All eyes are on the Federal Reserve this week as investors await results from their June meeting which are due out Wednesday. The central bank is not expected to take any action. However, any adjustments to inflation and interest rate forecasts will likely affect the markets. Investors will also be looking for clues as to when the Fed will start to taper back the bond-buying program that was initiated to provide liquidity during the pandemic.
More consolidation could be in the wings for the beginning part of the week, and Wednesday’s Fed announcement may heavily influence investor sentiment from that point on.
Current recent conditions have created some interesting opportunities and our team has some hot recommendations. Continue reading to find out which three stocks we are watching this week.
Detroit legend, Ford ( F) is probably the best performing EV stock as of late. The legacy automaker’s new CEO Jim Farley is taking an aggressive approach to autonomous and electric vehicles. Farley took over in October 2020, and his recent effort to increase its EV and AV investments to $30 billion by 2025 is a huge deal for the company and the industry as a whole.
Ford’s major investment began taking shape last year with the release of their head-turning new take on its muscle car classic, the Mach-E Mustang. The affordable electric twist on the company’s iconic sportscar lives up to its name. The eye-popping nu-classic can go from 0-60 in just 3.5 seconds, with a range of approximately 300 miles per charge. It even has new tech including Active Drive Assist allowing drivers to operate the Mustang Mach-E hands-free.
The F-150 Lightning, one of the most powerful F-150s and the second mass market EV from Ford, made its official debut earlier this year. The company received 44,500 reservations for their latest pick-up truck in under 48 hours.
Ford’s most recent rally has to do with the launch of its new hybrid compact pickup truck, the Maverick, last week. The Maverick is a so-called “white space” product, filling a market segment that Ford hasn’t previously contested. The Maverick will slot below the mid-size Ranger in Ford’s line-up and is expected to be priced well below the Ranger. The new edition goes on sale in the fall.
This is likely just the beginning for the heavyweight automaker. Ford also unveiled its fourth-generation self-driving test vehicles based on the Ford Escape Hybrid crossover. Ford is adding the new vehicles to its current AV test fleets and along with partner Argo AI plan to launch a self-driving commercial business in 2022. Per a report by Million Insights, the global autonomous vehicle market demand is projected to account for 4.2 million units by the end of 2030, witnessing a CAGR of more than 63%. The company also recently joined forces with BMW to invest in solid-state battery startup Solid Power.
F share price is up 32% in the past month. Considering all of these developments the stock may have room to run for the foreseeable future. Not to mention, Ford stock is a value at less than 16 times forward earnings, compared to other competitors in the EV space like Tesla, which trades at 136 times forward earnings.
The shipping industry has been slowly recovering thanks to rising demand for commodities and increasing international trade, as many of the world’s economies resume their manufacturing and industrial activities. As a result, container ship chartering company Costamare (CMRE) is witnessing increasing demand for their services.
As of June 2021, Costamare reported contracted revenue of $3 billion, providing clear revenue and cash flow visibility. The company has been beefing up its fleet in anticipation of growing demand. Since the beginning of 2021, the company has acquired 17 vessels. Considering its strong balance sheet, the company seems positioned for further expansion. And with continued global progress on the coronavirus vaccination front, growth in demand is expected to continue. According to Globe Newswire the global dry bulk shipping market is expected to grow at a 5.10% CAGR between 2020 – 2027.
Small-cap CMRE is among the top value stocks, trading at a forward P/E of just 5.3. But what makes an investment in CMRE stock even more appealing is the 3.57% dividend yield which the company has paid 42 out of 42 consecutive quarters since their debut on the public markets in 2010. A clear demonstration of the businesses resilience through economic cycles. As day-rate improves and cash flow accelerates, higher dividends are likely in the coming quarters.
Year-to-date, CMRE has outperformed the S&P 500 with a gain of 48.28% versus a 13.56% rise for the benchmark index. Costamare is well positioned for a continued strong performance through the second half of the year.
Generac (GNRC) makes energy storage systems, power generation equipment, among other power products for the light commercial and residential, and industrial markets globally. Founded in 1959, Generac was the first company to engineer affordable home standby generators. Today, it is the leading manufacturer of home backup generators.
The company is focused on expanding market penetration for standby and clean energy solutions in the United States while establishing traction for these products globally. Generac is currently doing business in 150 countries and is working to expand opportunities for growth by pioneering new markets. The bottom line is that the company will profit from a number of secular global developments. Generac management predicts a robust 40% – 45% increase in sales for 2021.
The analyst community is highly bullish on the portable generator company. Of the 16 analysts covering this midcap stock, 14 rate it at Buy, and 2 call it a Hold. There are currently no Sell ratings for the stock.
“The company is well positioned for future trends such as climate change and energy market disruption, 5G deployment, and automation in manufacturing,” writes Argus Research analyst John Eade, who rates the stock at Buy.
Their average target price of $400 represents a 21% upside over the next twelve months.
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