Microsoft Rated “Top Buy” This Week Amid Possible TikTok Acquisition
Major tech stocks, namely Amazon, Alphabet, Microsoft, and Facebook, drove the markets higher this week after strong quarterly performance despite the pandemic. The CEOs of these companies also testified before the Congress this week, and investors were relieved since no major confrontation emerged during the meeting. Energy stocks like Exxon Mobil and Chevron were under pressure after these companies reported one of the largest losses this quarter. The US economy saw GDP contract at a record annualized rate of 32.9% but there have been some positive signs in the housing market and manufacturing sector – likely due to those rock bottom mortgage rates. As expected, the FOMC kept the federal funds rate unchanged at its range of 0%-0.25%. Gold prices continue to rise this week while the yield on long term Treasury instruments continues to drop. Our deep learning algorithms using Artificial Intelligence (“AI”) technology have rated some Trending Stocks this week.
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Microsoft Corp (MSFT), Netflix Inc (NFLX), Facebook Inc (FB)
There were three “Top Buy” rated stocks this week in Microsoft Corp, Netflix Inc, and Facebook. These companies have been performing really well during the pandemic and continue to trend upward. Our AI system has identified factor scores of D in Technical, C in Growth, A in Momentum Volatility, A in Quality Value for Microsoft, D in Technical, A in Growth, B in Momentum Volatility, C in Quality Value for Netflix, and C in Technical, A in Growth, C in Momentum Volatility, B in Quality Value for Facebook. The shares are up 28.34%, 48.23%, and 20.92% respectively for the year. Netflix has seen its financials grow at a high rate with operating Income growing by 44.18% in the last fiscal year, and by 347.72% over the last three fiscal years. ROE for Microsoft grew to 40.14% in the last year compared to 19.45% three years ago while that of Netflix improved to 29.12% in the last year from 17.85% three years ago. Revenue for Netflix is projected to grow by 8.61% in the next 12 months while that of Facebook is expected to grow by 10.82%. The stocks are trading with a Forward 12M P/E of 31.85, 65.22, and 28.53 respectively.
Intel Corp (INTC)
On the “Attractive” list this week is Intel Corp. Our AI systems have given factor scores of D in Technical, A in Growth, B in Momentum Volatility, C in Quality Value to Intel Corp. The stock is down 20.73% for the year even though the performance of the company has been good. Revenue grew by 9.71% in the last fiscal year and by 25.8% over the last three fiscal years. EPS has grown by 173.53% over the last three years from $1.99 to $4.71 in the last fiscal year. Intel has managed to almost double is ROE from 14.2% three years ago to 27.68% in the last year. Trading with a Forward 12M P/E of 11.04, the stock is an attractive choice when the valuation is considered.
L Brands Inc (LB), Starbucks Corp (SBUX)
There are two “Unattractive” rated stock this week that our AI systems have identified, L Brands Inc and Starbucks Corp. Factor scores as identified from our deep learning algorithms are rated C in Technical, D in Growth, D in Momentum Volatility, C in Quality Value for L Brands Inc and B in Technical, D in Growth, C in Momentum Volatility, C in Quality Value for Starbucks Corp. Returns have been mixed for both these companies. L Brands, operating as a specialty retailer of women’s intimate and other apparel, personal care, and beauty and home fragrance products is up 41.34% for the year while Starbucks, a global coffee retailer is down 13.49% for the year. L Brands has seen its operating income fall to $1241.0M in the last fiscal year compared to $1728.0M three years ago while that of Starbucks grew slightly over the last three years from $3896.8M to $3915.7M in the last fiscal year. L Brands reported a negative EPS of $(1.33) in the last fiscal year compared to $3.42 three years ago. While revenue projections of 5.3% and 13.72% respectively over the next twelve months, investors can be critical of whether such targets can be met in the current scenario. Even if the stores open up, one needs to consider the willingness of retail customers to venture out. The valuations of these companies are also not very attractive. L Brands trades with a Forward 12M P/E of 26.64 while the figure for Starbucks is 34.23.
Boeing Co (BA)
We have one “Top Short” in Boeing Co as rated by our AI systems. The firm has been significantly impacted by the pandemic as air travel remains restricted. Uninspiring factor scores of rated B in Technical, C in Growth, F in Momentum Volatility, F in Quality Value are given for Boeing Co. The stock has witnessed tremendous selling pressure this year with a drop in value by 52.31%. As for the financials, there has been no significant growth for investors to be optimistic about. Revenue has been declining and stands at $76559.0M in the last fiscal year compared to $94005.0M three years ago. Operating was negative at $(2102.0)M in the last fiscal year, significantly lower when compared to $10113.0M three years ago. Three years ago the firm reported an ROE of 653.13% but the fortunes of the company have changed since then. Forward 12M Revenue is projected to grow by 16.56% over the next 12 months but the growth can only be realized if the pandemic is under control.
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