Friday proved to be a great day for the stock market as all three major indices – the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite – closed at record highs. The move reversed Thursday’s sudden sell-off, spurred on by Japan’s state of emergency declaration over the spreading delta variant prior to the upcoming Summer Olympics.
But the start of this week brought mixed news for the market as Dow futures dropped more than 100 points and the 10-year Treasury yield slipping to 1.3%. By Tuesday, the stock market rally had retreated thanks to a report from the Labor Department showing that the consumer price index (CPI) had jumped 5.4% YOY, well outpacing the 5% expected increase as shipping and manufacturing bottlenecks continue to strangle the supply chain.
Fortunately – or perhaps not – all these factors come together to provide myriad opportunities to invest in (and profit from) the stock market. But instead of telling you what you should buy, we’re going to tell you what’s already trending as we head into hump day.
Q.ai runs daily factor models to get the most up-to-date reading on stocks and ETFs. Our deep-learning algorithms use Artificial Intelligence (AI) technology to provide an in-depth, intelligence-based look at a company – so you don’t have to do the digging yourself.
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Johnson & Johnson (JNJ)
Johnson & Johnson ticked down 0.16% Monday to end the day at $169.48 per share, closing out the day with 7.8 million trades on the books. The stock is trending $4 above the 22-day price average and is up around 7.7% for the year. Currently, Johnson & Johnson is trading at almost 18x forward earnings.
Johnson & Johnson is trending, once again, for all the wrong reasons after the Food and Drug Administration updated the pharmaceutical giant’s coronavirus vaccine fact sheet to reflect the possibility of a new adverse event following vaccination: Guillain-Barré syndrome. This incredibly rare neurological disorder can cause numbness, muscle weakness, and full-body paralysis, though most people recover. Around 100 cases have been reported out of 12.5 million vaccine doses, with most cropping up in the 50+ male demographic.
Additionally, the company is researching potential modifications that would reduce or eliminate another risk of their Covid-19 vaccine: blood clots. The FDA added a warning label about the rare blood-clotting disorder back in April after a handful of “immune thrombotic thrombocytopenia” cases originally surfaced.
But if it comes down to it, these reports likely won’t impact the Big Pharma company’s bottom line too much. In the last three fiscal years, Johnson & Johnson’s revenue expanded around 3.2% to $82.58 billion, a rise of around $1 billion from the three years prior. Meanwhile, operating income shrank from $21.2 billion to $20 billion, while per-share earnings dropped just 10 cents to $5.51 in the most recent fiscal year.
Johnson & Johnson is expected to see around 1.5% revenue growth in the next 12 months. The company is rated well above average overall, with As in Low Volatility Momentum and Quality Value and Cs in Technicals and Growth.
Mastercard, Inc (MA)
Mastercard, Inc nicked up 0.7% by Monday’s close, ending the day at a $375.56 per share with 2.6 million trades on the docket. The stock remains up around 5.3% YTD and is trading near 46x forward earnings.
Mastercard is trending this week after the financial services giant announced a joint partnership with Verizon to innovate new 5G contactless consumer payment options by 2023. They will also look to create solutions for small- and medium-sized businesses out of the collaboration. According to Mastercard, the partnership aims to help businesses use emerging tech to turn smartphones and watches into cash registers and payment devices. The end goal? To facilitate the new future of retail transactions – a contactless, quick-shop model á la Amazon Go.
Mastercard’s continuing innovation has netted the enormous financial company around 3.3% revenue gains over the last three fiscal years, with the company’s cash flow growing from $14.95 billion to just over $15.3 billion. And while operating and income both slipped somewhat (down to $8.2 billion and 102.5%, respectively), per-share earnings leapt from $5.60 to $6.37 in the three-year period.
All told, Mastercard is expected to see forward 12-month revenue growth in the ballpark of 4.8%. Our AI rates this modernizing mammoth B in Low Volatility Momentum and Quality Value and C in Technicals and Growth.
The9 Ltd (NCTY)
The9 Ltd dropped 1.5% to $11.39 per share on Monday, ending the day with around 711.5k trades. The stock is up an astonishing 221.75% for the year, though it’s trading well below its 22-day average of nearly $15.
The9 Ltd. is a Shanghai-based internet company best known for obtaining exclusive distribution rights to World of Warcraft in China. While the company previously focused on gaming operations, it has since begun expanding into cryptocurrency mining, with a goal to “become a diversified high-tech Internet company.”
In its most recent news, The9 Limited and Moscow-based BitRiver signed a cryptocurrency mining hosting agreement. Under the newly inked terms, BitRiver will reserve 15MW of electric capacity for The9’s mining operations for two years as the internet company seeks low-cost, sustainable energy mining facilities.
This agreement – among myriad others – is intended to positively impact The9’s bottom line, which has suffered in the last three fiscal years. For instance, revenue plunged from $17.4 million to just over $630,000, while operating income dipped from $115 million to $112 million. Meanwhile, per-share earnings have bottomed out – though they remain high – from $124.61 to $72.60.
All told, The9 Ltd. has earned a C in Quality Value and Ds in Technicals and Low Volatility Momentum from our AI. However, our deep-learning algorithms declined to provide a Growth rating.
American Airlines Group, Inc (AAL)
American Airlines Group, Inc nudged down 0.24% to $20.84 on Monday. The stock closed out the day on the back of 20.78 million trades. Currently, American Airlines is trending up around 32% for the year.
American Airlines is trending this week after the airliner forecast smaller losses and better revenue gains than previously estimated for the company’s second quarter report. The Texas-based carrier noted that it’s expecting a “slight” pretax profit, with resulting ranging from up to $25 million in profit to a loss of $35 million. The company will webcast its second quarter results on Thursday, 22 July.
Hopefully, current tailwinds will lead to positive changes for the airliner as the industry rejoices in climbing travel rates and reduced coronavirus restrictions. In the last three fiscal years, American Airlines’ revenue plunged from $44.5 billion to $17.3 billion. That said, the pandemic allowed for the airline industry to take advantage of some fancy financial footwork, leading the company’s operating income to increase over the last three years, soaring from $3.76 billion to nearly $11.1 billion. Meanwhile, per-share earnings leapt from $3.03 to $18.36.
All told, American Airlines is expected to see revenue growth around 18% in the coming twelve months. But at this time, our AI rates the airliner poorly overall, with a D in Technicals and Fs in Growth, Low Volatility Momentum, and Quality Value.
Hewlett Packard Enterprise Company (HPE)
Hewlett Packard Enterprise Company closed down 0.75% to $14.47 per share on Monday, ending the day pennies below its 10- and 22-day price averages. The stock is up 22.1% for the year and trading at 7.5x forward earnings.
Hewlett Packard Enterprise is trending this week after expanding its decades-long partnership with XYPRO Technology Corporation. The collaboration will allow Hewlett Packard to offer the entire XYPRO suite with its HPE NonStop systems, providing mission-critical environments at 100% fault tolerance with optimal threat detection and security management abilities.
Additionally, Hewlett Packard last week revealed the acquisition of Ampool, which provides an SQL engine based on the Presto project, to allow users access to data across multiple databases at once. By incorporating the distributed SQL engine with its Ezmeral container, Hewlett Packard can offer reduced overhead, increased data access, and accelerated speeds at scale.
Hopefully, these moves will allow Hewlett Packard to once again top the charts in information technology after its revenue slipped from $30.85 billion to $26.98 billion over the last three fiscal years. That said, operating income did balloon a whopping 72.6% to $1.66 billion in the same period – though per-share earnings and return on equity both plunged significantly to $0.25 and 1.9%, respectively.
Currently, Hewlett Packard is expected to see forward 12-month revenue growth around 0.86%. Our AI rates this information technology giant A in Growth and C in Technicals, Low Volatility Momentum, and Quality Value.
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