Ford & Verizon, Boost by Sept Interest Cut.
Fears of US economy falling into recession any time soon is firmly behind us.
Last week’s inflation reports of PPI, CPI and US retail sales report have helped to snuff out the last ounce of doubts in the market.
Click here ! to read about the reports in details ahd help to Repost ok.
And just like that, US 3 Composite indexes closed on a high for the week ending 16 Aug 2024: (see above)
DJIA: +2.79% (+1,103.75 to 40,659.76).
S&P 500: +3.78% (+202.37 to 5,554.25).
Nasdaq: +4.99% (+838.08 to 17,631.72).
Barring any unforeseen circumstances, the final inflation report - the Personal Consumption Expenditure (PCE) for July 2024 should more or less, seal the deal paving the way for an 18 Sep 2024 interest cut announcement.
With July 2024 PPI data components being used in PCE data derivation, it does not require any imagination to predict US’s July 2024 PCE data.
With things looking rosy, it is time to look for value-potential stocks.
With (a) interest rates above 5% for over a year and (b) an economic slowdown, investors and punters alike are waiting impatiently to find out what will be the interest quantum to be cut.
Will it be the widely anticipated -0.25% or the dark horse rate of -0.50% come Wed, 18 Sep 2024.
There should be more information coming from Mr Powell on Fri, 23 Aug 2024 when he speak at the symposium in Jackson Hole, Wyoming.
With the Fed’s impending interest rate cut at the horizon (one month away), two US stocks have emerged as clear beneficiaries, in a low-interest environment.
Let’s find out !
$Ford(F)$
Automobile giant, Ford stock is down -13.57% YTD.
The dip makes it one of the best stocks to buy. (see below)
The Michigan-based company is a household name in US automobile industry.
Its operates an expansive lineup of cars from Ford Pro to Ford F-150 Lighting.
However, recent earnings dragged shares lower as the company missed analyst expectations by a wide margin.
For its Q2 2024 earnings:
Earnings per share (EPS) came in at $0.47 vs analysts’ expectations of $0.68.
Net income fell to $1.83 billion despite a +6% YoY revenue growth.
According to Ford, profitability decline was due to an increase in warranty reserves for older vehicles.
The company anticipates recent quality control (QC) initiatives will help mitigate this in the future.
For its electric vehicle (EV) business that continues to incur losses, Ford remains confident that its next generation of EVs will drive growth.
The September 2024 interest rate cuts could catalyze to re-ignite demand as lower borrowing costs increase spending.
This can potentially provide a significant boost to Ford’s EV business.
Ford Technical Analysis.
Above is Ford’s technical analysis summary.
Overall consensus is a “Sell”.
Technical analysis consensus is a “Neutral”.
Moving averages consensus is a “Strong Sell”, given its YTD weak performances.
$Verizon(VZ)$
Verizon is feeling the heat of rising costs as its stock dipped following its Q2 2024 earnings.
With a hefty dividend yield of 6.56% and trading at an incredible value of just 8.9x its estimated FY 2024 earnings, VZ is one of the top stocks to buy this year.
Looking at its previous quarter earnings:
Revenue came in at $32.8 billion vs estimates of $33.06 billion.
Verizon attributed the decline to:
An increase in phone plan prices.
And a historically low number of people upgrading their phones.
This ties into sentiments in the broader economy as consumers tighten spending amidst inflationary pressure.
In addition, elevated interest payments on its debt load (amounting to $1.7 billion by Q2 2024) have pushed earnings lower.
Like car maker Ford, Verizon stands to gain (a lot) from an interest rate cut, as lower interest rate reduces the cost of debt, while boosting demand for its phone plans.
In parallel, it will also make it more cost-efficient for VZ to maintain its extensive wireless network while increasing investments to maintain its competitive edge.
Verizon - Technical Analysis.
Above is Verizon’s latest technical analysis summary.
Overall consensus is a “Buy”.
Technical analysis consensus is a “Buy”.
Moving averages consensus is a “Buy”, given its YTD performance is up +4.45%.
Given 2 veteran US stocks’ quarterly earnings and technical analysis laid out, is one a better investment option than the other ?
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Do you think Ford will be able to turn the corner come September when interest cut happens ?
Do you think Verizon will be able to fly when interest falls, reliefing cost of borrowings pressure ?
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