VIDEO (1:00) - What Is A Secular Bull or Bear Stock Market? (6:50) - Learning From The Past Market Trends: Tracking The S&P 500 All Time Highs (18:30) - What Can You Learn From The Earnings Beats and Misses From Industry Leaders? (26:20) - Who Could Lead The Bull Market Moving Forward? (35:30) - Where Should You Be Investing If We Enter A Secular Bear Market? (41:20) - Episode Roundup: SHOP, PYPL, GOOGL, AAPL, TSLA, NVDA, HAL, SLB, BKR Podcast@Zacks.com
Welcome to Episode #374 of the Zacks Market Edge Podcast.
Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds, and ETFs and how it impacts your life.
This week, Tracey is joined by Zacks Stock Strategist Bryan Hayes, who is also the editor of Zacks Headline Trader and the Income Investor portfolios, to discuss stock market trends. Are stocks in a secular bull or a secular bear in 2023?
What is a Secular Bull and Bear Market?
First thing investors should know is what is a secular bull or bear market. The stock market can have two kinds of markets, secular and cyclical. Cyclical bull and bears are the short-term trade. In 2022, stocks were in a cyclical bear market as they sold off. Secular bulls are longer term, and can last years. The 1982-2000 secular bull lasted 18 years.
Secular bear markets are marked by the lack of new all-time highs on the S&P 500 and a treading water type of momentum, where stocks don’t seem to ever want to break out. And if they DO hit new highs, they give it up and sink again. This was the scenario in the 2001-2012 secular bear.
Can These 5 Stocks Tell us if Stocks are in a Secular Bull or Bear Market? 1. Shopify Inc. ( SHOP Quick Quote SHOP - Free Report)
Shopify was one of the big winner stocks during the pandemic, hitting a new all-time high in 2021. But Shopify sold off in 2022, along with many growth stocks.
But the shares rallied in 2023, gaining 54.6%. Many thought the worst was over. However, Shopify still remains down 62% over the last 2 years. It’s not really cheaper either, on a P/E basis. It still trades at 168x.
Is Shopify’s big sell-off, and a lack of a return to the highs, a sign that stocks are now in a secular bear market?
2. PayPal Holdings, Inc. ( PYPL Quick Quote PYPL - Free Report)
PayPal was one of the big winners of the pandemic as the fintech companies were in demand. Shares peaked in 2021 and have been on the slide ever since.
Shares of PayPal have fallen 17.7% year-to-date, missing out on the growth stock rally. Over the last 2 years, they are down 78.9%. And they have even round tripped over the last 5 years and are now down 35% during that time.
PayPal shares are now cheap. It trades with a forward P/E of just 12.3.
Is the collapse of PayPal shares a sign that stocks are in a secular bear market?
3. Apple Inc. ( AAPL Quick Quote AAPL - Free Report)
Apple has been one of the stalwarts of the secular bull market which began in 2013. It was originally part of FAANG, then in FANGMAN and now it is a member of the Magnificent 7.
Apple has joined in on the 2023 rally, gaining 34% year-to-date. Over the last 2 years, it’s also still in the green, up 18.4%. Apple even hit another all-time high in 2023.
Apple, however, isn’t a cheap stock on a P/E basis. It trades at 29x.
But with Apple, one of the big winners of the secular bull, still breaking out, is it a sign that stocks are still in the secular bull market?
4. NVIDIA Corp. ( NVDA Quick Quote NVDA - Free Report)
NVIDIA is having quite the year. Shares are up 180.7% year-to-date with earnings expected to jump 219.5%. Shares of NVIDIA originally hit new highs in 2021, along with the other FANGMAN and growth stocks. And although they sold off in 2022, they bounced back quickly and have been hitting new highs again in 2023.
Over the last 2 years NVIDIA is up 85% and over the last 5, it has gained 520%. NVIDIA now trades with a forward P/E of 39.6.
In secular bears, the prior winners do not lead yet NVIDIA is still leading.
Is NVIDIA signaling that stocks are still in the secular bull?
5. Baker Hughes Co. ( BKR Quick Quote BKR - Free Report)
Baker Hughes is an oil field services company. Energy has been out of favor since 2013. It was not one of the “winners” of that decade. Shares of Baker Hughes are up just 9.9% over the last 5 years.
But, after bottoming in 2020, the energy stocks like Baker Hughes have been on the move higher. Over the last 2 years, Baker Hughes is up 44.8% and it’s kept the momentum going this year with shares up 18.7%.
Baker Hughes is trading at 23x but earnings are expected to jump 73% this year.
If stocks are in a secular bear, is Baker Hughes a good way to play it?
What Else do you Need to Know About Secular Bulls and Bears?
Check out the podcast to find out.