The Trend In Earnings This Season Is …
There is a trend developing in the earnings reports that point to solid gains ahead for the S&P 500 (NYSEARCA: SPY). This trend involves guidance, results, and the analyst’s consensus. While not all companies are participating, it has a couple of deep implications for the market. First, the downturn in earnings for the Q2 peak-COVID downturn wasn’t as bad as expected. Second, guidance, which has largely absent until now, is at least firming if not improving. Third, the analyst’s consensus estimates for the quarter and the year are off which means upward revisions are in store.
Logitech International, Accessorizing The Hottest Trend In Stocks Today
Logitech (NASDAQ: LOGI) is a very interesting company in that it sells all the accessories and peripheral items you use with your computers and gaming systems. Peripherals include keyboards, mice, screens, controllers and anything and everything else you might use to upgrade, enhance, or ergonomically improve your work and/or gaming experience. The hottest trends in the market today, trends accelerated by the COVID-19 pandemic, are work-from-home and stay-at-home and those trends are driving demand for peripherals.
“Logitech’s business was already positioned to grow from these long-term trends, and since early March they have accelerated, making Logitech more relevant to customers than ever before,” said Logitech in its press release.
Logitech was expected to report a great quarter, just like it did in the 1st quarter, but not nearly as great as it reported. The company beat consensus by 10% to grow revenue by 22% on a YOY basis. The strength in revenue carried through to the bottom line resulting in EPS that beat consensus by nearly 100%. The company raised guidance for FY revenue to 10-13% from mid-single-digits and sets itself to beat consensus for the full-year. The analysts are expecting EPS growth in the range of 6.0%; the first-quarter results and 2nd quarter consensus are already tracking above 50% of that mark.
Prologis, The Leader In Logistics Real Estate
Prologis (NYSE: PLD) is another unique player in the COVID environment as it owns and leases logistics facilities to clients worldwide. If it technology that links the world together, it is logistics that get things where they need to be. Prologis is a 2.45% yielding stock compared to Logitech’s 1.0% with the caveat coverage is a little weaker (not bad) and the outlook for growth is not quite as strong. Regardless, the company just released its 2Q report and raised guidance along with it.
Prologis reported a 35% increase in YOY revenue that beat consensus by over 2.25% and padded quarterly earnings. Earnings, FFO in the case of a REIT, exceeded consensus by 1200 basis points. The company says conditions are improving, raising guidance by $0.15 to $3.70, as the outlook for the second half of the year continues to improve.
"While the economic impact of COVID-19 remains unknown, the combination of what we see in our proprietary data, the pace of rent collections, and dialogue with our customers give us a more positive outlook for the back half of the year," said CFO Thomas S. Olinger.
Lockheed Martin, Tailwinds For This Defense Giant
While some other companies struggle with revenue in the pandemic environment Lockheed Martin (NYSE: LMT) is sitting pretty on freshly signed contracts that are driving its business. The company reported revenue of $16.22 billion to double the consensus for growth to over 12%. An increase in operating margins helped drive a 750 basis point beat on the bottom line while an increasing backlog of orders ensures the future business will be at least stable.
The guidance was raised but only fractionally from $23.65 to $23.75 but nonetheless it’s good news. Regarding the dividend, Lockheed Martin is yielding about 2.63%, the highest of the lot, with a payout ratio and balance sheet that should allow most investors to sleep soundly at night.7 Tech Stocks That Will Lead the Way in 2022
The end of 2021 and the initial trading days of 2022 have been rough for tech stocks. The prospect of multiple interest rate hikes has investors fleeing to risk-off assets, including stocks. And that means some of the biggest tech stocks may have further to fall.
But for growth investors, tech remains the sector to be in. Some appealing stocks have dropped 50% or more from their 2021 highs. That means it’s inevitable that some savvy buyers will be moving in to buy their favorite names at a discounted price.
However, price doesn’t always equal value. Some stocks have sold off and may never recover their previous level. Those are tough lessons for investors to learn.
However, in this presentation, we’re looking at seven tech stocks that have a strong business case to support a recovery even as other tech stocks may struggle. We think all these stocks are strong buying candidates. However, we encourage you to do your due diligence to decide when the price is right for you.View the "7 Tech Stocks That Will Lead the Way in 2022"
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