These stocks are poised for a comeback when inflation peaks, says Jefferies
A slowdown could be on the horizon and more profit cuts are forecast. If inflation also spikes, as some analysts expect, that mix of factors will favor one class of stocks, Jefferies says.
Jefferies produced a screen of such stocks for investors to buy, based on a list of metrics including high profitability, reasonable valuations and good cash flows.
PayPal Soars on Profits, Share Repurchase Announcement
PayPal shares rose more than 11% after hours. The payment company beat analysts’ earnings and revenue estimates for the second quarter and gave an optimistic outlook for the full year. PayPal also announced a $15 billion share repurchase program.
Share buybacks provide companies with a way to increase their earnings per share and increase the value of their shares, especially while the market is facing sharp price declines across the board this year. The company started a $10 billion program four years ago.
Elliott Management said it has a $2 billion stake in the payments giant. PayPal announced it has entered into a value-creation information sharing agreement with the activist investor.
— Tanaya Macheel
Despite Fedspeak on fighting inflation, ‘easing cycle’ is emerging, says Leuthold’s Jim Paulsen
Jim Paulsen, chief investment strategist at Leuthold Group, said that despite the Federal Reserve’s “continued lip service to fight inflation” by tightening monetary policy, there are several factors that indicate the market may be entering an “emerging easing cycle.”
Bond yields have hit a significant rate cut, the dollar is finally rolling and junk spreads have narrowed, he said in a note to investors on Tuesday.
“The media, policymakers and investors are mainly focused on the war on inflation and how aggressively the Fed will have to maintain rate hikes,” said Paulsen. “But with real economic growth already slowing to a snail’s pace and indications that inflation is slowing, the plea for further tightening by the Fed at its September meeting is rapidly disintegrating.”
“Investors should place the appropriate weight on economic policy leadership,” he added. “Tightening today means lower real and nominal growth tomorrow.”
— Tanaya Macheel
MatchGroup Shares Plunge After Hours
Shares of the dating app manager Match group tumbled a whopping 23% after the company reported $795 million in revenue for the second quarter, compared to FactSet estimates of $803.9 million. Match also provided weak guidance on adjusted operating income and revenue for the current quarter.