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The Zacks Analyst Blog Highlights: Advanced Micro Devices, Blackstone and Chevron
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For Immediate Release
Chicago, IL – November 8, 2021 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Advanced Micro Devices, Inc. (AMD - Free Report) , Blackstone Inc. (BX - Free Report) and Chevron Corporation (CVX - Free Report) .
Here are highlights from Friday’s Analyst Blog:
Fair Value? Yes, Fair Value! Zacks NOV Market Strategy
The bull trend remains fully intact, heading into the final stretch of 2021.
Across last year, the S&P 500 annual gain was +18.4%. A majority of that gain came in the last two months of the year. That was an above-average annual S&P 500 return.
Label an excess over “Fair Value” or “proxies” Zacks shown (above) as the “Fed Money Printing” effect!
Next, factor in investor recency bias. 100% of major asset classes worked out in 2020. 4 of the last 5 years (2016, 2017, 2019, and 2020) were good to long-term investors. Also factor in this asset allocation set of facts: Negative bond (LQD, EMB, TLT) returns performances are in hand this year. And corporate bond spreads are very tight.
As for underlying U.S. macro fundamentals? They are strengthening. The ADP private payroll data for Oct. was up +571K, after a +523K print in Sept., and +310K in August.
II. Zacks November Sector/Industry/Company Telescope
The NOV Zacks Rank system showed only 3 strong sectors; and 2 were Value sectors. Info Tech, Energy & Financials were those three top sectors; strong in multiple industries.
Industrials fell to an Attractive rating from Very Attractive. Pollution Control (likely the Biden clean energy and climate infrastructure elements) was the new top industry here.
Materials stayed at Very Unattractive from Attractive.
Health Care was a Market Weight. Medical Products looked best. A surprise industry leader. Perhaps Biden health spending effects? Utilities stayed at Market Weight.
Communication Services fell to an Unattractive rating.
Both the Consumer Staples and Consumer Discretionary sector fell to Very Unattractive ratings. The Delta variant and the high CPI seemed to finally hit excess spending.
(1) Info Tech stayed at Very Attractive. Computer Software-Services and Semis (with a global supply shortage) stayed at the top. Electronics looked excellent, again, too.
Top Zacks #1 Rank (STRONG BUY) Stock: Advanced Micro Devices
(2) Financials stayed Very Attractive. Investment Funds, Finance, Investment Banking, and Real Estate looked good. Lower reserves, more profit from higher stocks and M&A deals.
Top Zacks #1 Rank (STRONG BUY) Stock: The Blackstone Group
(3) Energy rose to a Very Attractive rating from Attractive. Oil Integrated, Oil E&P, Energy-Alternates, and Oil-Misc. looked the very best. Coal and Pipelines were strong too.
Top Zacks #1 Rank (STRONG BUY) Stock: Chevron
(4) Industrials fell to an Attractive rating from Very Attractive. Pollution Control (Biden infrastructure?) Metal Fabricating, Railroads, and Business Services were the top industries.
(5) Health Care fell back to Market Weight from Attractive. Medical Products looked best.
(6) Utilities stayed at Market Weight. Utilities-Gas Distribution was the best. Higher Nat. Gas.
(7) Communications Services fell to Unattractive from Market Weight.
(8) Consumer Discretionary fell to a Very Unattractive rating from Attractive. Autos/Tires/Trucks, Home Furnishing-Appliances and Consumer Electronics were strong and show wealth effects.
(9) Consumer Staples fell to Very Unattractive from Market Weight. Agri-business (commodity price boom) looked best.
(10) Materials stayed at Very Unattractive. Only Chemicals held up.
III. Conclusion
My basic “fair value” point is this:
You need a 21 S&P 500 index forward 12M P/E ratio, and not an 18 P/E ratio to compute a forward 12M “fair value” and see the S&P 500 trade at 4,660. Like it trades at today.
This implies about a 14% to 15% valuation haircut.
At the most recent lows on October 4th, 2021, the S&P 500 closed at 4,300.
In short, my updated “fair value” computations are not out of synch.
Just sober.
That’s it for summary stock market materials.
Consult the entire Zacks NOV 2021 Market Strategy report — for ALL of the latest insights.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights: Advanced Micro Devices, Blackstone and Chevron
For Immediate Release
Chicago, IL – November 8, 2021 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Advanced Micro Devices, Inc. (AMD - Free Report) , Blackstone Inc. (BX - Free Report) and Chevron Corporation (CVX - Free Report) .
Here are highlights from Friday’s Analyst Blog:
Fair Value? Yes, Fair Value! Zacks NOV Market Strategy
The following is an excerpt from Zacks Chief Strategist John Blank’s full Nov Market Strategy report To access the full PDF, click here.
I. Top-Down S&P 500 Year-end 2021 Targets
To Nov. 1st. the S&P 500 YTD gain was +22.5%.
To Sept. 1st, the S&P 500 YTD gain was +20.7%.
The bull trend remains fully intact, heading into the final stretch of 2021.
Across last year, the S&P 500 annual gain was +18.4%. A majority of that gain came in the last two months of the year. That was an above-average annual S&P 500 return.
Label an excess over “Fair Value” or “proxies” Zacks shown (above) as the “Fed Money Printing” effect!
Next, factor in investor recency bias. 100% of major asset classes worked out in 2020. 4 of the last 5 years (2016, 2017, 2019, and 2020) were good to long-term investors.
Also factor in this asset allocation set of facts: Negative bond (LQD, EMB, TLT) returns performances are in hand this year. And corporate bond spreads are very tight.
As for underlying U.S. macro fundamentals? They are strengthening. The ADP private payroll data for Oct. was up +571K, after a +523K print in Sept., and +310K in August.
II. Zacks November Sector/Industry/Company Telescope
The NOV Zacks Rank system showed only 3 strong sectors; and 2 were Value sectors. Info Tech, Energy & Financials were those three top sectors; strong in multiple industries.
Industrials fell to an Attractive rating from Very Attractive. Pollution Control (likely the Biden clean energy and climate infrastructure elements) was the new top industry here.
Materials stayed at Very Unattractive from Attractive.
Health Care was a Market Weight. Medical Products looked best. A surprise industry leader. Perhaps Biden health spending effects? Utilities stayed at Market Weight.
Communication Services fell to an Unattractive rating.
Both the Consumer Staples and Consumer Discretionary sector fell to Very Unattractive ratings. The Delta variant and the high CPI seemed to finally hit excess spending.
(1) Info Tech stayed at Very Attractive. Computer Software-Services and Semis (with a global supply shortage) stayed at the top. Electronics looked excellent, again, too.
Top Zacks #1 Rank (STRONG BUY) Stock: Advanced Micro Devices
(2) Financials stayed Very Attractive. Investment Funds, Finance, Investment Banking, and Real Estate looked good. Lower reserves, more profit from higher stocks and M&A deals.
Top Zacks #1 Rank (STRONG BUY) Stock: The Blackstone Group
(3) Energy rose to a Very Attractive rating from Attractive. Oil Integrated, Oil E&P, Energy-Alternates, and Oil-Misc. looked the very best. Coal and Pipelines were strong too.
Top Zacks #1 Rank (STRONG BUY) Stock: Chevron
(4) Industrials fell to an Attractive rating from Very Attractive. Pollution Control (Biden infrastructure?) Metal Fabricating, Railroads, and Business Services were the top industries.
(5) Health Care fell back to Market Weight from Attractive. Medical Products looked best.
(6) Utilities stayed at Market Weight. Utilities-Gas Distribution was the best. Higher Nat. Gas.
(7) Communications Services fell to Unattractive from Market Weight.
(8) Consumer Discretionary fell to a Very Unattractive rating from Attractive. Autos/Tires/Trucks, Home Furnishing-Appliances and Consumer Electronics were strong and show wealth effects.
(9) Consumer Staples fell to Very Unattractive from Market Weight. Agri-business (commodity price boom) looked best.
(10) Materials stayed at Very Unattractive. Only Chemicals held up.
III. Conclusion
My basic “fair value” point is this:
You need a 21 S&P 500 index forward 12M P/E ratio, and not an 18 P/E ratio to compute a forward 12M “fair value” and see the S&P 500 trade at 4,660. Like it trades at today.
This implies about a 14% to 15% valuation haircut.
At the most recent lows on October 4th, 2021, the S&P 500 closed at 4,300.
In short, my updated “fair value” computations are not out of synch.
Just sober.
That’s it for summary stock market materials.
Consult the entire Zacks NOV 2021 Market Strategy report — for ALL of the latest insights.
Warm Regards,
John Blank
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
https://www.zacks.com
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.