3 Stocks to Buy Now for a Sizzling Summer Rally

stocks to buy now - 3 Stocks to Buy Now for a Sizzling Summer Rally

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The stock market has been hit a few headwinds in 2023. High inflation, interest rate hikes, and declining earnings have been put into focus. Despite the headlines, indices have performed well to start the year. The S&P 500 and Nasdaq-100 are up 8% and 23% year to date, respectively. 

Some investors believe a summer rally will take shape and push the stock market higher. Inflation still remains high but has cooled in recent months, recently ticking in at 4.9% in April 2023. Every stock market rally produces outliers that outperform indices and many of their peers.

If you’re getting ready for a summer rally in stocks, these are some stocks to buy now.

Perion (PERI)

Advertising companies haven’t faired well in 2023. Meta (NASDAQ:META), Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), and The Trade Desk (NASDAQ:TTD) had declining earnings in FY 2022 compared to FY 2021. 

Those declines in the broader industry make Perion’s (NASDAQ:PERI) growth more astounding. The global advertising company achieved 34% year-over-year revenue growth and 156% year-over-year GAAP net income growth in FY 2022. While most of Perion’s competitors experienced single-digit revenue growth and net losses in Q1 2023, the small cap stock had 16% year-over-year revenue growth and 54% GAAP net income growth in Q1 2023.

Perion’s ability to achieve high growth numbers as the industry faces headwinds highlights the company’s resilience during economic uncertainty. Despite surging over 750% in the past five years, the stock only has a 15x P/E ratio and 0.54x PEG ratio. The small-cap stock has a market capitalization just shy of $2 billion. 

Perion focuses on three types of digital ads: search, social media, and CTV. This focus gives Perion several revenue streams, and advertisers seem to enjoy the service based on the corporation’s 115% customer retention rate in FY 2022. The stock’s recent pullback may be setting it up as one of the top stocks to buy now before the rally.

Axcelis Technologies (ACLS)

Axcelis Technologies (NASDAQ:ACLS) produces ion implantation and other equipment for semiconductor manufacturers worldwide. Companies need equipment like Axcelis’ for their chips. These chips are in various products like computers, vehicles, mobile devices and data storage servers. 

The semiconductor industry is cyclical. When semiconductor companies have too many chips, they have to lower the prices to adjust to the current environment. Some companies do better than others at navigating slowdowns, and Axcelis Technologies has been an outlier.

Axcelis Technologies has comfortably outperformed the S&P Semiconductor ETF (NYSEARCA:XSD). While the S&P Semiconductor ETF has increased by 17% in 2023, Axcelis Technologies has surged by over 75% since the start of the year. Axcelis Technologies has also outperformed the ETF over the past 1-year and 5-year timeframes. 

Healthy profit margins, along with growing top and bottom lines, can make this company one of the stocks to buy now before the summer rally. The semiconductor stock is a small cap valued at a little over $4 billion and has a 22x P/E ratio. In the Q1 2023 earnings call, Axcelis Executive Vice President and CFO Kevin Brewer stated that the company expects the company’s 2023 revenue to exceed $1.03 billion. This development would represent a 12% year-over-year increase in revenue.

Walmart (WMT)

High inflation and rising interest rates have many consumers feeling cautious about their expenses. When costs rise, people turn to affordable businesses for their products and services. That’s good news for Walmart (NYSE:WMT), a retail conglomerate that offers a wide range of low-priced products. 

Walmart doesn’t have the same eye-popping revenue growth or valuation as the other two stocks to buy now. The company achieved 6.7% year-over-year revenue growth for FY 2022. The company returned over $16 billion to investors through dividends and share purchases.

Walmart is also slowing down on its hiring to keep costs low.

Walmart may surprise investors in the second quarter, but it remains an attractive long-term dividend stock that has hiked its dividend for over 50 consecutive years. A dividend payout ratio slightly above 30% suggests the payments are sustainable. 

The average price target for Walmart is $164.95 based on price targets from 40 analysts. This price target implies 8% growth by the end of the year, excluding the dividend. 

On the date of this publication, Marc Guberti held LONG positions in PERI and ACLS. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Marc Guberti is a finance freelance writer at InvestorPlace.com who hosts the Breakthrough Success Podcast. He has contributed to several publications, including the U.S. News & World Report, Benzinga, and Joy Wallet.

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Oil prices mark first weekly gain in 5 weeks; natural-gas futures end the week 14% higher

Oil futures finished lower on Friday as optimism surrounding a U.S. debt ceiling faded, but prices still notched a gain of more than 2% for the week. Natural-gas futures, meanwhile, ended sharply higher for the week, buoyed by prospects for tighter supplies.  “Crude prices were having a great week as the U.S. economic outlook dramatically improved as lawmakers seem likely to reach a deal on the debt ceiling,” said Edward Moya, senior market analyst at OANDA. However, “debt ceiling optimism quickly disappeared on Friday and that sent oil prices sharply lower.” June West Texas Intermediate crude
CLM23,
-0.35%

fell 31 cents, or 0.4%, to settle at $71.55 a barrel on the New York Mercantile Exchange, up 2.2% for the week, according to Dow Jones Market Data. June natural gas
NGM23,
+0.31%

shed a penny, or 0.3%, to settle at $2.59 per million British thermal units, posting a weekly rise of 14.1%.

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QS Stock Alert: QuantumScape Is a Money Pit NOT a Promising Investment

QS stock - QS Stock Alert: QuantumScape Is a Money Pit NOT a Promising Investment

Source: Tada Images / Shutterstock.com

Should dip-buyers consider investing in electric vehicle (EV) battery technology company QuantumScape (NYSE:QS) now? I hate to be the bearer of bad news, but the risk-to-reward profile isn’t ideal for QS stock in 2023. QuantumScape’s financials certainly aren’t favorable. In addition, it’s taking a very long time for QuantumScape to develop its multi-layered battery cell product.

QuantumScape is truly a hero-or-zero type of startup. The company is working tirelessly to develop a “forever battery” that would, at least in theory, change the EV landscape of the 2020s.

Yet, QuantumScape is testing the patience and resolve of its loyal shareholders. They can only tolerate so much capital loss. And they’re wondering how much longer it will take QuantumScape to get its battery technology to market.

QS Stock Slides Toward Penny Stock Territory

Believe it or not, QuantumScape shares have lost half their value since mid-February. QS could actually become a penny stock soon, as it was recently seen near the crucial $5 level. Thus, it’s fair to conclude that QuantumScape’s hype phase is in the rearview mirror now, and the company’s investors must now come to terms with the harsh reality of the situation.

The operational updates on QuantumScape’s press releases page have been few and far between. A lot of time has passed — five months, actually — since QuantumScape shipped its first 24-layer prototype battery cells to automotive manufacturers. Time flies, but QuantumScape’s progress has been frustratingly slow.

QuantumScape did issue a shareholder letter in late April, but QS stock only continued to slide after that. Perhaps, that’s because QuantumScape’s operational update wasn’t particularly encouraging. As QuantumScape transitions “from prototype to commercial product,” the company admits that “still has “work to do to improve reliability.” Meanwhile, QuantumScape’s investors haven’t been provided with a specific timeline for this transition.

QuantumScape Is a Money Pit

Some folks might think that it’s fine for QuantumScape to take its sweet time as the company develops its multi-layer battery cell technology. Yet, it costs a great deal of money to run a business like this.

Not long ago, QuantumScape acknowledged that it “had not derived revenue from its principal business activities” as of March 31. The company also conceded that its planned “principal operations have not yet commenced.”

At the same time, QuantumScape has been a money pit. The company’s operating expenses grew to $109.978 million in 2023’s first quarter, from $90.657 million in the year-earlier quarter.

That’s not the only startling statistic. From the year-ago quarter to Q1 2023, QuantumScape’s net earnings loss expanded from $90.353 million to $104.631 million. Furthermore, QuantumScape’s capital position weakened during that time. Specifically, the company’s total cash, cash equivalents and restricted cash declined from $300.535 million in the three months ended March 31, to $258.733 million in the three months ended March 31, 2023.

Don’t Even Think About Buying QS Stock

If you’re interested in QuantumScape’s expected time to full product commercialization, the company hasn’t provided much clarity on that topic. That’s a major problem, since QuantumScape hasn’t stopped spending money on product research and development.

The point is, QuantumScape is a promising company that could bring a game-changing product to the market someday. Yet, it doesn’t make sense to wait around for that “someday” to happen. So, unless the circumstances change, QS stock is still not a buy in 2023.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.

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American Airlines, pilots reach tentative labor contract agreement

American Airlines Group Inc.
AAL,
-1.87%

and the union representing its pilots have reached a preliminary labor contract, the union said Friday. Allied Pilots Association said that next steps include presenting the preliminary agreement to its board. Earlier this month, the pilots had voted to authorize a strike if necessary. An agreement between American and its pilots would follow Delta Air Lines Inc.’s
DAL,
-1.34%

contract with Delta pilots, who are represented by a different union, ratified in March. That contract raised pay by 34% through 2026 and also offered job protections and improvements to benefits and vacations. Shares of American Airlines were caught in the downdraft for equity markets on Friday. So far this year, the stock has gained around 16%, which compares with a 9% advance for the S&P 500 index.
SPX,
-0.24%

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2-month Treasury yield jumps to 5.22% ahead of Powell’s panel appearance

The 2-month T-bill rate led Friday’s rise in Treasury yields as investors continued to focus on the debt-ceiling debate and awaited an 11 a.m. Eastern time appearance by Federal Reserve Chairman Jerome Powell. The rate was up 20.1 basis points at 5.219% from Thursday’s close of 5.018%, according to 10:30 a.m. figures from Tradeweb data. The 2-month rate has been up every trading day since May 11, though is still short of the all-time high of 5.322% it reached on May 4. The rate’s history only dates back to October 2018, when the 2-month bill was first issued.

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Farfetch, Deere, Applied Materials and more

Luxury fashion items sit on display beside tablet devices at the launch of the Farfetch “Store of the Future” pop-up exhibition, at the Design Museum in London, U.K., on Wednesday, April 12, 2017.

Luke MacGregor | Bloomberg | Getty Images

Check out the companies making headlines before the bell.

Foot Locker — Shares tumbled more than 23% following a disappointing quarterly results announcement from Thursday after the bell. The shoe retailer missed analysts’ expectations on both earnings and revenue in the first quarter. 

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Disney — The company’s stock fell 0.9% in premarket trading. Earlier on Friday, Macquarie Research downgraded Disney stock to neutral from outperform over uncertainties surrounding the growth of its streaming services.

Nike — Shares fell by more than 2% on news that the company may face more than $530 million in fines for misclassifying thousands of independent contractors, according to a report from The Guardian. 

Bath & Body Works — Shares drew back by 2.2% after surging 10.7% during the previous trading session. The longtime mall shop posted better-than-expected earnings for the fiscal first-quarter and raised its full-year guidance in its earnings announcement on Thursday.

Catalent — The drug maker’s shares fell by almost 6% after delaying its fiscal third-quarter earnings announcement Friday before the bell. Catalent lowered its full-year earnings and revenue guidance ahead of its business update call. 

Applied Materials – Shares of the chip maker slipped more than 1% premarket despite the company posting earnings and revenue for the most recent quarter that beat expectations on Wall Street. It also issued upbeat guidance for the third quarter.

Farfetch — The luxury fashion platform’s stock soared 25.5% Friday morning. The company’s first-quarter earnings of 43 cents per share missed analysts’ estimates from Refinitiv by 1 cent. However, its revenue of $556 million was higher than Wall Street’s expectations of $513 million. 

DXC Technology – The IT company saw its shares fall 3.5% following its latest financial results. DXC posted revenue that came in below analysts’ expectations from FactSet and earnings that were about in line with expectations. It also announced the departure of CFO Ken Sharp later this year.

Bloom Energy — Shares of the clean energy stock jumped 6.2% in the premarket on the back of an upgrade to overweight from neutral by JPMorgan, which said there’s a buying opportunity in the stock after a recent slide.

Deere — The tractor maker’s shares rose almost 4% after it announced an earnings and revenue beat for its fiscal second-quarter. Deere posted $9.65 earnings per share and $17.39 billion in revenue. Analysts surveyed by Refinitiv had expected $8.59 per-share earnings and $14.83 billion in revenue. 

Gen Digital — Gen Digital climbed 1.5% after Evercore ISI initiated coverage of the cybersecurity company with an outperform rating. Analyst Peter Levine said the company has become the “leading consumer cybersecurity platform.”

— CNBC’s Alex Harring, Sarah Min, Tanaya Macheel and Brian Evans contributed reporting

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Best Biotech Stocks to Buy: 3 Stocks on the Cusp of Breakthroughs

The biotechnology (or biotech) sector is a crystal-clear illustration of risk and reward. Many biotech companies work on drugs and therapeutics for some of the most pernicious conditions affecting our society and healthcare system. But finding the best biotech stocks to buy is not always simple. 

Many biotech companies work on drugs for years. And these biotech stocks will swing wildly on the news. Positive results from a clinical trial can send stocks soaring. Conversely, disappointing results can cause a sharp selloff.  

Unfortunately, some biotech companies never get FDA approval. Even if they do, small cap companies may have to dilute stock many times throughout the clinical trial process. 

Investing in biotech stocks is for risk-tolerant investors. But the reward is also clear. Investors only need to think back to the Covid-19 pandemic for examples of biotech stocks that soared after the company successfully launched a vaccine or therapeutic.  

In 2023, there are several biotech companies that are on the verge of significant breakthroughs. Even though a couple of them have already made significant gains this year, each of these biotech stocks has room to run higher.  

Biogen (BIIB)

 

Biogen (NASDAQ:BIIB) stock shot higher in October 2022 on the news that one of its Alzheimer drug candidates, Lecanemab received better than expected results in a clinical trial. Lecanemab is a monoclonal antibody that targets amyloid. The drug works with the body’s immune system to clear amyloid protein from the brain.  

The stock moved about 10% higher after the drug received accelerated approval by the FDA in January. But BIIB stock didn’t hold those gains as some investors were concerned about the accelerated approval process. Currently, the Centers for Medicare and Medicaid Services (CMS) only cover the Lecanemab (which is marketed under the name Leqembi) to patients enrolled in clinical trials.  

The agency says that could change if the drug receives standard FDA approval. A decision is expected by July 6. At that time, BIIB stock could surpass analysts’ forecast for 7% stock price growth. And trading at just 14x earnings, Biogen is offering good value for risk-tolerant investors.  

Vertex Pharmaceuticals (VRTX)

 

Next on this list of biotech stocks to buy is Vertex Pharmaceuticals (NASDAQ:VRTX). The biotech giant is an undisputed leader in cystic fibrosis treatments. On April 26, 2023, the company received an expanded use authorization for Trikafta, its flagship cystic fibrosis drug. The drug can now be used for children with CF ages 2 through 5 provided they meet certain conditions.  

VRTX stock climbed about 10% higher on the news. But there could be even more catalysts coming for the stock in 2023. Vertex has a partnership with CRISPR Therapeutics (NASDAQ:CRSP) to develop treatments in the areas of gene therapy and gene editing.  

 The companies have been working on breakthrough treatments for sickle cell disease (SCD) and transfusion-dependent beta thalassemia (TDT) in addition to Type-1 Diabetes. In April, several key milestones were reached that are pushing the companies closer to getting priority review of the drugs. 

 VRTX stock is butting up against its consensus price target but recent analyst ratings give the stock significant upside.  

ImmunoGen (IMGN) 

ImmunoGen (NASDAQ:IMGN) was a mere penny stock until it received encouraging news on its Phase 3 trial for its antibody-drug conjugate (ADC) for treating platinum-resistant ovarian center. This type of ovarian cancer doesn’t respond to the current standard of care in chemotherapy which are platinum-based. Patients may respond favorably in the short term, but the cancer will recur. This is only the second ADC approved for cancer treatment and the first for ovarian cancer. 

Immediately after the report, IGMN stock surged and is up over 230% percent. The drug is currently being marketed under accelerated approval by the FDA. There is always the risk that the drug will not get approval.  

But the positive results make it more likely that the drug will receive approval by the FDA at some point. If that approval happens, the drug will likely be covered by Medicare and other health insurers. That would likely give IMGN stock an additional catalyst for stock price growth. 

On the date of publication, Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines. 

Chris Markoch is a freelance financial copywriter who has been covering the market for over five years. He has been writing for InvestorPlace since 2019.

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3 Analyst Downgrades That Smart Investors Won’t Ignore

I’d be the first to agree that Wall Street analysts are often wrong. Quite frequently, in fact, in the case of analyst downgrades, they focus excessively on minutiae, such as tiny “misses” (i.e., quarterly results that come in slightly below analysts’ average estimates) or a small decline in profit margins. And they often overlook or minimize huge opportunities that companies have, such as game-changing technologies or an ability to gain market share over the long term.

On the other hand, sometimes analysts uncover important information and/or make very good points.  For investors, it’s particularly important to pay attention to analyst downgrades of stocks they own or are thinking of buying. That’s because those downgrades can include important, new information that, in some cases, should cause investors to sell a stock or avoid buying a company’s shares.

Here are three analyst downgrades you should be aware of if you have a bullish position in the stocks below or you’re thinking of opening such a position.

SOFI SoFi Technologies $5.07
COIN Coinbase $60.26
XOM Exxon Mobil $105.77

SoFi Technologies (SOFI)

On May 2, investment bank Wedbush cut its rating on SoFi Technologies (NASDAQ:SOFI) to “neutral” from “outperform” in the wake of the lender’s first-quarter earnings report.

Wedbush noted that SoFi had only increased its guidance by a small amount even though its first-quarter results beat analysts’ estimates by a sizeable margin. Much more importantly, in my view, the firm warned that after SoFi had failed to unload any of its loans in Q1, the value of its loans could sink when it starts selling them again.

“We believe SOFI not selling loans in Q1 could imply that gain on sale margins aren’t trending at similar elevated levels to those generated last year or that the market for loans may have weakened,” Wedbush said.

In a May 5 column, I went much further, warning that SoFi’s “personal loan portfolio could be problematic and unattractive” given the fact that it had failed to sell any of these loans and some of its key customers are likely experiencing financial difficulties.

Coinbase (COIN)

Investment bank TD Cowen cut its rating on Coinbase (NASDAQ:COIN) stock to “underperform” from “neutral” on March 24 after the company announced that it had received a Wells notice from the Security and Exchange Commission.  The SEC uses Wells notices to inform companies that the agency’s staff has recommended that they be charged with a violation of the nation’s securities rules and/or laws.

Coinbase stated that the SEC’s staff has likely recommended that the agency file charges related to the company’s “core trading operations as well as an interest-bearing service, institutional trading solution, and custody business,” Barron’s reported.

TD Cowen warned that “multiple prongs of Coinbase’s business are increasingly under threat of potential SEC enforcement action.” Further, the bank thinks that the news could negatively impact the company’s business.

In a related, more recent note, investment bank Berenberg started coverage of COIN stock with a “neutral” rating, warning that the SEC would soon charge the cryptocurrency exchange platform with violations. The firm suggested that the agency would seek to force Coinbase to shut down key parts of its business, as it has done with other crypto exchanges in the past year. Berenberg set a $55 price target on the stock, which is almost 9% below where it currently trades.

Exxon Mobil (XOM)

Goldman Sachs downgraded Exxon Mobil (NYSE:XOM) to “neutral” from “buy” on valuation concerns on May 1, stating that the shares price “now appears to better reflect the structural turnaround in the business.”

The investment bank noted that, at the time, XOM was changing hands based on “a 7% free cash flow yield on 2024 estimates at $85/bbl Brent.”

Exxon’s share price was around $116 at the time. It has fallen 8.8% since then.

As I noted in a recent column, I’m bearish on oil stocks because, “I think that oil traders are finally noticing that electric-vehicle sales are soaring in the U.S., China, and the EU, while hydrogen could, in the not-too-distant future, become a viable alternative to oil-derived fuels for large trucks and planes. ”

As a result, I expect oil prices to remain well below $85 for the foreseeable future, making most oil stocks, including XOM, unattractive at this point.

On the date of publication, Larry Ramer held a short position in COIN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been PLUG, XOM and solar stocks. You can reach him on Stocktwits at @larryramer.

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Catalent stock sinks to 4 1/2-year low after revenue, income outlook

Shares of Catalent Inc.
CTLT,
+0.06%

sank 5.2% toward a 4 1/2-year low in premarket trading Friday, after the manufacturer of products used by drug makers and consumer health companies cut its full-year revenue outlook, citing operational challenges and higher costs. The company now expects 2023 revenue of $4.250 billion to $4.350 billion from $4.625 billion to $4.875 billion, which compares with the FactSet consensus of $4.427 billion. The company also cut its guidance range for net income excluding nonrecurring items, to $187 million to $228 million from $567 million to $648 million, while raising its guidance for capital expenditures (capex) to about $550 million from about 4500 million. Earlier Friday, the company disclosed that it had been notified by the New York Stock Exchange (NYSE) that it was not in compliance with listing standards, given the late filing of its audited quarterly results. The stock, which was on track to open at the lowest price seen during regular-session hours since January 2019, has tumbled 28.6% year to date while the S&P 500
SPX,
+0.94%

has gained 9.3%.

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