Aug 30 2021 (Mon)
Despite a sluggish global economy and the threat of the delta variant, the equity markets are trading at record highs. The S&P 500 Index has already gained over 20% year to date as the economy reopened a few months back.
Traditionally, September has been the worst month for stocks since 1945 but bulls took on the mantle on Friday after US Fed Reserve Chairman Jerome Powell’s remarks on tapering and interest rates. Powell confirmed there would likely be no increase in interest rates but tapering could begin this year.
This week will see two sets of data come out. First up, is the Consumer Confidence survey on Tuesday and the second one is the August jobs data report that comes out on Friday. However, it has to be kept in mind that unemployment benefits continue till September, and the actual situation will come to light in October.
According to a report from Bloomberg, economists expect 750,000 jobs to come back in August. This is lower than the 943,000 jobs added in July 2021. The unemployment rate is also likely to improve to 5.2% in August from 5.4% in July.
However, Bank of America economist Michelle Meyer forecasts non-farm payrolls to increase by 600,000 this month. According to a report from Yahoo Finance, Meyers explains, “High frequency labor market data are signaling a marked slowdown in employment activity in the August payroll survey week, suggesting downside risk to our forecast. Our below-consensus non-farm payrolls forecast is predicated on the markedly weaker high frequency employment data between the July and August payroll survey periods.”
According to data from FactSet, 58 companies part of the S&P 500 have derived negative returns in 2021 and a few of them are well-positioned to stage a comeback in the next 12-months. Analysts expect Micron stock to gain momentum and the consensus target estimates have meant its trading at a discount of 59% right now.
Micron is trading at an attractive valuation with a forward price to earnings multiple of just 7x, despite gaining 1,000% in market value in the last decade. Other beaten-down companies and their upside potential include:
Las Vegas Sands Corp: 49%
Activision Blizzard: 44%
Global Payments: 38%
Incyte Corp: 35%
NOV Inc: 33%
One of the most popular stocks on social media platform Reddit in the last 72 hours is the technical support company Support.com. The stock has already surged 228% in the last month and is up 40% in pre-market trading today. Since the start of 2021, SPRT stock has gained a staggering 1,102%.
Other popular companies on Reddit include usual suspects such as GameStop and AMC Entertainment.