Buckle up, folks. This could be a very volatile week for the stock market.
One reason for the potential volatility is earnings season. We’ve officially entered the heart of earnings season, with five of the “Magnificent 7” – Amazon.com, Inc. (AMZN), Apple Inc. (AAPL), Alphabet Inc. (GOOG), Microsoft Corporation (MSFT)and Meta Platforms, Inc. (META) – slated to report their latest quarterly results throughout the week. Tesla (TSLA), another one of the Magnificent 7, reported last week, and NVIDIA Corporation (NVDA) will report on Wednesday, February 21.
As I mentioned in last Friday’s Market 360, these seven stocks alone account for about 28% of the S&P 500, so their earnings could significantly impact the broader market. This is especially true when you consider that earnings expectations are high for these five names. All five companies are expected to post double-digit earnings growth compared to the same period in the previous year, with Amazon projected to grow earnings by a stunning 2,366.7%!
In other words, if any one of these companies posts a significant surprise or miss, then it will likely send shockwaves through the rest of the market.
But earnings season is not the only thing for investors to watch this week.
We also have the Federal Reserve’s Federal Open Market Committee (FOMC) meeting to look forward to on Tuesday and Wednesday, with the Fed’s key interest-rate decision to be announced Wednesday afternoon.
It’s important to note that the central bank is not expected to make any changes to key interest rates on Wednesday. So, investors will look for clues about future rate cuts in the FOMC statement, as well as in Fed Chair Jerome Powell’s press conference.
As we learned from last week’s Personal Consumption Expenditures (PCE) report, the Fed’s preferred inflation measure is now running at 1.5% on a three-month annualized basis and at 1.9% on a six-month basis for the second month in a row. So, we’re squarely on track to reach their preferred target of 2% annual inflation.
Now remember, I still think the Fed will cut key interest rates more than three times ahead of the November presidential election. In fact, I think we could see as many as eight quarter-point cuts this year.
But the bottom line is investors could be in for a very volatile week. So, in today’s Market 360, I’ll share 10 stocks that are likely to struggle in the current market environment, due to their weak fundamentals. And then, I’ll share where you can find fundamentally superior stocks that truly represent the crème de la crème of the stock market.
This Week’s Ratings Changes
After taking a closer look at the latest institutional buying pressure and each company’s financial health, I decided to revise my Portfolio Grader for 70 big blue chips. Of these 70 stocks, 19 were downgraded from a B-rating (Buy) to a C-rating (Hold), and 25 stocks were downgraded from a C-rating to a D-rating (Sell).
I’ve listed the first 10 stocks to sell below, but you can find the full list – including the stocks’ Fundamental and Quantitative Grades – here.
Chances are that you have at least one of these stocks in your portfolio, so you may want to give this list a skim and adjust accordingly.
| Ticker | Company Name | Total Grade |
|---|---|---|
| AFG | American Financial Group, Inc. | D |
| BA | Boeing Company | D |
| CVE | Cenovus Energy Inc. | D |
| DD | DuPont de Nemours, Inc. | D |
| FITB | Fifth Third Bancorp | D |
| GFS | Global Foundries Inc. | D |
| HSY | Hershey Company | D |
| KIM | Kimco Realty Corporation | D |
| LYG | Lloyds Banking Group plc Sponsored ADR | D |
| PLD | Prologis, Inc. | D |
With thousands and thousands of stocks to invest in, it can be hard to find fundamentally superior stocks set to prosper during earnings season.
That’s where my Growth Investor service can help.
Currently, my Growth Investor stocks are characterized by 14.3% annual sales growth, 166.5% annual earnings growth, an 8.5% earnings surprise and a median fiscal 2024 price-to-earnings ratio of 16.7.
So, if you want to your portfolio to be filled with the crème de la crème of stocks, then join me at Growth Investor today. You’ll receive instant access to all my Buy List stocks, as well as all my Growth Investor Monthly Issues, Weekly Updates, Special Market Podcasts – and much more.
(Already a Growth Investor subscriber? Click here to log in to the members-only website now.)
Sincerely,
Louis Navellier
The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:
