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Chicago, IL – November 17, 2020 – Today, Zacks Investment Ideas feature highlights Features: Alibaba Group Holding Limited (BABA - Free Report) , Amazon.com, Inc. (AMZN - Free Report) , Splunk Inc. , salesforce.com, inc. (CRM - Free Report) and Etsy, Inc. (ETSY - Free Report) .
Vaccine Hopes Push Markets to Frothy Levels: Stocks to Watch
US investors & traders are continuing their rotation out of 2020's growth-oriented winners and into cyclical underperformers. Recovery sectors like travel & leisure, energy, and financials are booming today in the face of a pandemic resurgence that has pushed hospitalization rates to new highs around the US.
Investors are looking past the remainder of 2020 and towards the spring, where two high potential vaccines aim to rid our world of this microscopic terror.
Vaccine Hopes May Be Over Played
Moderna just announced its vaccine was 94.5% effective in preventing COVID-19 in early trials, making it the second vaccine to reach this type of breakthrough in November. Pfizer was the first to announce a 'successful' clinical trial earlier this month, which has turned the market's tides with investors & traders now able to see the light at the end of the tunnel.
Market optimism is high, but the tunnel is getting darker as we come closer to the end of the COVID-crisis.
The US has had more than 1 million new cases in the past week, with total COVID cases surpassing 11 million (over 3% of the US population). States are going back into lockdown mode, and without more fiscal stimulus, we could be in for a long winter where bankruptcies hit the fan (again).
I would tread cautiously in these markets. Do not blindly chase this cyclical rally. We are trading up to overbought territory.
Market Levels
2020's cyclical underperformers are finally participating in the market's rally as bullish investors & traders drive the S&P 500 past 3,600, which was Goldman Sach's old year-end price target before increasing it to 3,700 earlier this month. The markets are now sitting at frothy levels with my 'overbought/oversold' oscillators teetering on overbought.
It may be time to start buying some put option protection as the S&P 500 ticks closer to Goldman's year-end target. Options are getting cheap as volatility gets priced out of the markets. The VIX, aka the fear index, has fallen from 41 to 23 in just two weeks (44% drop).
Stocks to Watch This Week
I love Alibaba shares below $300, and with regulatory concerns looming, the stock has tumbled way below its intrinsic value in a whiplash reaction by the markets. The Chinese government reacted to a critique by Alibaba & Ant Group founder, Jack Ma, with antitrust 'draft rules.' I believe this is Xi's regime demonstrating that they have the control, not billionaires like Jack Ma. China doesn't want to inhibit growth from its biggest tech giant.
Alibaba is trading at less than half the market value of its western competitor Amazon, despite having stronger profitability, wider margins, and a superior long-term outlook as China's economy rapidly digitalizes. The stock is trading at $260 today, and with record sales during 'Singles Day' (11.11) and a new Asian-Pacific trade deal, the future for this Chinese tech powerhouse looks bright.
Keep an eye on well-positioned COVID winners as they shed some of their rich valuations and head towards a reasonable price. Stocks on my Wishlist include Splunk , Salesforce and Etsy. These equities were all provided with a massive pandemic tailwind and will continue to thrive in the precipitously digitizing Roaring 20s. The recent pullback in these stay-at-home name presents an opportunity to jump in at a relative discount.
Final Thoughts
Optimism is ramped in the markets today as a second 'successful' vaccine trial is announced. There is now a more defined light at the end of this pandemic tunnel. Still, we are not out of the woods yet. I don't expect a vaccine to be universally available until the spring, and we could be in for a very cold economy this winter.
The rotation into 2020's hardest-hit sectors continues, but with states starting to lockdown again, the pain for the cyclical underperformers is not over. My eye remains on tech and the enterprises that will continue to drive growth in the post-pandemic world. Watch out for more fiscal stimulus as this unprecedented year comes to an end.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
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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Zacks Investment Ideas feature highlights: Alibaba, Amazon, Splunk, Salesforce and Etsy
For Immediate Release
Chicago, IL – November 17, 2020 – Today, Zacks Investment Ideas feature highlights Features: Alibaba Group Holding Limited (BABA - Free Report) , Amazon.com, Inc. (AMZN - Free Report) , Splunk Inc. , salesforce.com, inc. (CRM - Free Report) and Etsy, Inc. (ETSY - Free Report) .
Vaccine Hopes Push Markets to Frothy Levels: Stocks to Watch
US investors & traders are continuing their rotation out of 2020's growth-oriented winners and into cyclical underperformers. Recovery sectors like travel & leisure, energy, and financials are booming today in the face of a pandemic resurgence that has pushed hospitalization rates to new highs around the US.
Investors are looking past the remainder of 2020 and towards the spring, where two high potential vaccines aim to rid our world of this microscopic terror.
Vaccine Hopes May Be Over Played
Moderna just announced its vaccine was 94.5% effective in preventing COVID-19 in early trials, making it the second vaccine to reach this type of breakthrough in November. Pfizer was the first to announce a 'successful' clinical trial earlier this month, which has turned the market's tides with investors & traders now able to see the light at the end of the tunnel.
Market optimism is high, but the tunnel is getting darker as we come closer to the end of the COVID-crisis.
The US has had more than 1 million new cases in the past week, with total COVID cases surpassing 11 million (over 3% of the US population). States are going back into lockdown mode, and without more fiscal stimulus, we could be in for a long winter where bankruptcies hit the fan (again).
I would tread cautiously in these markets. Do not blindly chase this cyclical rally. We are trading up to overbought territory.
Market Levels
2020's cyclical underperformers are finally participating in the market's rally as bullish investors & traders drive the S&P 500 past 3,600, which was Goldman Sach's old year-end price target before increasing it to 3,700 earlier this month. The markets are now sitting at frothy levels with my 'overbought/oversold' oscillators teetering on overbought.
It may be time to start buying some put option protection as the S&P 500 ticks closer to Goldman's year-end target. Options are getting cheap as volatility gets priced out of the markets. The VIX, aka the fear index, has fallen from 41 to 23 in just two weeks (44% drop).
Stocks to Watch This Week
I love Alibaba shares below $300, and with regulatory concerns looming, the stock has tumbled way below its intrinsic value in a whiplash reaction by the markets. The Chinese government reacted to a critique by Alibaba & Ant Group founder, Jack Ma, with antitrust 'draft rules.' I believe this is Xi's regime demonstrating that they have the control, not billionaires like Jack Ma. China doesn't want to inhibit growth from its biggest tech giant.
Alibaba is trading at less than half the market value of its western competitor Amazon, despite having stronger profitability, wider margins, and a superior long-term outlook as China's economy rapidly digitalizes. The stock is trading at $260 today, and with record sales during 'Singles Day' (11.11) and a new Asian-Pacific trade deal, the future for this Chinese tech powerhouse looks bright.
Keep an eye on well-positioned COVID winners as they shed some of their rich valuations and head towards a reasonable price. Stocks on my Wishlist include Splunk , Salesforce and Etsy. These equities were all provided with a massive pandemic tailwind and will continue to thrive in the precipitously digitizing Roaring 20s. The recent pullback in these stay-at-home name presents an opportunity to jump in at a relative discount.
Final Thoughts
Optimism is ramped in the markets today as a second 'successful' vaccine trial is announced. There is now a more defined light at the end of this pandemic tunnel. Still, we are not out of the woods yet. I don't expect a vaccine to be universally available until the spring, and we could be in for a very cold economy this winter.
The rotation into 2020's hardest-hit sectors continues, but with states starting to lockdown again, the pain for the cyclical underperformers is not over. My eye remains on tech and the enterprises that will continue to drive growth in the post-pandemic world. Watch out for more fiscal stimulus as this unprecedented year comes to an end.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>
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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.