Free Trial

5 Trends You Need to Know This Quarter

→ The only AI company to buy (From Porter & Company) (Ad)

 

Key Points

  • Five key trends should be at the top of investors' minds as they enter the new quarter.
  • Working through the fundamental trends, all the way to sector-specific interests in the stock market, there is opportunity at each turn.
  • Wall Street price targets and EPS projections support the upcoming capital rotation.
  • 5 stocks we like better than Taiwan Semiconductor Manufacturing

The global financial markets are like a machine, and each asset class acts as a cog that twists and turns each cycle. Today, there are a few key trends that investors should be aware of before the quarter ends to help them consider the best themes for growing their wealth.

Each step of the machine’s makeup contains actionable steps for investors to follow and rotate some of their capital in and out of respective asset classes. Broader market participants and even Wall Street analysts are aware of these trends, which could start with the Federal Reserve’s potential push to cut interest rates this year.

Because the price of money is typically driven by interest rates, a first sensible step for investors is to figure out where commodities (quoted in U.S. dollars) could be headed and how everything else may follow. For this first step, consider Hess Co. NYSE: HES. Oil’s new yearly high could have an interesting effect on the iShares 20+ Year Treasury Bond ETF NASDAQ: TLT.

Kickstarting the Machine: Oil and Bonds

The FedWatch tool at the CME Group Inc. says traders priced in these potential cuts by September 2024. Potentially lower interest rates could lower the value of the dollar index, bringing the price per barrel higher. Reaching a near nine-month high, oil trends may have currently priced in these cuts.

Finding the right oil trade could be treacherous, so here is what Wall Street likes. The integrated oil and gas industry is projected to grow its earnings per share (EPS) by an average rate of 11% this year. In contrast, Hess analysts think Hess could push out 32%.

Knowing that growth will be the main focus in these uncertain times, Mizuho Financial Group Inc. boosted its price target on Hess up to $205 a share, calling for a 30% upside from today’s prices. More than that, The PNC Financial Services Group Inc. bought up to $373,100 worth of Hess stock in the past quarter.


Hess stock trades at 94% of its 52-week high, so momentum has already started for energy stocks. Next in line are bonds, which have attracted few buyers to push their yields down and reflect the potential Fed cuts.

Because of this, the iShares bond ETF trades at roughly $90 a share, a price not seen since 2011. Because bond prices move opposite to yields, investors could catch this ETF at a cyclical low and ride it higher when the Fed throws in the towel and cuts rates.

American Manufacturing is in Play

Because the dollar is set to decline, American exports may become more attractive to foreign buyers. The February ISM manufacturing PMI report recorded export orders at 6.4% higher than the previous month as the sector prepares itself for the coming export activity.

The Japanese steel giant Nippon Steel OTCMKTS: NISTF, placed a bid in December 2023 to buy out United States Steel Co. NYSE: X for $14.9 billion. Now that the Japanese Yen is at a 30-year low against the dollar, buying an American manufacturing firm seems like the cyclical choice.

Another name to remember is Entegris Inc. NASDAQ: ENTG. This one is looking to grow its EPS by 36% in the next 12 months, riding on the back of the CHIPS and Science Act mission to onshore semiconductor manufacturing in the U.S.

It’s All About the Consumer

Now that U.S. consumer sentiment is at a 3-year high, stocks that enable consumer spending could see a new leg higher. This time, names like Simon Property Group Inc. NYSE: SPG afford inflation-beating dividends to sponsor shareholders through this new cycle.

Even after rallying 32% in the past year, Simon Property (a mall owner-operator) still pays a 5.3% dividend yield. Also, its P/E valuation of 20.8x puts it at more than 50% below the real estate investment trust (REIT) industry’s 44.5x multiple.

Over the past quarter, Morgan Stanley and The Goldman Sachs Group Inc. analysts boosted their price targets on the stock. Despite stubborn inflation rates in the U.S., the prospect of potentially lower rates has investors excited about this consumer discretionary play.

The A.I. Race

And who can remember the technology stocks bringing indexes to all-time highs? After carrying the crown for a while, Nvidia Co. NASDAQ: NVDA is beginning to raise questions about whether its price is overextended.

After assigning $11 billion to Taiwan Semiconductor Manufacturing Co. NYSE: TSM, the U.S. government inherently expressed its preference – and confidence – for TSMC to carry out its plan for onshore semiconductor manufacturing.

TSMC is set to grow its EPS by 24% this year, nearly twice the 13% projection for Nvidia. TSMC still trades at a P/E of 28.4x, 68% below Nvidia’s 75.4x valuation.

Over the past 12 months, TSMC stock underperformed Nvidia by as much as 173%, a gap that the favored fundamentals and U.S. backing may fill.

→ The only AI company to buy (From Porter & Company) (Ad)

Should you invest $1,000 in Taiwan Semiconductor Manufacturing right now?

Before you consider Taiwan Semiconductor Manufacturing, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Taiwan Semiconductor Manufacturing wasn't on the list.

While Taiwan Semiconductor Manufacturing currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

5G Stocks: The Path Forward is Profitable Cover

Click the link below and we'll send you MarketBeat's guide to investing in 5G and which 5G stocks show the most promise.

Get This Free Report

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Hess (HES)
4.4303 of 5 stars
$151.39+0.7%1.16%23.18Hold$178.08
iShares 20+ Year Treasury Bond ETF (TLT)N/A$91.38+0.3%3.83%-7.14N/AN/A
Nippon Steel (NISTF)
0 of 5 stars
$21.00flatN/A0.80N/A
United States Steel (X)
3.9728 of 5 stars
$35.91-0.1%0.56%10.53Hold$38.78
Entegris (ENTG)
4.0924 of 5 stars
$132.29+3.1%0.30%63.60Moderate Buy$148.67
Simon Property Group (SPG)
3.611 of 5 stars
$147.88+2.2%5.27%18.84Hold$145.33
NVIDIA (NVDA)
4.8367 of 5 stars
$1,064.69+2.6%0.02%62.26Moderate Buy$1,123.49
Taiwan Semiconductor Manufacturing (TSM)
1.9202 of 5 stars
$160.00+1.9%1.08%30.48Moderate Buy$157.00
Compare These Stocks  Add These Stocks to My Watchlist 

Gabriel Osorio-Mazilli

About Gabriel Osorio-Mazilli

  • gosoriomazzilli@gmail.com

Contributing Author

Value Stocks, Asian Markets, Macro Economics

Experience

Gabriel Osorio-Mazilli has been a contributing writer for MarketBeat since 2023.

Areas of Expertise

Value investing, long/short trading, options, emerging markets

Education

CFA Level I candidate; Goldman Sachs corporate training; independent courses

Past Experience

Analyst at Goldman Sachs, associate at Citigroup, senior financial analyst in real estate


Featured Articles and Offers

Search Headlines: