The stock market closed broadly up on Monday as investors waved off concerns about continuing growth and geopolitical affairs. Both the S&P 500 and Dow Jones Industrial Average reached new record highs, though the tech-heavy Nasdaq
The mixed performance came as citizens from all walks of life lambasted the government’s response to the crisis in Afghanistan as the Taliban swiftly reclaims the country. In less bombastic news, China’s economic updates disappointed investors and economists alike, as July’s data showed that both industrial production and retail sales slowed considerably even as Covid-19 makes a resurgence.
And in the United States, investors, parents, and essential workers also had to weigh the economic and educational reopening against surging delta cases. In a single Florida school district, nearly 6,000 students and teachers entered quarantine or isolation after being exposed to the virus this week. A slightly less substantial scenario played out in Nashville as more than 1,000 students and teachers quarantined after just one week of in-person learning.
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Starbucks Corporation (SBUX)
Starbucks Corporation traded up 0.9% on Friday to $116.76 per share, closing out the day with 4.36 million shares on the docket. The stock is up 9.1% for the year and currently trades at 31.6x forward earnings.
Starbucks is trending this week, not because of anything the company is doing, but in response to the reopening economy and return to in-person learning. As workers head back to the office and high school students once again fill bustling classrooms, everyone with a car and a hankering for an early-morning boost will stop into Starbucks’ famed one-stop buzz-n-munch. And even if the bulk of companies reopen with a hybrid arrangement, business is business – and the great green logo certainly won’t turn down more dough.
Over the last three fiscal years, Starbucks’ revenue has slipped slightly from $24.7 billion to $23.5 billion, thanks in part to the pandemic. In the same period, operating income plunged from $3.8 billion to just $1.6 billion. Moreover, per-share earnings plummeted to 79 cents compared to $3.24, while return on equity dropped from 136% to nonexistent in the most recent fiscal year.
At this time, Starbucks is expected to see around 9% revenue growth in the next year. Our AI rates this coffee brewer A in Low Volatility Momentum, B in Technicals and Quality Value, and C in Growth.
Nvidia Corporation (NVDA)
Nvidia Corporation popped 1.4% to $201.88 per share on Friday with 18.3 million shares having changed hands by the bell. The stock is trending around $4 more than the 22-day price average and remains up 54.6% for the year. Currently, Nvidia trades at nearly 50x forward earnings.
Nvidia stock is trending this week after Credit Suisse analyst John Pitzer noted concern about near-term volatility due to a slowdown in the cryptocurrency markets. As international governments debate how to regulate the production and use of cryptos – with some outright banning digital currencies – the legitimacy of owning popular names such as Bitcoin and Ethereum seems to hang in the balance.
And Nvidia, who produces a line of GPUs (graphics processing units) specifically suited to cryptocurrency mining, could experience some ripple effects in the meanwhile. However, Pitzer – and dozens of other analysts – remain bullish on Nvidia as a long-term holding due to the company’s essentiality and solid performance.
In the last three fiscal years, Nvidia’s revenue rose from $11.7 billion to over $16.67 billion, while operating income jumped almost 50% from $3.8 billion to $4.7 billion. In the same period, EPS grew by 6 cents to $1.72 in per-share earnings. That said, return on equity fell substantially in the period from 49.3% to less than 30%.
Presently, Nvidia’s revenue is expected to grow around 2.5% in the next year. Our AI agrees with analysts who say this investment is a worthwhile one, and has rated the chipmaker A in Technicals and Growth, B in Low Volatility Momentum, and C in Quality Value.
Exxon Mobil Corporation (XOM)
Exxon Mobil Corporation slipped 1% on Friday to $56.77, trading 20 million shares on the day to a price around a dollar below the 10- and 22-day price averages of $57.55. The stock remains up 37.7% YTD and currently trades at 11.4x forward earnings.
Exxon Mobil reported its Q2 2021 earnings in late July, noting a total cash flow of $9.7 billion from operating activities in the quarter. Earnings were up $5.8 billion compared to Q2 2020 on the back of rising oil and natural gas demand, as well as “best-ever” quarterly chemical and lubricant sales.
But Exxon Mobil’s quarterly report is not the only reason the oil and gas giant hit our trending lists. Notably, the corporation received yet another bout of negative press when it was suspended from the pro-carbon tax Climate Leadership Council – ironically, a climate advocacy group that it founded. The company’s slap on the wrist occurred following reports that an Exxon Mobil lobbying only supported carbon tax proposals because of the near impossibility of implementation.
Over the last three fiscal years, Exxon Mobil’s bottom line has suffered. Revenue bottomed out at $179.8 billion in the most recent year compared to $281 billion three years earlier, while operating income fell to $3.98 billion from $23.3 billion. That said, per-share earnings grew in the period from $4.88 to $5.25. At the same time, return on equity saw an increase from 10.9% to 12.8%.
At this time, Exxon Mobil’s forward 12-month revenue is expected to see 10.1% growth. Our AI rates this oil and gas giant A in Low Volatility Momentum, B in Technicals, and Ds in Growth and Quality Value.
Philip Morris International, Inc (PM)
Philip Morris International Inc. nudged up 1.6% on Friday, ending the week at $101.59 per share. The stock changed hands 2.2 million times by the session’s end to a final price that reflected 22.7% YTD gains. Currently, the tobacco giant trades at 16.2x forward earnings.
Philip Morris began trending two weeks ago when its own CEO called for banning cigarettes in the U.K. within a decade. Management likened cigarettes to gas-powered cars, which are being weaned out of legality by the year 2030. But it’s not pure humanitarian or health reasons driving the company’s sudden push against its own product – naturally, the tobacco king has a replacement ready for all the nicotine lovers out there in the form of its e-cigarette lines.
Philip Morris also made a splash as it moved to transition its name into one synonymous with health and wellness. In particular, it’s caused a bit of controversy in the medical world and amongst advocacy groups as it seeks to profit from the very same healthcare advances its own products helped necessitate: the asthma inhalers and other respiratory therapies developed by Vectura. The tobacco giant recently received tentative approval to acquire the U.K.-based company for its line of respiratory medicines and inhaled-drug delivery devices.
In the last three fiscal years, Philip Morris has experienced revenue growth of 1.5% from $29.6 billion to $28.7 billion. Operating income nudged up from $11.3 billion to $11.7 billion in the same period, while per-share earnings inched up from $5.08 to $5.16.
Currently, Philip Morris is expected to see forward 12-month revenue growth around 2.3%. Our AI rates the company A in Low Volatility Momentum, B in Quality Value, C in Growth, and D in Technicals.
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