAP
The clock just started on the biggest stock market event in twenty years. And the next couple months could determine who will become extremely wealthy in 2022 – and who won’t. [Full Story…]