Quant Ratings Updated on 73 Stocks Dear Reader, As we head toward the final weekend of August, everybody is scrambling to have one last bit of summer fun. That’s the case on Wall Street, too. In fact, I was recently in Manhattan, and it was pretty quiet. That’s because they’re all on vacation. Nevertheless, there are a couple of events on the docket for this week that should be fairly bullish for stocks. I’m talking about the July Personal Consumption Expenditures (PCE) announcement and the latest earnings results from NVIDIA Corporation (NVDA). So, in today’s Market 360, I want to explain why I think these two events will create a very positive week on Wall Street. I’ll also tell you how you can best position your portfolio to profit for the rest of the year. The July Personal Consumption Expenditures Index On Friday, we should get further confirmation that the inflation fight is over. That’s when the Commerce Department releases the Federal Reserve’s favorite inflation indicator, the Personal Consumption Expenditures (PCE) index. Economists are expecting a 0.2% monthly gain for the PCE in July. That compares to a 0% gain in May and 0.1% in June. Currently, economist Ian Shepherdson estimates the PCE will come in at 0.13%. This would mean that the PCE in the past three months is now well within the Fed’s 2% inflation target on an annualized basis. The reality is cooling inflation has set the Fed up nicely for a key interest rate cut on September 18. Fed Chair Jerome Powell signaled that a rate cut was imminent during his speech at the Kansas City Fed conference in Jackson Hole, Wyoming, last week. (I covered the details of Powell’s speech in Saturday’s Market 360.) Specifically, Powell stated, “The time has come for policy to adjust,” and added that “the direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook and the balance of risks.” Powell also commented on the slowdown in the labor market, which echoed comments from other Fed officials that unemployment concerns are now overshadowing inflation concerns. We also learned last week that there was a statistical “glitch” in recent employment data. The Labor Department revealed that 818,000 jobs “disappeared” in the past year (through the end of the first quarter) due to revisions related to people working multiple jobs and/or not paying income taxes. So, instead of creating 2.9 million jobs in the past 12 months, the U.S. economy only created about two million jobs. Ouch! So, a rate cut on September 18 is now 100% certain. And if we get a favorable PCE reading on Friday, I suspect we’ll also see rate cuts in November and December this year. NVIDIA's Upcoming Earnings Report As I mentioned in last week’s Market 360, NVIDIA will announce quarterly results on Wednesday, August 28, after the market closes. It’s expected to be the grand finale to what was a stunning second-quarter earnings announcement season. Here’s why I expect fireworks on Wednesday: NVIDIA has posted better-than-expected sales and earnings results, as well as provided positive guidance, in recent quarters. In fact, the company has posted an average 18.2% earnings surprise in the last four quarters. For its second quarter in fiscal year 2025, the analyst community expects earnings to soar 128% year-over-year to $0.57 per share, up from $0.25 per share in the same quarter a year ago. Second-quarter revenue is forecast to jump 89% year-over-year to $25.59 billion. Now, it’s important to note that NVIDIA is making the transition from its older AI chip (H100 GPU) to its newer AI chip (Blackwell GB200 GPU). There have been endless reports that NVIDIA will delay its Blackwell chip by at least three months due to a manufacturing glitch. So, NVIDIA’s guidance on the delivery of its Blackwell chips and order backlog will be a very important part of Wednesday’s report. This guidance will likely be even more important than the company’s actual second-quarter sales and earnings results. Now, I should add that I expect good news from NVIDIA’s report. And I’ll have a detailed review of the earnings report in Thursday’s edition of Market 360. This Week’s Ratings Changes There is one additional factor that could be bullish for stocks this week, which is that the market tends to rally into long holiday weekends. If you’ve been around for as long as I have, then know that Wall Street and Main Street alike look forward to a few days off for holiday weekends. So, there’s a positive mood that tends to spread throughout Wall Street, and stocks meander higher. Add in what should be a strong earnings announcement from NVIDIA on Wednesday and a positive PCE report on Friday morning, and this week is shaping up to be a very positive one for the stock market. So, to help you prepare, I took a fresh look at the latest institutional buying pressure and each company’s financial health. I decided to revise my Portfolio Grader recommendation for 73 big blue chips. Of these 73 stocks… - Four stocks were upgraded from a Buy (B-rating) to a Strong Buy (A-rating).
- Ten stocks were upgraded from a Hold (C-rating) to a Buy (B-rating).
- Fourteen stocks were upgraded from a Sell (D-rating) to a Hold.
- Twenty-four stocks were downgraded from a Buy to a Hold.
- Eighteen stocks were downgraded from a Hold to a Sell.
- And three stocks were downgraded from a Sell to a Strong Sell (F-rating).
I’ve listed the first 10 stocks rated as Buys below, but you can find a more comprehensive list – including all 73 stocks’ Fundamental and Quantitative Grades – here. Chances are that you have at least one of these stocks in your portfolio, so you may want to give this list a skim and adjust accordingly. | BBY | Best Buy Co., Inc. | B | | CFG | Citizens Financial Group, Inc. | B | | GM | General Motors Company | B | | H | Hyatt Hotels Corporation Class A | B | | JCI | Johnson Controls International plc | B | | O | Realty Income Corporation | B | | SKX | Skechers U.S.A., Inc. Class A | B | | SYY | Sysco Corporation | B | | TSCO | Tractor Supply Company | B | | URI | United Rentals, Inc. | B | Now, I should add that we currently hold NVDA in our Accelerated Profits Buy List – and we’re up by about 175% since adding it last August. However, I plan to hold NVIDIA for several more years. It is truly a “once-in-a-lifetime stock,” with superior fundamentals backed by persistent institutional buying pressure. But it’s not the only fundamentally superior stock we have in our Buy List. In fact, thanks to the power of a financial superintelligence, our Buy List is chock full of fundamentally superior companies that are sporting some incredible gains. By harnessing its power over the years, it has given my readers the chance to see massive gains. Go here now to learn how to put this financial superintelligence on your side. (Already an Accelerated Profits subscriber? Click here to log in to the members-only website.) Sincerely, | .png)
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