The Market Melodrama

Wall Street’s current obsession revolves around whether the Fed will accelerate rate cuts, given the stubborn persistence of elevated inflation. As earnings season unfolds, the prevailing anxiety has led to a sell-off, a logical cool down from the market’s torrid momentum since October. The S&P 500 and Nasdaq were always due to test their long-term moving averages in 2024.

Microsoft’s Next Frontier

Microsoft will unveil its Q2 FY24 earnings on January 30. Its transformation into a cloud computing and artificial intelligence powerhouse revitalized the company, propelling it to consistent sales and EPS growth. Microsoft’s recent acquisition of Activision Blizzard underscores its bold foray into gaming, VR, and the metaverse. With a robust balance sheet, including $144 billion in cash and equivalents, Microsoft is well-positioned for strategic expansions.

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Microsoft is expected to achieve a revenue spike of around 14% in both FY24 and FY25, rocketing from $212 billion to $275 billion. This correlates with a 14% growth in adjusted earnings. Microsoft consistently outperformed bottom-line estimates and maintains an impressive earnings outlook, earning a Zacks Rank #3 (Hold) currently. Over the last 20 years, MSFT outshone the tech sector, boasting a 65% surge in the last 12 months compared to the sector’s 46%. Although the stock seems somewhat overheated, it is solidly trading above its long-term moving average, indicating enduring strength.

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Valuation-wise, MSFT trades at a 10% discount to its 10-year high with a forward 12-month P/E ratio of 32.5X. When considering its longer-term earnings growth outlook, its PEG ratio of 2.1 offers enticing value, presenting a 32% discount to historical highs. Microsoft’s commitment to dividend hikes and share repurchases further solidifies its promise as a long-term investment.

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NvidiaNVDA has undeniably shone as the S&P 500 standout so far in 2024.

While Nvidia basks in its 60% gain, others have quietly excelled in their own right, outpacing the market.

Within the S&P 500 index, ten stocks have surged over 25% this year, showcasing the prowess of top players.

Amidst this, the median S&P 500 stock has seen a modest 3% uptick, while SPDR S&P 500 ETF Trust boasts a solid 7% jump.

Chart-Topping Performers: Feb. 29, 2024 Company YTD Return Market Cap NVIDIA Corporation 60.02% $1,950.35B

Investors ponder the future growth prospects of these top performers amidst their impressive run.

One way to gauge this is by comparing current stock prices with Wall Street analysts' one-year median targets.

Among the top 10, Uber Technologies shines with a 13.8% potential upside, followed by Catalent at 10% and Nvidia at 7%.

However, other stocks in the S&P 500 index boast even more significant potential upsides.

Here's a summary of the substantial differences between current market prices and analysts' forecasts.

Top Potential Performers Vs. Analyst Targets Company 1-Year Price Target (Med) vs Current Price Warner Bros. Discovery, Inc. 54.73% Exploring Social Sentiments

A gauge of U.S. stock social sentiment is provided by the VanEck Social Sentiment ETFBUZZ.

This fund channels investments into companies that exhibit

Insights from BUZZ ETF Holdings The Buzz Around Top Stock Holdings

The P&G Resilience

Procter & Gamble will release its Q2 FY24 earnings on January 23. As a dominant force in the consumer packaged goods landscape, P&G manufactures an array of household and personal essentials. The company’s diversified brand portfolio, including household names like Febreze, Swiffer, Head & Shoulders, and Pampers, leaves it well-positioned to thrive in diverse market conditions.

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Projected to achieve a 4% sales uptick for the current and next fiscal year, P&G anticipates an adjusted earnings growth of 9% and 8%, respectively. With a consistent earnings beat track record and upward EPS revisions, P&G currently holds a Zacks Rank #2 (Buy). The stock has outperformed the consumer staples sector, with a 65% climb in the last five years, although it lagged the S&P 500 in the previous three years, posting an 11% increase compared to the index’s 26% surge.

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Trading at a modest 8% discount to its highs and slightly below its average Zacks price target, P&G is currently trading above its long-term moving average, indicating stability. With its status as a consumer staples stalwart, P&G emerges as a compelling long-term investment choice, particularly as it demonstrates resilience in diverse economic climates.