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Stocks making the biggest moves premarket: GME, LAZR, VORB

People wearing protective face masks walk past the closed Nike store on 5th Avenue, during the outbreak of the coronavirus disease (COVID-19), in New York City, May 11, 2020.

Mike Segar | Reuters

Check out the companies making headlines before the bell.

GameStop — The meme stock surged 44% after the company posted a quarterly profit for the first time in two years Tuesday. The video game retailer’s gross margin also rose from the year-earlier period.

Luminar Technologies — Shares dropped nearly 9.2% after being downgraded by Goldman Sachs to sell from neutral. The Wall Street firm cited margin risk and a premium valuation for the call.

Petco Health and Wellness — The stock fell by 7.8% in early morning trading after the company reported fourth-quarter earnings that missed Wall Street’s expectations. Petco posted a revenue of $1.58 billion, in line with expectations from analysts surveyed by StreetAccount. Petco also reported adjusted earnings per share of 23 cents, below a consensus estimate of 24 cents per share.

Virgin Orbit Holdings — Shares of billionaire Richard Branson’s rocket builder soared by nearly 73.3% after Reuters reported it is aiming to close a deal for a $200 million investment from Texas-based venture capital investor Matthew Brown via a private share placement. Virgin Orbit and Brown are aiming to close the deal on Friday, the report said. The company was bracing for a potential bankruptcy filing as soon as this week, CNBC reported on Monday.

Boeing — Shares of the airline declined by 1.3% on news that Boeing will take additional charges to its KC-46 tanker program due to a supplier quality issue with the center fuel tank, chief financial officer Brian West said Wednesday. Although the charges were not disclosed, West said Boeing’s margins at its defense business would be negative for the first quarter.

First Republic — Shares of the regional bank fell by 4.2% in premarket trading after jumping nearly 30% in Tuesday’s session. The stock has been extremely volatile in recent weeks as investors have reacted to the closure of Silicon Valley Bank.

Nike — Nike dipped about 1.1% before the bell even after it beat expectations for its fiscal third quarter on both the top and bottom lines. Sales in China fell short of analyst expectations, and the company continued working through its inventories, which weighed on margins.

— CNBC’s Samantha Subin, Jesse Pound, Alex Harring and Michelle Fox Theobald contributed reporting.

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GME Stock Alert: GameStop Soars 50% on Surprise Profits.

Source: Northfoto / Shutterstock.com

GameStop (NYSE:GME) stock soared 50% in early morning trading. It is now down to “just” 38% in the green but is still the top-trending stock on Yahoo Finance after the company surprised the Street by reporting a fourth-quarter profit last night, excluding certain items. But GME’s move into the black appeared primarily fueled by cost-cutting and inventory reductions. The firm’s revenue actually dropped slightly compared to the same period a year earlier.

As a result, the sustainability of the retailer’s profitability going forward is questionable.

Can Gamestop Keep Cutting Its Way to Profitability?

GME’s reported Q4 earnings per share of 16 cents, excluding certain items, representing the company’s first positive, adjusted EPS in two years.

But the company’s sales actually fell 1.2% YOY, so the change in the top line was obviously not a factor behind the firm’s surprise move into the black. Instead, the company’s surprise profit appears to have been caused by a reduction in the total amounts of its two key spending categories: cost of sales and Sales, General, and Administrative Expenses (SG&A).

GME’s cost of sales fell to $1.727 billion from $1.876 billion during the same period a year earlier. Meanwhile, its SG&A spending sank to $453.4 million from $539 million.

The cost of sales decline appears to have been caused primarily by a drop in the value of the company’s inventories. In contrast, the SG&A drop was likely triggered mainly by the massive layoffs that GME had undertaken recently.

But the company’s ability to keep liquidating inventory rapidly in the future is questionable, as video-game sales are generally not climbing a great deal while downloading video games is becoming much more popular than buying physical games.

And usually, companies can’t continuously keep laying off large numbers of their employees without causing their revenue to decline meaningfully.

The Implications of the Q4 Results for GME Investors

GameStop’s Q4 profit is good news for the owners of GME stock, and even after today’s rally by the shares, they have a reasonable forward price-sales ratio of 1.5. Still, with the company reducing its focus on e-commerce and the sales of physical video games plunging, it isn’t easy to see how GME can grow or remain profitable going forward.

On the date of publication, Larry Ramer did not hold (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.

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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3 EV Stocks to Buy for 100% Returns

Source: VadymG / Shutterstock

Tesla (NASDAQ:TSLA) stock was trading at $108 at the beginning of the year. In just over a month, TSLA stock delivered 100% returns. For fundamentally strong stories, the rally from oversold levels can be quick. This performance can be replicated in several EV stocks. Some EV stocks can surge by 100% in the next 6 to 12 months, if not in one month.

The global markets face multiple uncertainties in the form of banking sector challenges, inflation, and a potential recession. EV sales will likely be impacted on a relative basis. However, there are two important points to note. First, the deep correction in EV stocks has largely discounted the concerns.

Furthermore, EVs constituted only 15% of global passenger vehicle sales as of Q3 2022. There is ample headroom for penetration in the coming decade. It’s expected that by 2030, EVs will represent more than 60% of vehicles sold globally.

Therefore, it’s a good time to buy EV stocks for the medium and long term. Let’s discuss three EV stocks that look poised for a sharp reversal rally.

Solid Power (SLDP)

Solid Power (NASDAQ:SLDP) stock looks attractive among EV stocks for 100% returns quickly. The company is working towards the commercialization of solid-state batteries. Business developments have been positive, and I expect SLDP stock to surge higher.

Last month, Solid Power announced Q4 2022 results. The company’s electrolyte production facility is on track to be commissioned in Q1 2023. Further, the company expects to deliver EV cells to automotive partners during the year. A positive result from validation testing is a major stock upside catalyst.

Solid Power closed 2022 with total liquidity of $496 million. With Ford (NYSE:F) and BMW (OTCMKTS:BMWYY) being automotive partners, financial research and development is unlikely to be a concern.

It’s worth noting that the company has signed an agreement with BMW to license the cell design and manufacturing process. This will allow for parallel R&D activities. Overall, Solid Power seems to be the best bet in the solid-state battery segment, which has a promising future.

Polestar Automotive (PSNY)

Polestar Automotive (NASDAQ:PSNY) stock has been depressed, with a downside of almost 50% in the last six months. I believe the stock is undervalued and poised for a strong reversal rally.

A strong performance by Polestar backs this view. Last year, the company registered 80% year-on-year growth in vehicle deliveries to 51,491 vehicles. The company has also guided for 60% year-on-year growth in deliveries for the current year.

Vehicle deliveries will remain robust, with a product portfolio of three cars and a pipeline of another three through 2026. The aggressive geographical expansion will also contribute to growth. Polestar is already present in 27 markets globally.

From a financial perspective, Polestar reported a widening of EBITDA level losses in 2022. That was expected because the company is in an early-growth stage. With operating leverage, EBITDA losses are likely to narrow in 2023. Polestar ended 2022 with a cash buffer of $974 million. Financing growth through equity dilution or debt is unlikely to be a challenge.

Nio (NIO)

Nio (NYSE:NIO) stock has also disappointed investors in the last six months with a plunge of 60%. I see the downside capped with meaningful upside potential from current levels of $8. In my view, it would not be a surprise if NIO stock trades at $20 in the next 12 months.

Nio reported a 37.2% growth in revenue on a year-on-year basis for 2022. However, the vehicle margin contracted by 640 basis points to 13.7%. Vehicle deliveries and margins will likely remain subdued in 2023. For Q1 2023, Nio expects year-on-year delivery growth from 20.3% to 28.1%. However, this factor is discounted in the stock.

Regarding positives, Nio ended last year with cash and equivalents of $6.6 billion. The company has flexibility for investing in international expansion and product development. It’s worth noting that the company aims to launch five new models in 2023. Further, aggressive expansion in Europe is on the cards.

On the date of publication, Faisal Humayun did not hold (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.

Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modeling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.

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Why the LCID Stock Sell-Off Could Continue

Lately, a lack of news has been good news for investors in Lucid Group (NASDAQ:LCID) stock, which plunged during late February and early March. This was primarily because of the electric vehicle maker’s release of disappointing quarterly results and guidance.

However, since the middle of this month, LCID has found support, with the stock bouncing between $7 and $8 per share. To some, this may look like a worthwhile entry point. After all, the latest developments appear to be fully absorbed by the market. This leaves shares poised to rebound when more positive developments arrive, right?

Not so fast. Lucid’s sell-off may be far from over. There’s little sign that the next wave of news will be of the positive variety. In fact, Lucid’s next earnings release (less than two months from now) could end up sending the stock to prices substantially below present levels. Here’s how.

Be Wary of Calm Waters

When it comes to investor sentiment for early-stage EV stocks so far this year, one can say that it has been a bit of a rollercoaster ride. At the start of 2023, the market warmed back to Lucid Group, as well as to similar names such as Rivian Automotive (NASDAQ:RIVN).

LCID stock of course also received a short-lived lift from widely reported takeover rumors during this time. However, by mid-February, Wall Street’s renewed bullishness for EV contenders waned once again, quickly reverting to bearishness. With Lucid, this shift intensified upon the company’s aforementioned quarterly earnings release.

As I have discussed previously, Lucid not only fell short in terms of vehicle deliveries and 2023 production guidance. It also severely underwhelmed with its latest reservation figures, which signaled that this brand is facing difficulties building up a customer base.

After slipping further in the weeks following the Feb. 22 earnings report, the waters have calmed once again. Outside of some small-potatoes press releases touting the opening of new retail studios, there’s been little news out of the company. Another round of volatility may be just around the corner, so be wary.

The Next Big Event for Shares

As InvestorPlace’s Eddie Pan reported March 14, the next big event for Lucid Group is the company’s annual shareholder meeting on April 24. Yet the next event that stands to have a major impact on the LCID stock price is the May 9 quarterly earnings release.

Much like the recent earnings release, the primary focus will probably be on whether Lucid is living up to its current production guidance for this year (between 10,000 and 14,000 vehicles), but another factor may end up being top of mind as well.

That would be the company’s cash burn. In the past month, sell-side analysts have adjusted their estimates for net losses during the current quarter, raising this figure from 33 cents to 39 cents per share. Still, although bracing for additional heavy losses, the reporting of high cash burn once again may underscore Lucid’s need to once again raise additional cash through dilutive means.

You may recall how shares sank in December, after a $1.515 billion dilutive capital raise. The prospect of more dilution, alongside a lack of progress in production/deliveries, could spark another plunge.

Bottom Line

Admittedly, it is difficult to pinpoint how much further LCID could fall, if the company drops another round of downbeat updates on May 9. However, even a moderately lackluster earnings release may be enough to push the stock back down to its 52-week low ($6.09 per share).

Looking beyond just the next two months, the LCID sell-off may have plenty of runway. While tough to value this enterprise given its severe lack of profitability, the stock trades at more than three times book value.

Further erosion of confidence in the Lucid “story” could in time push shares closer to underlying book value, similar to the situation with Rivian, which today trades at a slight discount to book.

So, what’s the takeaway here? At high risk of experiencing continued big declines, sell/avoid LCID stock.

LCID stock earns a D rating in Portfolio Grader.

On the date of publication, Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.

The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.

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5 Undervalued Insurance Stocks with High Dividend Yields and Low Payout Ratios

Insurance stocks are among the more intriguing options in this market. Among the most stable and consistent long-term bets, insurance companies are highly sought after by those with long investing time horizons.

Insurance starts with a bet. A customer bets on a disaster that they’ll die, or their car will crash, or their business will be destroyed by a natural gas leak, as my late father’s TV repair business was in 1967. If disaster strikes, the customer “wins” and is made whole, up to the policy’s limits. (Dad’s shop re-opened soon after his loss.)

If nothing happens, the insurer keeps the customer’s money and offers to play again with new odds and a new price tag. The biggest disasters cause insurers to raise their rates, but by carefully managing risk, they ensure this doesn’t hit them too hard.

Insurance has been essential to business conduct since Lloyd’s of London was a coffee house, in the 17th century. Without a way to manage risk, significant risks can’t be taken. The bigger an insurer, the bigger the dangers it can take. But even the biggest insurers will off-load layers of risk to other companies through “reinsurance.” No insurance stock stands alone.

With that said, here are five top insurance stocks I think are worth diving into right now.

LNC	Lincoln National	$20.30
FAF	First American Financial	$51.39
ALL	Allstate	$105.11
RGA	Reinsurance Group of America	$121.97
UNH	UnitedHealth Group	$469.50

Lincoln National (LNC)

Source: Jonathan Weiss / Shutterstock.com

First on this list of insurance stocks is Lincoln National (NYSE:LNC), a life insurance company offering annuities and retirement planning. This business model allows Lincoln to keep more customers’ money longer than an insurer offering just term life policies.

If you’ve heard of the company, it’s likely due to their sponsorship of the Philadelphia Eagles stadium. The Eagles lost the Super Bowl. However, Lincoln Financial is also among the insurance stocks on a losing streak.

That’s because its business model makes it more dependent than other insurers on investment returns. In 2022 Lincoln’s returns were in the red, with the company losing $2.2 billion on revenue of $19 billion. Lincoln accelerated its move downward, taking one-time accounting charges that sank the stock after it released its third-quarter report.

But this was unusual, and Lincoln has maintained its 45-cent per share dividend. This yields over 6.5% to current shareholders.

While Lincoln stock is down 20% over the last three months and 14% in the previous five years, intelligent hedge funds are now buying it. They know a better market will mean positive earnings and a rising stock price, making today’s dividend even more valuable. Lincoln’s market cap is currently less than one-fifth of its annual revenue.

This is a long-term play. You buy it on weakness, like now, and let the dividends keep you warm until the market figures out that a large insurer can’t lose forever.

First American Financial (FAF)

Source: tokar / Shutterstock

First American Financial (NYSE:FAF) is in the real estate insurance business. It offers title insurance, handles appraisals of real estate and transaction documents, and conducts inspections. In the most recent quarter, the company earned $54 million, or 52 cents per share, on revenue of $1.7 billion. The company also lost $114 million on its investments.

Over the last year, shares are down almost 19%, bringing the company’s 52 cent per share dividend yield up to 3.8%. All this is in line with the rest of the industry.

First Americans’ recent fall is due to real estate affordability. Rising interest rates aren’t just about buyers paying more. It also means sellers are often giving up low-interest loans. There are fewer transactions, thus less demand for FAF services. Private equity buyers also use cash, which further cuts FAF’s need. Revenue last year fell nearly 20% from 2021, and net income by almost 80%. Operating cash flow, however, fell only 40% to $780 million. The company’s cash on hand remained stable, at a little over $1.2 billion.

While some hedge funds have sold out of FAF stock, and some analysts have abandoned ship, Keefe, Bruyette & Wood continue to believe in it. Management also believes in its model, deciding to keep its 52 cent payout, despite declining earnings.

Allstate (ALL)

Source: Jonathan Weiss / Shutterstock.com

You know about Allstate (NYSE:ALL) because it’s in the consumer property and casualty business. The company sells car and homeowners’ policies, competing against such companies as Berkshire’s GEICO and Progressive (NYSE:PGR). Before the recent bank bailout panic, its stock was up for the year. It’s still running ahead of the S&P 500.

That said, during 2022, the company lost $1.4 billion, or $5.22 per share, on revenue of over $51 billion. Revenue rose 10%, but its losses were higher, too. For every $1 from premiums, 95 cents went out to customers. The previous year’s “combined loss ratio,” as the company calls it, was 86. Like the rest of the industry, Allstate also had less investment income. Despite these factors, the company hiked its dividend to 89 cents per share, translating to a yield of 2.9%.

Allstate was doing fine until rising car repair and medical costs skyrocketed losses. Its statutory surplus fell by over $6 billion to $12.2 billion. That means it may remain a bargain stock. The company is pausing stock buybacks.

Management doesn’t expect its bad luck to continue. Just to make sure it’s raising rates, especially on reinsurance lines that don’t kick in until losses have already become extreme. Those are up by 45-50%. Allstate management says that this year it’s focused first on profits, and less on growth.

Reinsurance Group of America (RGA)

Source: Shutterstock

In reinsurance, you’re not taking the first dollar of loss or selling a policy. You only pay out if someone suffers an extreme loss.

No insurer wants to take a billion-dollar hit, so risks like that are layered, with several companies often covering a $100 million loss. You may never have heard of Reinsurance Group of America (NYSE:RGA). Its name is only essential to your insurance company.

RGA stock has appreciated over the last year by 32%. This was an unusual year. During the previous five years, shares are down by nearly 20%. RGA was part of the “rush to safety” by many portfolio managers after years spent chasing growth. As with most other insurance stocks, you’re buying RGA mainly for its dividend, which was recently raised to 80 cents per share. Back in 2018, it was just 50 cents.

For all of 2022, RGA reported a net income of $623 million, or $9.31 per share, on revenue of $15.9 billion. A look at its earnings release shows how all the moving parts fit together. The company made up its loss in the U.S. with profits from Canada, for instance. Some currency headwinds should abate this year. That’s why the dividend went up, and Citigroup (NYSE:C) recently upgraded the stock.

UnitedHealth Group (UNH)

The UnitedHealth (UNH) headquarters in Minnetonka, Minnesota.

Source: Ken Wolter / Shutterstock.com

Rounding out this list of insurance stocks is UnitedHealth Group (NYSE:UNH). Indeed, UnitedHealth may be one of the best companies I don’t have in my retirement portfolio. But I have been a fan for years.

United dominates the health insurance space, evolving from a pure insurance model to a managed care model.

With insurance, you are betting on health and paying for losses. In managed care, you’re assuming costs and working to minimize them. That’s why checkups and cheap generic drugs are now part of many policies. If a managed care company can handle your chronic conditions and keep you out of the hospital, that’s a win.

United does this because it was an early technology user through its Optum unit. It has its own “pharmacy benefit manager,” which helps it limit drug costs. It gets a considerable share of the highly profitable Medicare Advantage business through its links to AARP, the elderly lobby.

Last year, United reported earnings of $20 billion, or $22.19 per share, on revenue of $324 billion. Earnings were up 16%, and revenue was up about 12.5%. The dividend of $1.65 per share yields only 1.4% to current shareholders. If that seems modest, the stock’s value has doubled over the last five years, even though it’s down 12% in 2023.

This is the miracle of the insurance business. You can always find new ways to make money, even if you gradually tweak the business model to meet the market’s needs.

On the date of publication, Dana Blankenhorn held a long position in AAPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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Index Funds vs Mutual Funds vs ETF (WHICH ONE IS THE BEST?!)

Top Wall Street analysts like stocks like BJ’s & CrowdStrike

A line of shoppers wait to enter BJ’s Wholesale Club market at the Palisades Center shopping mall during the coronavirus outbreak in West Nyack, New York, March 14, 2020.

Mike Segar | Reuters

Concerns about a bank crisis have added to the woes of investors, who were already burdened with stubbornly high inflation and fears of an economic slowdown.

Given the ongoing uncertainty, turning to stock market experts to pick attractive stocks for the long term could be a good decision.

Here are five compelling stocks chosen by Wall Street’s top analysts, according to TipRanks, a platform that ranks analysts based on their track records.

Allegro MicroSystems

Allegro Microsystems (ALGM) develops sensing and power semiconductor solutions for motion control and energy-efficient systems. On Tuesday, the company held its inaugural analyst day to provide insights into its strategy and technology.

Needham analyst Quinn Bolton noted that at the event, management focused on the rapidly growing opportunities across two “secular megatrends” – electrification (mainly e-mobility) and industrial automation. Allegro expects to flourish in these two key markets and to deliver low-double-digit percentage revenue growth from fiscal 2023 to 2028.

Bolton thinks that his margin estimates for fiscal 2024 and 2025 seem conservative, given Allegro’s new long-term model that targets a gross margin of more than 58% and an operating margin of over 32%. He highlighted that the company’s e-mobility serviceable available market is expected to grow at a 25% compound annual growth rate to $3.9 billion by fiscal 2028.

“ALGM’s portfolio is aligned with the industrial secular growth trends in clean energy and automation,” said Bolton. Allegro expects its clean energy and automation SAM to grow at an 18% CAGR to $3.5 billion by fiscal 2028. (See Allegro Insider Trading Activity on TipRanks)

Impressed by Allegro’s growth prospects, Bolton raised his price target to $50 from $42 and reaffirmed a buy rating. Remarkably, Bolton ranks 2^nd out of more than 8,000 analysts followed on TipRanks. His ratings have been profitable 67% of the time, generating a 36.3% average return.

CrowdStrike

Recent results of several cybersecurity companies, including CrowdStrike (CRWD), have reflected resilient demand. Enterprises are moderating their IT spending due to macro pressures but continue to allocate decent budgets to cybersecurity due to growing cyber attacks.

CrowdStrike’s adjusted earnings per share for the fourth quarter of fiscal 2023 (ended Jan. 31) increased 57%, fueled by revenue growth of 48%. At the end of the fiscal fourth quarter, the company’s annual recurring revenue stood at $2.56 billion, reflecting 48% year-over-year growth.

TD Cowen analyst Shaul Eyal attributed CrowdStrike’s upbeat performance to solid execution and robust demand for the company’s Falcon platform. Eyal added that the company is collaborating with Dell to deliver its Falcon platform to Dell’s customers through various avenues.

“We believe CRWD is positioned to achieve its goals of generating ending ARR of $5B by the end of FY26 and of reaching its target operating model in FY25,” said Eyal. He reiterated a buy rating on CrowdStrike with a price target of $180.

Eyal is ranked No. 14 among more than 8,000 analysts tracked on TipRanks. His ratings have been profitable 66% of the time, with each rating delivering a return of 23.7%, on average. (See CrowdStrike Stock Chart on TipRanks)

Oracle

Next on our list is enterprise software giant Oracle (ORCL), which delivered mixed results for the third quarter of fiscal 2023 (ended February 28, 2023). The company’s adjusted EPS grew 8% and came ahead of Wall Street’s expectations, while revenue growth of 18% fell short of estimates.

Nonetheless, Oracle is optimistic about the solid potential of its cloud business, which delivered 45% revenue growth in the fiscal third quarter. Further, management stated that Cerner, a healthcare technology company acquired in June 2022, has increased its healthcare contract base by about $5 billion.

Monness, Crespi, Hardt, & Co. analyst Brian White said Oracle delivered “respectable 3Q:FY23 results in a treacherous environment.” He contends that the company’s cloud business continues to navigate ongoing challenges better than the leading public cloud vendors, who reported notable deceleration in revenue growth.

White cautioned investors that the “darkest days” of the economic downturn are ahead of us. That said, he reiterated a buy rating on Oracle with a price target of $113, saying, “Oracle represents a high-quality, value play with the opportunity to participate in a compelling cloud transformation and gain exposure to digital modernization initiatives in the healthcare industry.”

White holds the 50^th position among more than 8,000 analysts on TipRanks. Additionally, 64% of his ratings have been profitable, with an average return of 18%. (See Oracle Blogger Opinions & Sentiment on TipRanks)

BJ’s Wholesale Club

Warehouse club chain BJ’s Wholesale Club (BJ) continues to perform well even as the macro backdrop is getting tougher and pandemic-induced tailwinds have faded. The company recently held its fourth-quarter earnings call and first-ever investor day.

Baird analyst Peter Benedict, who ranks 129^th on TipRanks, noted that the company’s membership base is “stronger than ever.” Membership fee income grew 10% in fiscal 2022 (ended January 28, 2023), driven by a 7% increase in members to 6.8 million, a rise in higher-tier penetration and solid renewal rates. It’s worth noting that BJ’s hit its all-time-high tenured renewal rate of 90% for the year.

“With a structurally advantaged business model, growing/increasingly loyal membership base and emerging unit growth runway, BJ has the fundamental building blocks of a compelling long-duration consumer staple growth story,” explained Benedict. (See BJ’s Wholesale Financial Statements on TipRanks)

Benedict increased the price target for BJ stock to $90 from $85 and reiterated a buy rating based on multiple strengths, including a solid balance sheet, free cash flow generation and efforts to enhance assortment. His ratings have been profitable 64% of the time, with an average return of 13.4%.

Stryker

Medical devices giant Stryker (SYK) has built a solid business over the years through strategic acquisitions and continued innovation in its medical and surgical, neurotechnology, and orthopaedics and spine divisions.

BTIG analyst Ryan Zimmerman recently hosted a fireside chat with Spencer Stiles, group president of Stryker Orthopaedics and Spine business and Jason Beach, vice president of investor relations. He highlighted that orthopedics procedure volumes are benefiting from a backlog that is projected to last about four to six quarters, as patients who postponed care previously are returning.

Zimmerman thinks that “SYK retains its growth leadership position in orthopedics even as competitive robotic systems iterate.” He expects Stryker’s new Mako Knee 2.0 software, the Insignia Hip launch and upcoming robotic launches in shoulder and spine in fiscal 2024 could “support a long and robust growth cycle.”

Zimmerman reiterated a buy rating on Stryker with a price target of $281. The analyst ranks 657 out of more than 8,300 analysts on TipRanks, with a success rate of 45%. Each of his ratings has delivered an average return of 8.9%. (See Stryker Hedge Fund Trading Activity on TipRanks)

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Fed likely to raise rates by a quarter point but it must also reassure markets on banking system

BlackRock's Rick Rieder: I think the terminal funds rate is 5.25%, 5.5%

The Federal Reserve is expected to raise interest rates Wednesday by a quarter point, but it also faces the tough task of reassuring markets it can stem a worse banking crisis.

Economists mostly expect the Fed will increase its fed funds target rate range to 4.75% to 5% on Wednesday afternoon, though some expect the central bank could pause its hiking due to concerns about the banking system. Futures markets were pricing in a roughly 80% chance for a rate rise, as of Tuesday morning.

The central bank is contemplating using its interest rate tools at the same time it is trying to soothe markets and stop further bank runs. The fear is that rising rates could put further pressure on banking institutions and crimp lending further, hurting small businesses and other borrowers.

“The broader macro data shows some further tightening is warranted,” said Michael Gapen, chief U.S. economist at Bank of America. He said the Fed will have to explain its double-barreled policy. “You have to show you can walk and chew gum at the same time, using your lender-of-last-resort powers to quell any fears about deposit flights at medium-sized banks.”

U.S. Federal Reserve Chair Jerome Powell addresses reporters after the Fed raised its target interest rate by a quarter of a percentage point, during a news conference at the Federal Reserve Building in Washington, February 1, 2023.

Jonathan Ernst | Reuters

Federal regulators stepped in to guarantee deposits at the failed Silicon Valley Bank and Signature Bank, and they provided more favorable loans to banks for a period of up to one year. The Fed joined with other global central banks Sunday to enhance liquidity through the standing dollar swap system, after UBS agreed to buy the embattled Credit Suisse.

Investors will be looking for assurances from Fed Chairman Jerome Powell that the central bank can contain the banking problems.

“We want to know it’s really about a few idiosyncratic institutions and not a more pervasive problem with respect to the regional bank model,” said Gapen. “In these moments, the market needs to know you feel you understand the problem and that you’re willing and capable of doing something about it. … I think they are exceptionally good at understanding where the pressure is that’s driving it and how to respond.”

A month of turmoil

Markets have been whipsawed in the last month, first by a hawkish-sounding Fed and then by fears of contagion in the banking system.

Fed officials begin their two-day meeting Tuesday. The event kicks off just two weeks after Powell warned a congressional committee that the Fed may have to hike rates even more than expected because of its battle with inflation.

Those comments sent interest rates soaring. A few days later, the sudden collapse of Silicon Valley Bank stunned markets, sending bond yields dramatically lower. Bond yields move opposite price. Expectations for Fed rate hikes also moved dramatically: What was expected to be a half-point hike two weeks ago is now up for debate at a quarter point or even zero.

The 2-year Treasury yield is most sensitive to Fed policy.

Messaging is the key

Gapen expects Powell to explain that the Fed is fighting inflation through its rate hikes but then also assure markets that the central bank can use other tools to preserve financial stability.

“Things going forward will be done on a meeting-by-meeting basis. It will be data dependent,” Gapen said. “We’ll have to see how the economy evolves. … We’ll have to see how financial markets behave, how the economy responds.”

The Fed is scheduled to release its rate decision along with its new economic projections at 2 p.m. ET Wednesday. Powell will speak at 2:30 p.m. ET.

The issue is they can change their forecast up to Tuesday, but how does anyone know?

Diane Swonk

Chief economist at KPMG

Gapen expects the Fed’s forecasts could show it expects a higher terminal rate, or end point for rate hikes, than it did in December. He said it could rise to about a level of 5.4% for 2023, from an earlier projection of 5.1%.

Jimmy Chang, chief investment officer at Rockefeller Global Family Office, said he expects the Fed to raise interest rates by a quarter point to instill confidence, but then signal it is finished with rate hikes.

“I wouldn’t be surprised if we get a rally because historically whenever the Fed stops hiking, going to that pause mode, the initial knee-jerk reaction from the stock market is a rally,” he said.

He said the Fed will not likely say it is going to pause, but its messaging could be interpreted that way.

“Now, at the minimum, they want to maintain this air of stability or of confidence,” Chang said. “I don’t think they’ll do anything that could potentially roil the market. … Depending on their [projections], I think the market will think this is the final hike.”

Fed guidance could be up in the air

Diane Swonk, chief economist at KPMG, said she expects the Fed is likely to pause its rate hiking because of economic uncertainty, and the fact that the contraction in bank lending will be equivalent to a tightening of Fed policy.

She also does not expect any guidance on future hikes for now, and Powell could stress the Fed is watching developments and the economic data.

“I don’t think he can commit. I think he has to keep all options on the table and say we’ll do whatever is necessary to promote price stability and financial stability,” Swonk said. “We do have some sticky inflation. There are signs the economy is weakening.”

Fed needs to 'call a timeout' and stop hiking rates, says Bleakley's Peter Boockvar

She also expects it will be difficult for the Fed to present its quarterly economic forecasts, because the problems facing the banks have created so much uncertainty. As it did during the Covid pandemic in March 2020, the Fed might temporarily suspend projections, Swonk said.

“I think it’s an important thing to take into account that this is shifting the forecast in unknown ways. You don’t want to overpromise one way or the other,” she said. Swonk also expects the Fed to withhold its so-called dot plot, the chart on which it shows anonymous forecasts from Fed officials on the path for interest rates.

“The issue is they can change their forecast up to Tuesday, but how does anyone know? You want the Fed to look unified. You don’t want dissent,” said Swonk. “Literally, these dot plots could be changing by the day. Two weeks ago, we had a Fed chairman ready to go 50 basis points.”

The impact of tighter financial conditions

The tightening of financial conditions alone could have the clout of a 1.5 percentage point hike in rates by the Fed, and that could result in the central bank cutting rates later this year, depending on the economy, Swonk said. The futures market is currently forecasting much more aggressive rate cutting than economists are, with a full percentage point — or four quarter-point cuts — for this year alone.

“If they hike and say they will pause, the market might actually be okay with that. If they do nothing, maybe the market gets nervous that after two weeks of uncertainty the Fed’s backing off their inflation fight,” said Peter Boockvar, chief investment officer at Bleakley Financial Group. “Either way we still have a bumpy road ahead of us.”

Stock picks and investing trends from CNBC Pro:

The Fed could also make a surprise move by stopping the runoff of securities from its balance sheet. As Treasurys and mortgages mature, the Fed no longer replaces them as it did during and after the pandemic to provide liquidity to financial markets. Gapen said changing the balance sheet runoff would be unexpected. During January and February, he said about $160 billion rolled off the balance sheet.

But the balance sheet recently increased again.

“The balance sheet went up by about $300 billion, but I think the good news there is most of that went to institutions that are already known,” he said.

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Why Are Cannabis Stocks TLRY, SNDL, OGI and ACB Up Today?

With America Turning Green Things Only Can Get Better for Aurora Stock

Source: Shutterstock

It has been a while since we’ve talked about cannabis stocks, but they’re popping up on investors’ radars on Tuesday. This group rallied rather nicely on the day.

More specifically, Tilray (NASDAQ:TLRY) stock closed up 7% today. Meanwhile, Aurora Cannabis (NASDAQ:ACB) closed up 9%, SNDL (NASDAQ:SNDL) up 8% and Canopy Growth (NASDAQ:CGC) up about 6% on Tuesday. Finally, Organigram (NASDAQ:OGI) closed up by 9%. These stocks are trending on hopes that Congress can give the cannabis group another lift.

That’s as Republican Senator Steve Daines, who is co-sponsor of a marijuana banking bill, “urged a group of bankers on Tuesday to lobby for the passage of cannabis banking reforms at Capitol Hill.”

The Secure and Fair Enforcement Banking Act — or SAFE Banking Act– would allow the marijuana industry to use the U.S. financial system. Currently, many of these companies struggle with banking options, given that marijuana is legal in many states but not legal on the federal level. The bill has already passed the House six times with bipartisan support. However, it has not made it through the Senate.

Daines had the following to say, per Seeking Alpha:

“I think with each passing year, there’s a greater number of people who understand that the problem—forcing businesses to operate in all cash—is only getting worse.”

Will It Matter for Cannabis Stocks?

It’s hard to get too bullish on cannabis stocks at this very moment. That’s particularly true due to this catalyst.

As previously mentioned, there seems to be little issue getting the bill through the House. However, the Senate has been a different story. While the Senate has seen a bit of a shakeup, the fact that this bill has failed so many times creates some hesitation about getting too bullish on it passing. And that’s combined with the fact these stocks have been real duds lately.

All of the cannabis stocks listed above have hit new 52-week lows in the last week. Some, like CGC and ACB, hit those lows just yesterday. Clearly, momentum is not on the bulls’ side at the moment.

While some investors are optimistic the bear market is coming to an end, a lot of mixed signals remain. As it relates to cannabis stocks, investors clearly aren’t feeling the “speculative bug” just yet.

Still, if progress is made with the SAFE Banking Act, that will at least give cannabis stocks one positive catalyst to work with.

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On the date of publication, Bret Kenwell did not hold (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.

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3 Stocks to Buy In Case a Major Recession Doesn’t Materialize

There are plenty of reasons why investors believe a major recession could be on the horizon. Sticky and persistent inflation has continued to put pressure on low- and middle-income workers. The impressive rate-hiking cycles by the Federal Reserve and other global central banks have attempted to tamp down economic activity to constrain rising prices. These moves, while not explicitly intended to cause a major recession, may do just that. And that’s not taking into consideration any of the myriad other concerns, from ongoing geopolitical conflicts to potential supply gluts in certain sectors.

In short, the current macroeconomic environment is risky. Yet, if central banks do what they’ve traditionally done, and inject liquidity into the markets at the first sign of strain, perhaps we can avoid a major recession.

If that’s the case, below are three stocks to buy or at least consider putting on your watch list. Each has the potential to rocket higher if a major recession doesn’t materialize.

COIN	Coinbase	$83.99
SHOP	Shopify	$45.74
ZM	Zoom Video	$71.85

Coinbase (COIN)

A well-known crypto exchange, Coinbase (NASDAQ:COIN) enables users to purchase and trade cryptocurrencies. Some investors view digital assets as a recession hedge, and after a brutal 2022, COIN is up 137% so far this year.

Much of this gain has to do with the rise in the value of prominent cryptocurrencies. Coinbase’s business model is rather simple. The company earns the lion’s share of its revenue via transaction fees. Thus, when trading volumes surge, it’s good news for Coinbase.

The company’s recent financial results show what happens when liquidity starts to dry up in the crypto market. The company reported a loss of $2.46 per share for the final quarter of 2022. Although this was less than Wall Street’s forecast of -$2.55 per share, it was still significant. Moreover, while revenue of $629 million also came in above expectations, it represented a decrease of about 75% year over year.

That said, if the Fed can coordinate some sort of soft landing, or simply cut rates, Coinbase should be a key beneficiary.

Shopify (SHOP)

If a major recession is on the horizon, Shopify (NYSE:SHOP) is one stock investors may want to avoid. This company, which has disrupted the e-commerce market by providing solutions for small- and medium-sized businesses to set up online shops, is tied closely to domestic and global economic growth. If businesses stop setting up shops, or turn to other players such as Amazon (NASDAQ:AMZN) to handle their logistics, Shopify’s growth trajectory could be called into question.

Of course, we all saw how impressive Shopify’s growth was in the pandemic environment. Considering its robust sales growth trajectory over this period, many viewed the stock as the “next Amazon.” Investors were mistaken, though, to believe Shopify’s pandemic growth levels were sustainable.

That said, if we can avoid a major recession, Shopify is a company I think is poised for much better year-over-year growth comparisons.

Zoom Video (ZM)

Over the past 18 months, Zoom Video (NASDAQ:ZM) has experienced a number of considerable setbacks. Initially prospering during the pandemic, the business garnered notoriety as one of the biggest winners of the shift to remote work.

Of course, like many pandemic winners, ZM stock has since plunged, losing nearly 90% from its peak of $588.84 in October 2020, due to rising competition and changing macroeconomic conditions.

Like the other names on this list, too much growth was factored in. The idea that pandemic-related tailwinds could continue was wishful thinking.

However, if monetary policy becomes more accommodative and we get another run in higher-risk equities, Zoom is a stock that could really take off. Right now, this is one company that’s high on my watch list.

On the date of publication, Chris MacDonald 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 MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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