Delving into the intricacies of the stock market, Full Court Finance at Zacks dissects the aftermath of Jay Powell’s address as Wall Street navigates the uncertainty surrounding the Fed’s future actions. In this insightful episode, three stalwart stocks—Arista Networks (ANET), Uber Technologies (UBER), and Shopify (SHOP)—take center stage as potential long-term investment options ahead of their upcoming earnings announcements.
Bulls Stage a Comeback Amid Post-Fed Volatility
The bulls resurged on Thursday following a late-day slide that erased initial gains after the Fed’s pronouncements.
Fueled by Powell’s reluctance to consider rate hikes, investor confidence edged the S&P 500 and the Nasdaq closer to their 21-day moving averages.
Timing the Market: A Perilous Pursuit
Market uncertainties should not dissuade investors, given the folly of timing the market evident in recent years.
For those seeking continuous exposure to stocks, these robust tech stocks beckon as compelling options in the month of May.
Arista Networks: Networking Infrastructure Resilience
Arista Networks, a trailblazer in networking infrastructure, dominates data-driven networking from client to cloud in expansive data centers and beyond. With 8,000+ global cloud customers, including industry giants like Microsoft (MSFT) and Meta (META), Arista Networks stands at the vanguard of innovation, serving six of the largest cloud service providers based on annual revenues.
Resilience Amid Volatile Market Conditions
An impressive 1,800% surge over the past decade propels ANET far beyond sector benchmarks, with a 95% uptick in the last 12 months. Despite a 15% dip from March highs, ANET trades 12% below its Zacks price target, seeking support at its 21-week average and poised to reclaim its 21-day marker.
Uber Technologies: Navigating Profitable Pathways
Uber’s milestone achievement of a full-year profit in 2023 reflects strategic expansions in ride-hailing and delivery services, driving operational efficiencies. Characterizing 2023 as an “inflection point,” Uber’s CEO underscores the company’s capacity for sustainable growth and profitability.
Sustainable Growth Amidst Evolving Market Dynamics
With a 17% revenue uptick in 2023 and optimistic projections for 2024 and 2025, Uber is primed for a robust growth trajectory, bolstered by a 41% adjusted EPS growth forecast for 2024. Notably, Uber’s upbeat EPS revisions earn it a coveted Zacks Rank #1 (Strong Buy).
Unveiling the Layers of Shopify’s Financial Fortunes
Stellar Financial Profile
Shopify, a key player in the e-commerce realm, has been making waves with its robust financial standing. The company boasts high metrics, with its stock trading at 3.2 times forward sales, a figure that is strikingly 30% lower than the Zacks tech sector average. Additionally, Shopify’s PEG ratio, a key indicator of its future earnings growth potential, stands at a commendable 0.9, significantly overshadowing the tech sector’s average of 1.8.
Financial Resilience Amidst Turbulent Waters
Shopify serves as the backbone of essential internet commerce infrastructure, offering a wide array of services ranging from website design to marketing and payments. Threading through the competitive e-commerce landscape dominated by giants like Amazon, Shopify set itself apart by focusing on empowering sellers, a stark contrast to Amazon’s consumer-centric approach.
The company spearheaded its revenue growth over the years, with an impressive 65% average increase between FY17 and FY21. While growth rates have moderated, Shopify countered the slowdown by implementing its first price hike in over a decade in 2023.
Positive Growth Trajectory and Market Standing
Projections indicate a positive growth outlook for Shopify, with sales expected to rise by 21% in 2024 and another 20% in 2025, reaching a milestone of $10.20 billion in revenue. Furthermore, the company is committed to bolstering its bottom line, with adjusted earnings set to surge by 30% this year and an additional 33% in the following year.
Despite landing a Zacks Rank #3 (Hold), Shopify’s earnings estimates for FY24 and FY25 have witnessed a significant upsurge over the past year. Moreover, the company has consistently outperformed EPS estimates in the trailing four quarters, underlining its operational efficiency and financial prowess.
Valuation Dilemma Amid Surging Interest Rates
Shopify’s stock experienced a dip of 57% from its peak in November 2021, despite a remarkable 160% surge from its 2022 lows. Notably, since its IPO in 2015, Shopify has catapulted by an impressive 2,500%, outshining Amazon’s 750% growth during the same period. The company’s lofty valuation levels have restrained its stock performance in the wake of the current interest rate dynamics. However, Shopify’s robust balance sheet and enduring market standing present a compelling case for exploration, especially as other tech counterparts reach record highs in trading.
Riding the Bitcoin Rollercoaster
Delving into alternative investment avenues, Bitcoin emerges as a prime choice, boasting unmatched returns among diverse asset classes. Despite its volatility, Bitcoin has proven to be a lucrative option for investors, outperforming other decentralized forms of money.
Reflecting on historical data, Bitcoin showcased stellar returns in the past three presidential election years, with impressive percentages of +272.4% in 2012, +161.1% in 2016, and +302.8% in 2020. Projections from Zacks hint at another substantial surge in the imminent months, further solidifying Bitcoin’s appeal as a go-to investment option.