April may have ended on a whimper today as investors caught their breath after a flood of big tech quarterly reports this week, but the month as a whole has been fantastic as the market was pretty confident we were on the road to recovery are.
The S&P gave way on Friday by 0.72% to 4,181.17 and thus gained … one point for the week! Meanwhile, the Dow fell 0.54% (or about 185 points) to 33.874.85 and the NASDAQ fell 0.85% (or nearly 120 points) to 13,962.68. These indices are down about 0.5% and 0.4%, respectively, over the past five days.
However, the dates for April are as exciting as the weekly totals are boring. The NASDAQ rose 5.4% and the S&P rose 5.2% this month. The Dow saw a nice 2.7% gain.
It’s been 30 days of impressive economic data (especially a job number that was 250,000 better than expected), notable quarterly performances (especially the FAANGs this week), and a Fed looking to remain very accommodating for the foreseeable future. As a result, we’ve seen some record highs.
The market had an opportunity today to respond to the season’s final FAANG report. E-commerce giant Amazon (AMZN) reported first quarter earnings yesterday evening that exceeded Zacks Consensus estimate by nearly 62%, while sales rose 44% to $ 108.5 billion. Stocks reacted well to the release overnight, but it wasn’t surprising to see the stock drop 0.11% on Friday.
This ends a very lucrative Big Tech Week. This week’s top five reports – AMZN, Apple (AAPL), Facebook (FB), Alphabet (toget), and Microsoft (MSFT) – exceeded expectations, even if the market didn’t always reward them for their numbers. According to our research director Sheraz Mian, those names amounted to $ 74 billion in profits on $ 311.6 billion in sales. No wonder his latest article is titled: “Big Tech’s best days of growth could be behind it”.
The overall season was pretty good too. Of the more than 60% of S&P companies reported to date, total earnings are up 51.1% year over year and revenue is up 8.3%. And we’re not done yet! There will be over 1000 more reports next week.
Today’s portfolio highlights:
Shares under $ 10: After cutting three names earlier this week, Brian has a few vacancies. On Friday he picked up Israel Chemicals (ICL), a Zacks Rank # 2 (Buy) manufacturer of specialty fertilizers and specialty phosphates, flame retardants and water treatment solutions. The company will report back in advance of the May 6 opening. For the past four quarters it has had an average earnings surprise of around 75%. The stock also has a “wonderful chart” with a steady 45 degree upward angle, along with good valuation and growth. Be sure to read the full description for more details on this new addition. By the way, this portfolio had two of the best performers of any ZU name on Friday, with Freightcar America (RAIL) up 11.2% and GT Biopharma (GTBP) up 9.3%.
ETF investor: Residential construction was one of the hot spots in 2020, and the severe supply shortages promise to fuel it further in 2021. The portfolio is already involved in this area through the SPDR S&P Homebuilding ETF (XHB), but Neena wants more. The iShares US Home Construction ETF (ITB) is the most popular home builder ETF. This capitalization weighted fund owns some of the biggest names in the field, including D.R. Horton (DHI), Lennar (LEN), NVR (NVR) and PulteGroup (PHM). They make up around 45% of the portfolio. This addition gives the service department an excellent view of the first-class installation space. Read the full article for more.
Home Run Investor: For a while, Apogee (APOG) was a real home run that shot up more than 100%. However, the stock pulled back after its earnings report. Brian has been patient with this glass products company, but it has now slipped to a Zacks Rank 4 (Sales). As a result, the publisher finally sold APOG on Friday while still making a profit of nearly 70% in just over six months.
Technology innovators: It’s the last day of the week and the last day of the month. So it is a good time to take some money off the table and fill vacancies that should be filled in the coming days. The big winner was electronics maker Jabil (JBL), which was sold today for a return of more than 50% in about seven months. Brian also made room by exiting subpar roles at NetScout Systems (NTCT) and Amkor Technology (AMKR).
Insider Trader: “Selling and walking in May is back in the news, like every year in late April. Yawn.
“What if you sold last May and left by October? The S&P 500 was up 16% during that time while the NASDAQ was up 24.6%. It’s silly, market time based on an old standard to be determined, to which no one sticks anymore. Let’s forget. ” the “sale in May” thing in 2021.
“The bigger problem seems to be why Big Tech doesn’t rely on blockbuster earnings reports. In fact, many stocks have not benefited from excellent earnings in all sectors. Could another correction be coming soon?” – Tracey Ryniec
Have a nice weekend!
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