The stock market shook Wednesday after the Federal Reserve raised its inflation expectations for the year and moved up its next hike on interest rates. The policymaking Federal Open Market Committee noted that rate hikes may occur in 2023, a reversal from its March statements that it foresaw no increases until beyond then.
However, a date for the Fed’s expected reversal of its $120 billion per month bond buying program didn’t come up, the Fed Chief has noted that the central bank will provide “advanced notice” before tapering asset purchases.
This thrust investors’ worries about fiscal policy decisions into the spotlight after weeks of nail-biting angst, while many individual stocks did indeed trend down for the day. But many of these stocks were already trending this week anyway on their own merits.
Let’s explore a few of them, and take a peek behind the curtain into what, exactly, is going on in some of America’s biggest industries.
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Novavax, Inc (NVAX)
First up in our trending list we have Novavax, Inc
Novavax – as well as vaccine manufacturers Moderna, Pfizer
In the last fiscal year, Novavax saw astronomical revenue growth of 93% to $475.6 million, bringing the company up 2,582% over its $34.3 million revenue three years ago. Operating income leaped 44.9% in the same one-year period, and 245% in the last three, from $173.9 million to $414 million. And per-share earnings have grown almost 31% in the most recent 12-month time frame, though it’s fallen significantly to $7.27 compared to $9.99 three years ago.
Currently, Novavax is expected to see a whopping revenue expansion around 35.5% in the next twelve months. That said, our AI thinks that the biotech company may be overvalued at 72x forward earnings and has rated Novavax D in Technicals and Quality Value and F in Growth and Low Volatility Momentum.
Lowe’s Companies, Inc (LOW)
Lowe’s Companies, Inc tripped down 0.94% Tuesday to $187.88 per share, closing out the day with 4.47 million trades on the books. The company is trending below the 22-day price average of almost $192, though it’s up 17% YTD. Currently, Lowe’s is trading at 17.2x forward earnings.
Lowe’s stock has trended downward ever since releasing its stellar Q1 results on 19 May. Revenue shot up $5 billion YOY to $24.4 billion in the quarter – a 24% increase in the three-month period alone – with per-share earnings up to $3.21. The general downward trend may be largely the result of investors’ realization that the home improvement company can’t climb forever. And as the world returns to normal and stimulus checks stop flowing in, people may have less time and money to spend on their homes.
And Lowe’s did have a solid 2020 despite the pandemic. Revenue jumped 5.3% in the year to $89.6 billion compared to $71.3 billion three years ago, while operating profit over doubled that performance at 11.5% in the last year to $10.9 billion. This comes out to 144% growth over the $4.97 billion revenue seen in the 36-month-ago period.
All told, per-share earnings skyrocketed 18.3% in the last year and 222% in the last three, bringing EPS from $2.84 to $7.75. Moreover, while return on equity was a respectable 48.6% three years ago, it’s since climbed to over 342%.
Currently, Lowe’s Companies, Inc. is rated A in Low Volatility Momentum, B in Technicals and Quality Value, and C in Growth by our deep-learning AI algorithms.
Netflix, Inc (NFLX)
Next up on today’s trending list we have Netflix, Inc
There are a few reasons Netflix is trending down recently – the simplest being that its high stock price may be…well, too high. Investors may also be worrying about its slowing new subscriber growth, a reopening economy leading individuals to spend more time out of the house than in, and the weight of competition as everyone from Disney to NBC churns out their own streaming service to net their share of the market.
But not all is lost for Netflix. The company recently opened an online shop to start selling its own branded merchandise to open new sources of revenue – and compete adjacently, if not directly, with the brand-heavy products from Disney.
In the last fiscal year alone, Netflix raked in revenue growth of 5.6%, bringing the company up to $25 billion compared to $15.8 billion three years ago. In the same period, operating income jumped almost 22% to $4.585 billion against $1.6 billion in the 36-month-ago period (a three-year change of 248%). And per-share earnings have risen 36% in the last fiscal year and 208% in the last three from $2.68 to $6.08. ROE is up, too, from 27.5% to 29.6%.
Currently, Netflix is expected to grow about 3.3% in the next twelve months. Our AI is largely optimistic on the streaming media behemoth and has rated Netflix A in Growth, B in Low Volatility Momentum and Quality Value, and D in Technicals.
The Boeing Company (BA)
The Boeing Company
Boeing is trending in the news this week after the United States and European Union (E.U.) finally agreed to a truce in a 17-year conflict. The two sides have been struggling to reach a compromise since 2004 over subsidies for U.S.-based Boeing and E.U.-based Airbus, with either side arguing that the other would expose them to unfair competition. The truce also puts to rest a set of Trump-era tariffs for at least five years so the two sides can focus on the threat posed by China’s commercial aircraft industry.
The move may prove to be a boon for Boeing, the aircraft manufacturer that has struggled to turn a scandal-less profit for years following the high-profile 737 MAX crashes, as well as the cancellation and suspension of dozens of airplane orders throughout the pandemic.
The last fiscal year saw Boeing’s revenue plummet to $58 billion compared to $101 billion three years ago. Operating profit fell from $11.8 billion to $8.66 billion in the same period. However, per-share earnings rose (as a result of fewer trades) from $17.85 to $20.88.
Despite the potential for Boeing to regain its share price losses, our AI is skeptical on Boeing’s worth as an investment at the moment – especially with such a high P/E ratio. The company rates B in Technicals, C in Growth, and F in Low Volatility Momentum and Quality Value.
Vertex Pharmaceuticals, Inc (VRTX)
Vertex Pharmaceuticals, Inc
Vertex Pharmaceuticals traded down this week after telling investors on 10 June that its second attempt at treating alpha-1 antitrypsin deficiency (AATD), a rare, genetic lung disorder, had failed. The drug, VX-864, is the second to be shelved after last October the company ended trials of VX-814 due to links between the drug and liver damage.
This leaves Vertex Pharmaceuticals with one primary source of income: its treatments for cystic fibrosis, a life-threatening disorder worth $6.8 billion annually to the company. With no competitive threats on the horizon, the company can continue to cash in with one drug – but with no growth in the arena, Vertex will have to look to its collaborative efforts with CRISPR Therapeutics to impress.
Still, in the last fiscal year, Vertex Pharmaceuticals saw revenue grow 3.4% to $6.2 billion, bringing the company up 110% over its $3 billion revenue three years ago. In the same periods, operating income grew 5.7% and 356.6%, respectively, from $664 million to $2.87 billion. Moreover, EPS rose 2% in the last year and 29.7% in the last three, bringing per-share earnings to $10.29 compared to $8.09. However, return on equity slid in the same time frame from 64.4% to 36.7%.
Despite Vertex’s internal pipeline problems, the pharmaceutical company is expected to grow 2.7% in the next twelve months. Our AI rates Vertex Pharmaceuticals, Inc. B in Quality Value and D in Technicals, Growth, and Low Volatility Momentum.
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