Credit Suisse s Americas team just rolled out a string of those ideas, as well as stocks to avoid, by having their analysts identify their highest-conviction names in every major market sector. They then narrowed the search further by applying the firm s HOLT framework to find top-rated stocks facing the least demanding market expectations.
Credit Suisse evaluated those market expectations by looking at the difference between the cash flow return on investment, or CFROI, the market currently expects and both the 12-month forecast for CFROI and the companies historic five-year CFROI.
The firm s process also included comparing the analysts earnings forecasts and target price estimates to the analyst consensus, and measured a level of consensus bullishness based on buy, sell, and hold ratings.
Your weekly recap/outlook
This past week was one where the market just couldn t make up its mind. US stocks surged on Monday after suffering their worst decline in months the prior week. Then inflation fears and spiking bond yields spooked investors anew as Fed Chair Jerome Powell failed to calm nerves.
The tides turned again on Friday as anxious dip-buyers quickly pulled tech stocks back out of correction following a monster jobs report that nearly doubled forecasts. Now it s anyone s guess where the market heads next week.
The volatility is stemming at least partially from uncertainty around how signs of economic progress should be interpreted. On one hand, encouraging labor-market data should have investors excited about the prospect of increased consumer spending. But on the flip side, an economy that runs too hot risks runaway inflation the sort of thing addressed by higher interest rates. And when rates rise, stocks lose luster. It s quite the catch-22.
Solar power is set to boom as costs decline and battery tech makes it more accessible.
Tesla s North American Solar Projects could be worth $250 billion annually in the longer term, the bank said.
Goldman estimate installations will be 60% above Biden s policy aim for 500 million panels in the next 5 years.
The energy transition trade is heating up, and investors are looking tap into those companies and technologies that will power the homes and cities of the future.
Across the board, this has meant significant gains for companies that are focussed on sustainability. For example, shares in Danish wind power provider Orsted have rallied around 300% in the last five years, and Chinese Tesla rival NIO gained over 960% in the last 12 months alone.
According to Luke Lloyd, an investment strategist at Strategic Wealth Partners, such a pullback is a healthy thing near all-time highs, and investors shouldn t sweat it.
At the end of the day, tech stocks are still a good investment, he said, and they can justify the high valuations that have led some to cry of a bubble. Especially consider valuations of some stocks tied to an economic reopening, like airlines and cruise lines. A lot of these [reopening] stocks from a valuation standpoint are higher than they were the day before the pandemic. The thing is, they re not making any money, Lloyd told Insider last week. The cruise lines, for example, aren t even offering any cruises. Air traffic isn t getting anywhere close to where it was before the pandemic.