Chicago, IL – February 22, 2024 – Zacks Equity Research shares Tradeweb Markets TW as the Bull of the Day and Newmont Corporation NEM as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Alphabet Inc. GOOGL, Nvidia Corporation NVDA and International Business Machines Corporation IBM.
Here is a synopsis of all five stocks.
Tradeweb Markets, a Zacks Rank #1 (Strong Buy), is a global operator of electronic trading marketplaces. The stock recently eclipsed its former all-time high and has been benefitting from a resurgence in the financial sector. Shares have widely outperformed the market over the past year, and the trend looks set to continue in 2024. TW stock is displaying relative strength as buying pressure accumulates in this market leader.
The company is part of the Zacks Financial – Investment Bank industry group, which currently ranks in the top 12% out of more than 250 Zacks Ranked Industries. Because it is ranked in the top half of all Zacks Ranked Industries, we expect this group to outperform the market over the next 3 to 6 months.
Historical research studies suggest that approximately half of a stock’s price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1. It’s no secret that investing in stocks that are part of leading industry groups can give us a leg up relative to the market. By focusing on leading stocks within the top 50% of Zacks Ranked Industries, we can dramatically improve our stock-picking success.
Tradeweb Markets builds and operates global electronic marketplaces. These marketplaces facilitate trading in a range of asset classes including equities, rates, credit, and money markets. Tradeweb offers pre-trade and post-trade data and analytics, trade execution and processing, as well as reporting services.
The company also provides a range of electronic, voice, and hybrid platforms to dealers and financial institutions via the Dealerweb platform. In addition, Tradeweb offers trading solutions for financial advisory firms and traders with its Tradeweb Direct platform.
Serving institutional, wholesale, and retail clients, Tradeweb boasts a wide array of customers including asset managers, hedge funds, central banks, proprietary trading firms, insurance companies, and brokerage firms.
Tradeweb Markets has established an impressive earnings history, surpassing earnings estimates in each of the last four quarters. Earlier this month, the New York-based company reported fourth-quarter earnings of $0.64/share, a 1.59% surprise over the $0.63/share consensus estimate. Earnings improved 30.6% year-over-year, while revenues jumped 26.3% from the year-ago quarter.
The electronic marketplace facilitator has delivered a trailing four-quarter average earnings surprise of 1.4%. Consistently beating earnings estimates is a recipe for success.
Analysts covering TW are in agreement and have been raising their earnings estimates across the board. For the current quarter, analysts have bumped up earnings estimates by 6.35% in the past 60 days. The Q1 Zacks Consensus EPS Estimate now stands at $0.67/share, reflecting potential growth of 24.1% relative to the prior year. Revenues are projected to climb 19.9% to $394.8 million.
TW shares have advanced more than 42% over the last year. This is the kind of stock we want to include in our portfolio – one that is trending well and receiving positive earnings estimate revisions.
Notice how both the 50-day (blue line) and 200-day (red line) moving averages are sloping up. The stock has been making a series of 52-week highs and recently surpassed its former all-time high. With both strong fundamental and technical indicators, TW is poised to continue its outperformance.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. As we know, Tradeweb Markets has recently witnessed positive revisions. As long as this trend remains intact (and TW continues to deliver earnings beats), the stock will likely continue its bullish run this year.
The future looks bright for this highly-ranked, leading stock. The company has shown an ability to adapt to the ever-changing technological landscape, which puts it in a strong position moving forward.
Backed by a leading industry group and impressive history of earnings beats, it’s not difficult to see why TW stock is a compelling investment. An appealing technical trend along with robust fundamentals paint a bullish picture for Tradeweb Markets.
Newmont Corporation is engaged in the exploration and production of gold, copper, silver, zinc and lead. The company operates primarily in North America, South America, Australia, and Africa. Newmont is one of the world’s largest producers of gold with several active mines in Peru, Australia, Ghana, and Nevada.
Founded in 1916 and headquartered in Denver, Colorado, Newmont has over 30,000 employees and contractors worldwide and is a member of the S&P 500.
Newmont, a Zacks Rank #5 (Strong Sell), is a component of the Zacks Mining – Miscellaneous industry group. This industry ranks in the bottom 34% out of more than 250 Zacks Ranked Industries. As such, we expect this industry group as a whole to underperform the market over the next 3 to 6 months, just as it has so far this year.
Stocks in the bottom tiers of industries can often be potential candidates for short positions. While individual stocks have the ability to outperform even when they are part of a lackluster industry group, the inclusion in a weaker group serves as a headwind for any potential rallies and the journey forward is that much more difficult.
Despite a rebound in stocks with the Dow and S&P 500 hitting new all-time highs, NEM shares have not been participating lately. The stock has experienced considerable volatility over the past year.
Heading into today’s quarterly release, NEM had fallen short of earnings estimates in three of the prior four quarters. The company delivered a trailing four-quarter average earnings miss of -3.71%. Note that stocks can experience heightened volatility (in both directions) surrounding earnings announcements.
The company is grappling with higher production costs and a considerable rise in overall capital expenditures. Furthermore, a downward revision in gold production guidance last year along with various operational challenges have added to near-term uncertainty.
Newmont has been on the receiving end of negative earnings estimate revisions as of late. As we zoom out and look at fiscal 2024 as a whole, analysts have decreased EPS estimates by 11.69% in the past 60 days. The Zacks Consensus Estimate now stands at $2.19/share.
Falling earnings estimates are a huge red flag and need to be respected. A history of missing earnings estimates is the opposite of what the bulls want to see.
As illustrated below, NEM stock is in a sustained downtrend and has witnessed considerable volatility, all while the general market reaches new heights. Notice how both the 50-day and 200-day moving averages are sloping down signaled by the blue and red lines, respectively. The stock has made a series of lower lows over the past year.
NEM stock has also experienced what is known as a ‘death cross’, wherein the stock’s 50-day moving average crosses below its 200-day moving average. Newmont would have to make a surprising move to the upside and show increasing earnings estimate revisions to warrant taking any long positions. Shares have fallen more than 23% in the past year alone.
A deteriorating fundamental and technical backdrop show that this stock is not set to hit new highs anytime soon. The fact that NEM stock is included in one of the worst-performing industry groups provides yet another headwind to a long list of concerns. A history of earnings misses and falling future earnings estimates will likely serve as a ceiling to any potential rallies, nurturing the stock’s downtrend.
Highlighted underperformance bodes well for the bears. Potential investors may want to consider including this stock as part of a short or hedge strategy. Bulls will want to steer clear of NEM shares until the situation shows major signs of improvement.
Artificial intelligence (AI) has led to numerous technological progressions, making 2023 a breakout year for tech companies providing AI-related products and services. Yet, skeptics are concerned about the growth of AI in 2024 as it’s an expensive undertaking and requires chips that are presently in short supply.
However, market experts believe that the AI market will grow this year and beyond as it will successfully bridge the gap between humans and machines. AI is likely to lead to technological breakthroughs in handling various data, texts, videos and images.
AI is expected to increase cerebral aptitudes with tools including virtual aids, personalized references and language understanding. Many prominent financial firms also expect AI integration to boost labor productivity and economic growth in the coming years.
With AI poised to modernize business processes, and create a congenial business environment, its market is projected to reach $305.9 billion by the end of this year, and the United States will have the largest market size, per Statista.
In reality, the AI market is estimated to witness a compound annual growth rate of 15.83% from 2024 to 2030, and eventually touch a market volume of $730.8 by 2030, added Statista.
Thanks to the AI boom, not only the tech bigwigs but also a slew of tech companies gained traction in recent times. Bespoke Investment Group added that all 67 stocks related to AI listed on the S&P 500 Index have soared 45.3% on average since November 2022, whereas the remaining 433 non-AI stocks advanced only 9.2% in the same period.
What’s more, the AI-related group of stocks on the S&P 500 has gained an average of 3.7% year to date, more than non-AI stocks’ average gain of 1.1%.
Thus, banking on solid growth prospects in the field of AI, astute investors should keep an eye on AI-related industry-leading companies to reap handsome returns. Such players are Alphabet Inc., Nvidia Corporation and International Business Machines Corporation.
Alphabet has transformed from only a search engine player to a cloud-computing provider. But it’s the Google search engine that has utilized AI to guide users to improve spelling while making search-related queries. At the same time, Alphabet’s products, including Gmail and Google Cloud, incorporate AI functionalities to offer various services to clients.
Anyhow, Alphabet’s cloud division is playing a pivotal role in improving the company’s top line. The Zacks Consensus Estimate for its current-year earnings has moved up 1.7% over the past 60 days. GOOGL’s expected earnings growth rate for the current and next year is 16.6% and 14.9%, respectively.
Its estimated revenue growth rate for the current and next year is 11.7% and 11.1%, respectively. GOOGL currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.
Nvidia was involved in providing graphic processors to PC manufacturers, a less lucrative market, for quite some time. However, the graphics processing unit market boomed on increased demand for AI services. Notably, the curiosity in AI came in after the launch of Open AI’s ChatGPT.
Nvidia does have competition from Advanced Micro Devices, Inc., but its commitment to achieve cutting-edge technology, is keeping it way ahead of its competitors. The Zacks Consensus Estimate for its current-year earnings has moved up 0.4% over the past 60 days. NVDA’s expected earnings growth rate for the current and next year is 269.5% and 64.5%, respectively.
Its estimated revenue growth rate for the current and next year is 118.8% and 55.1%, respectively. NVDA currently has a Zacks Rank #2 (Buy).
International Business Machines is known for having created one of the most powerful AI systems, such as Watson, which is used for data analysis and various kinds of decision-making. IBM did confirm that the demand for their software and services improved recently as more customers are using AI systems.
The Zacks Consensus Estimate for its current-year earnings has moved up nearly 3% over the past 60 days. IBM’s expected earnings growth rate for the current and next year is 4.6% and 5.2%, respectively. Its estimated revenue growth rate for the current and next year is 3.1% and 4.4%, respectively. IBM currently has a Zacks Rank #2.
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