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Saturday, August 13, 2022

Weekly Market Review: Fed Signals Willingness to Change Course

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The S&P 500 rebounded on Friday, but still ended the week fractionally lower. Energy names led the decline, while Utilities and Healthcare stocks rallied.

Investors noted a shift in tone from the Federal Reserve. Minutes from the latest FOMC meeting suggested that most members expected to see the tapering of quantitative easing (QE) measures by the end of 2021.

The resurgence of COVID-19 is starting to creep into the economic data. The U.S. has seen coronavirus deaths increase by 19% over the past week and more business and travel restrictions are being announced for the Fall and Winter months.

Last week, August data about homebuilder sentiment and both the Empire State and Philly Fed manufacturing indexes posted larger-than-expected declines.

The Week Ahead

Looking ahead, Best Buy (BBY), Medtronic (MDT), and Salesforce.com (CRM) headline a relatively quiet earnings calendar this week.

On the economic front, we’ll get the preliminary reading of the August U.S. PMI Monday. The focus later in the week will shift toward the Jackson Hole economic conference and the July core PCE report on Friday.

Following the snap-back recovery in stocks last year from Pandemic lows, we believe that investment gains will be harder to come by in 2021. As a result, deciding what and when to buy can be challenging for any investor. However, the fact remains that attractive investments are out there if you’re willing to dig a little deeper.

One such Consumer name is worth a closer look and is our Stock of the Week.

Stock of the Week: TJX Companies (TJX)

The company operates more than 4,500 discount stores in nine countries, under brands such as T.J. Maxx, Homegoods, and Marshalls.

The stock gained 5% last week and we believe this outperformance can continue in the second half of 2021. Here’s why:

The retailer offers a unique value proposition for shoppers, given its purchasing power as a market leader. 

Retail spending is strong, as more Americans are going back to work. Consumers have pent-up demand to get out and shop, which was reflected in TJX’s better-than-expected quarterly results on Wednesday.

The company earned $0.79 a share in the July quarter, as revenue increased 81% from the previous year to $12.08 billion. Same-store sales of locations that were open in both years increased by 20%.

Following the numbers, analyst Robert Drbul of Guggenheim boosted his price target on the stock to $85 (14.8% upside potential). Drbul is rated in the top-5% of the more than 7,600 analysts tracked by TipRanks, which adds weight to the call.

TJX is generating solid cash flow and returning it to investors. The company logged $615 million of dividends and share repurchases in the most recent quarter.

In addition, the stock carries a Smart Score of 9/10 on TipRanks. This proprietary score utilizes Big Data to rank stocks based on 8 key factors that have historically been a precursor of future outperformance.

On top of the positive aspects mentioned already, the Smart Score indicates that shares have improving sentiment from financial bloggers.

FYI: This is just 1 of the 20+ stocks selected for the Smart Investor portfolio. That’s where we share more detailed insights on our weekly stock picks.

The post Weekly Market Review: Fed Signals Willingness to Change Course appeared first on TipRanks Financial Blog.

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