Last week, NVIDIA Corporation’s (NVDA) earnings served as the grand finale to the fourth-quarter earnings season.
We recapped the leading artificial intelligence chipmaker’s earnings report in a previous Market 360 (click here to read it now). But here’s a quick recap…
On Wednesday after the closing bell, NVIDIA reported fourth-quarter revenue of $22.1 billion and earnings of $5.16 per share, which represented 265% year-over-year revenue growth and 486.4% year-over-year earnings growth. Analysts expected earnings of $4.29 per share, so NVIDIA posted a 20.3% earnings surprise. The company also increased its first-quarter revenue guidance to $24.0 billion, substantially higher than estimates for $20.4 billion.
As I’ve said in recent Market 360 articles, NVIDIA is one of the clear leaders of the market right now. So, it should come as no surprise that shares soared about 16% higher on Thursday in the wake of its results and helped drive the overall market to new all-time highs.
This NVIDIA-led market rally has been stunning. The S&P 500 is up by about 6.4% year-to-date. The NASDAQ is up nearly 7%, while the Dow is up 3.4%. And leading the change has been NVIDIA, up 59% year-to-date.
Since NVIDIA is a member of my Buy List over at Accelerated Profits, now we all know how the Kansas City Chiefs felt the day after winning the Super Bowl!
But this week, as earnings season begins to wind down, things are relatively quiet. We do have a couple of key economic reports to look forward to, most notably with the latest reading of the Personal Consumption Expenditures (PCE) index, the Federal Reserve’s favorite inflation gauge, on Thursday.
Economists are looking for the core PCE, which excludes food and energy, to have risen by 2.4% in January, or 0.4% on a monthly basis. Given that we saw a 0.2% monthly rise in December, economists are looking for signs of whether inflation will remain stubbornly high… or whether we will remain on track to hit the Fed’s 2% annual target.
Now, I remain convinced that the Fed should cut key interest rates no later than at its Federal Open Market Committee (FOMC) on May 1st. However, the Federal Reserve continues to signal that a rate cut at its June FOMC meeting is more likely, since the PCE will likely fall within the Fed’s 2% annual inflation target by then.
In the meantime, as I have been saying lately, change is in the air and money is on the move.
More Great Earnings Ahead?
Going forward, I expect the overall market will grow more narrow and selective as it digests these stunning gains. But don’t let any of these dips concern you; I still think that 2024 is shaping up to be the best year since 1999.
About $8.8 trillion is still sitting on the sidelines in money market accounts, according to The Wall Street Journal. In other words, there is plenty of fuel to propel the stock market even higher.
What will inspire all this cash to pour in from the sidelines? Well, we’ve already seen how positive earnings results have driven more folks back to fundamentally superior stocks and pushed the overall stock market higher. The great news is that we have several more quarters of accelerating earnings momentum.
The analysts at FactSet recently revealed that earnings momentum will only gather more steam throughout the year. Current estimates call for first-quarter earnings growth of 3.9%, second-quarter earnings growth of 9.0%, third-quarter earnings growth of 8.0% and fourth-quarter earnings growth of 17.6%. The S&P 500 is also expected to achieve 10.9% average earnings growth in 2024.
So, accelerating earnings momentum will certainly send more investors back to the stock market this year. I also think that multiple key interest rate cuts, with the Federal Reserve likely cutting rates for the first time in June, and overall optimism during a presidential election year will create a lot of positivity on Wall Street.
But you can’t blindly assume that all stocks will get rewarded equally. The reality is that stocks with solid fundamentals get rewarded more than those with weak fundamentals. So, as we await the next big catalysts to send the market higher, you will want to make sure you are positioned in fundamentally superior stocks.
This Week’s Ratings Changes
I should add that ratings have been fluctuating more than usual in my Portfolio Grader tool. 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 81 big blue chips. Of these 81 stocks, 25 were upgraded from a C-rating (Hold) to a B-rating (Buy), and 29 stocks were upgraded from a D-rating (Sell) to a C-rating.
So, in today’s Market 360, I’ll share 10 stocks that are likely to struggle in the current market environment, due to their deteriorating fundamentals. And then, I’ll share where you can find fundamentally superior stocks that truly represent the crème de la crème of the market.
I’ve listed the first 10 stocks rated as Hold 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 |
|---|---|---|
| CARR | Carrier Global Corp. | C |
| CE | Celanese Corporation | C |
| DINO | HF Sinclair Corporation | C |
| FMS | Fresenius Medical Care AG Sponsored ADR | C |
| FNF | Fidelity National Financial, Inc. – FNF Group | C |
| GEHC | GE Healthcare Technologies Inc | C |
| GFL | GFL Environmental Inc | C |
| HSBC | HSBC Holdings PLC Sponsored ADR | C |
| LNG | Cheniere Energy, Inc. | C |
| LYV | Live Nation Entertainment, Inc. | C |
Party Like It’s 1999
The bottom line: 2024 is off to an even stronger start than 1999, with the stock market currently sitting at all-time highs. But given the perfect storm of positive earnings growth, key interest rate cuts and the Presidential election year, the torrid pace of appreciation should continue – and many of our powerful growth stocks over at Accelerated Profits have the potential to double (or even triple!) this year.
Our Accelerated Profits Buy List is up a whopping 13% in February so far, which has more than triple the Dow’s 2.0% gain and more than double the S&P 500’s 4.6% rise. And I’m pleased to report that 25 of our Buy List companies led the way higher, with double-digit gains between 10% and 64%.
Much of our Accelerated Profits stocks’ outperformance in February can be attributed to better-than-expected quarterly results.
But it can also be attributed to the fact that we use the power of artificial intelligence to help us pinpoint fundamentally superior companies that are primed to soar.
With thousands and thousands of stocks to invest in, it can be hard to find fundamentally superior stocks set to prosper.
But thanks to our financial superintelligence, my Accelerated Profits Buy List is chock-full of small- and mid-cap stocks with stunning fundamentals that aren’t even on the radar of most investors. And given their superior fundamentals, I expect money to flow into these names this year.
(Already an Accelerated Profits member? Click here to log in to the members-only website now.)
Sincerely,
Louis Navellier
Editor, Market 360
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:
NVIDIA Corporation (NVDA)
