JP Morgan top picks
At JPMorgan, analysts are focusing on what they believe to be significant undervalued global companies. They anticipate profits growth to reach double-digit levels for the first time since 2017.
“Those SMid-Cap stocks most largely owned by passive funds are delivering tremendous alpha!” the analysts wrote in a research note published Sept. 3, referring to the ability of small- to mid-sized companies to outperform the broader market. When a fund buys a stock for the long term, this is referred to as passive investing.
“While we acknowledge these potential short-term ‘waves,’ and wouldn’t be surprised if SMid-Caps gave up some ground in October, we continue to believe the underlying ‘tide’ is still very positive and should serve as a tailwind for SMid investors through at least the first half of next year,” the analysts led by Eduardo Lecubarri stated.
Stock prices for small- to medium-sized businesses are less expensive than other types of assets, according to the analysts. “Nominal GDP growth is expected to remain strong, assisting corporate margins to recover and pushing earnings growth into double digits for the first time in four years… a scenario that should eat into valuation multiples, giving SMid-Caps a low valuation in comparison to most other asset classes,” the analysts wrote.
Best selections
Analysts in the United Kingdom are bullish on energy firm Centrica, saying it is “down big + cheap despite many [positive] drivers.” They also chose packaging firm DS Smith, citing a “significant decline” from a 2018 high and a “solid growth trajectory.”
DCC, an Irish oil refiner, is also on JPMorgan’s list, with analysts stating that it is “still down double digits + trading at discount to the broad SMid mkt despite resilient business.” It also chose auto wholesaler Inchcape for its “good” free cashflow yield — a performance indicator — and stated that it expects car sales to increase as the economy recovers.
Acerinox, a Spanish steel company, has the “strongest” balance sheet in recent history, according to analysts, who also like its post-pandemic recovery plans in the United States. Maisons du Monde, a French furniture firm, is another overweight pick, trading at a “significant discount,” according to the bank.
Other stocks it is overweight on include French auto parts company Plastic Omnium, which it describes as a “quality play” with a strong balance sheet, and Switzerland-based IT firm SoftwareOne, whose stock is trading at a discount to industry average valuations, according to the bank.
In Asia, it chose Media Nusantara, an Indonesian TV company with a “undemanding” valuation and a very solid balance sheet. JPMorgan also chose Taiwanese battery manufacturer Simplo Tech, which it described as having “attractive business growth areas such as e-bikes.”
Lucid Motors could compete with Tesla
Citi began coverage of Lucid with a “buy” and a $28 price target, setting the share price as high as possible. Based on Thursday’s closing of $19.85, the target price is $31.
Until now, Lucid has been the only automaker capable of challenging Tesla’s position as the market leader in all-electric vehicles, according to Citi analyst Itay Michaeli.
Lucid’s vertical integration and electric car technological capabilities are similar to those shown by Tesla in the early stages of the company’s development, according to Citi. Citi liked Lucid’s lower 2030 volume and autonomous car plan in comparison to Tesla’s aggressive objectives and strategy.
According to Mike, we don’t look at Lucid as the next Tesla, but rather as an EV platform that has similarities with other EV manufacturers but without some of the risk associated with Lucid’s ambitious 2022 share price projections.
“the aggressive stance with regards to providing the electric car technology to original equipment manufacturers and non-auto companies” has been underlined by Citi as a defining factor for Lucid.
The business thinks Lucid’s technological competence, history of development, success, brand strength, and the speed at which the company was able to launch a new car all bode well for the company in the rapidly growing electric vehicle industry.
To be sure, Citigroup said that Tesla’s rise during hard times is almost impossible to mimic. Lucid received a rating of ‘high risk’ as a consequence.
Lucid Air, premium car, and brand identity and autonomous vehicle technology are all future catalysts for the stock.
Peter Rawlinson was formerly an engineering executive at Tesla Motors, and a former automotive veteran.
After they merged with a special purpose acquisition business, the electric car manufacturer started trading publicly in July.
According to a Wall Street Journal article in July prior to Lucid Motors’ launch, Saudi Arabia’s sovereign fund controls over 60% of the business.
This year, shares of Lucid have increased by more than 98 percent.
The market scenario according to Bank of America
This is the first negative return predicted by the model of long-term returns since the tech bubble in 1999, wrote Savita Subramanian, the firm’s head of U.S. equity and quantitative strategy, in a note on Wednesday.
The S&P 500 is now trading at 29 times normalized earnings, having more than doubled since the pandemic low in March 2020. That is 51% higher than the average forward normalized P/E since 1987.
According to the bank’s calculations, the S&P 500 will lose money over the next ten years at these valuation levels. The bank demonstrates that, while the valuation model is not very predictive over shorter time periods, it is quite predictive over 10-year and longer time periods.
According to the note, “value is almost all that matters for long-term stock returns.”
The bank demonstrates that the valuation model correctly predicted negative returns ten years after the 1999 bubble period, and we are now at a similar valuation point.
The valuation model is one of five inputs used by Bank of America to forecast its S&P 500 targets, and it is one of the reasons Subramanian announced a meager 2022 target of 4600, or about a 2% gain from here.
She wrote, “Valuations leave no room for error.” “This could go on for a long time. But when it comes to an end, it could end badly.”
Crypto to buy now
Solana is on a roll right now. According to CoinGecko data, the token reached an all-time high of more than $210 on Thursday morning, making it the sixth-largest digital currency with a market value of more than $60 billion.
It was last trading at $211.68 and has risen by a whopping 300 percent in the last month alone.
What exactly is solana?
Solana is a relatively unknown cryptocurrency. But it’s gotten a lot of attention recently, with Andreessen Horowitz investing more than $300 million in the start-up that created it in a token sale in June.
Polychain Capital, a venture capital firm founded by former Coinbase employee Olaf Carlson-Wee, and Alameda Research, a quantitative trading firm led by well-known crypto entrepreneur Sam Bankman-Fried, are also investors in the cryptocurrency platform.
Solana is one of several digital currencies vying to overtake ethereum, the world’s second-largest coin.
‘Ethereum assassins’
The technological foundations of Ethereum are similar to those of bitcoin. However, one significant distinction between the two is that developers can build applications on top of the Ethereum network.
As a result, an entire industry based on the Ethereum blockchain has emerged, known as decentralized finance, or DeFi. NFTs, a popular type of token used to represent ownership of a rare digital item, are just one of the many applications powered by Ethereum.
Other blockchains, however, are emerging. Cardano, for example, claims to be a more efficient and faster alternative to Ethereum. The platform is preparing for a major update this month, which supporters claim will allow it to compete more effectively with Ethereum.
This has aided Cardano’s ada token’s rise to third place in the market value rankings of the top digital currencies.
So, what is Solana’s pitch?
One criticism leveled at Ethereum is that it is not scalable, causing the network to struggle during large spikes in traffic.
The Solana platform is expected to be much faster and less expensive than Ethereum. It claims to support more than 1,000 transactions per second, with a transaction fee of $0.00025 on average.
