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🔥 Fueling the Fire

🔥 Fueling the Fire

Plus, is it small-cap season?

April 07, 2024

Happy Sunday to everyone on The Street.

By now, everyone has heard of Ozempic. What started as a niche celebrity weight-loss hack is now in high demand among consumers… and it’s impacting the markets in a big way.

The company that manufactures Ozempic, Novo Nordisk, is based in Denmark. Economists believe that Novo Nordisk’s surging profits and reinvestment rates from Ozempic sales are key reasons why Denmark avoided a recession and why its interest rates could stay relatively low.

Here are some notable highlights of Ozempic’s impact:

WeightWatchers stock fell to an all-time low last month with Oprah’s departure from the brand amid the “age of Ozempic.”
Eli Lilly has entered the weight loss craze with its drugs Zepbound and Mounjaro, which has made Citi analysts bullish on the stock.
Costco is now offering $179 Ozempic prescriptions through its low-cost healthcare partner, Sesame.

💊 Will Demand Sustain for Weight Loss Drugs

POWERED BY FINANCE BUZZ

5 Things To Try If You Need Extra Money This Month

You’ve got just enough money in your bank account to last until Friday … but then Monday rolls around, and you’re in the same situation. Again. Food. Bills. Rent. Gas. They dry up every bit of your take-home pay.

But it doesn’t have to be this hard. With a few smart moves, you could supplement your income and afford that next vacation — without doing much extra “work,” or even getting a side job. Check out this FinanceBuzz article to find a solution and take control of your finances today.

Review

Remarks from Federal Reserve officials alongside new economic data significantly shaped investor sentiment over the last week.

The U.S. economy continues to demonstrate resilience, with the manufacturing sector returning to expansion after 16 months of contraction and the labor market adding 303,000 new jobs in March, surpassing economist expectations.

Buoyed by this positive economic momentum, recent public statements from Federal Reserve officials have tempered expectations of an imminent interest rate cut, with Fed governors reiterating the need to see more positive data on disinflation.

Wall Street saw a varied performance this week, with uncertainty regarding monetary policy taking the spotlight. Energy stocks, as tracked by the Energy Select Sector SPDR Fund, notably stood out as oil prices surged to their highest levels in over six months, inching closer to $90 a barrel.

Apple’s Robotics Ambition

Apple is reportedly shifting its focus from electric vehicle ambitions to home robotics, reflecting its continual search for the next big innovation. Initiatives include a mobile robot and a sophisticated tabletop device with a display repositioning arm aimed at redefining smart home technology.

Analysts have expressed differing opinions on the possibility of Apple venturing into the realm of personal home robots.

Disney's Board Wins Vote

Disney shareholders overwhelmingly supported the company's current board, decisively defeating activist shareholder nominees from Trian and Blackwell. This result solidifies CEO Bob Iger‘s leadership as Disney aims to focus on growth, value creation and maintaining its position in the entertainment industry.

Demand Overwhelms Supply

Eli Lilly faces challenges meeting the high demand for its weight loss drugs Mounjaro and Zepbound, with shortages reported on Amazon Inc. Pharmacy. This situation underscores the drugs’ success and the company’s efforts to scale up manufacturing capacity.

EV Penny Stock Rallies

Nikola Corp., an electric truck manufacturer, has outperformed major companies like Tesla, Rivian Automotive, and Lucid Group Inc. in stock performance terms so far in 2024. This growth comes after a tough 2023 for Nikola that saw stock value dips, recalls and leadership changes. Nikola’s focus on hydrogen fuel cell trucks contributes to its share price recovery, in contrast with the broader EV market’s downturn.

Preview

Economic Data

Monday: Chicago Fed President Austan Goolsbee's radio interview
Tuesday: NFIB optimism index
Wednesday: Consumer price index, Core CPI, Monthly U.S. federal budget, Fed Gov. Michelle Bowman speaks
Thursday: Producer price index, Core PPI, Chicago Fed President Austan Goolsbee speaks
Friday: Import price index, Consumer sentiment (prelim), Atlanta Fed President Raphael Bostic speaks

Earnings

Monday: Inozyme Pharma
Tuesday: WD-40
Wednesday: Delta Air Lines
Thursday: Goodfellow Inc.
Friday: BlackRock Inc., State Street Corp., Citigroup

Scoop and Score

Stocks Full of Potential

Goldman Sachs (GS) is encouraging investors to look at some beaten-down names this month.

The firm has highlighted companies in a wide variety of sectors, including a cyclical name that’s recently been under pressure.

With the S&P 500 up around 10% year-to-date, there are plenty of high flyers with momentum in the market. But Goldman argues that investors should be digging through the laggards to optimize their portfolios.

Can Brown Go Green?

UPS (UPS) has been stuck in reverse. The stock is down more than 20% in the past year and roughly 6% year-to-date, substantially lagging behind the S&P. Goldman currently sees an entry point, saying the shipping company can grow volumes while trimming costs.

A fast food stock also made Goldman’s list: Arcos Dorados (ARCO). The company operates McDonald’s in Latin America and the Caribbean. The investment firm says the ARCO sell-off is a mistake, but now new investors can jump in. Analysts at Goldman say the food operator is picking up market share and has impressive same-store sales. The stock has dropped about 8% this year.

Follow the Index

A third name appearing on the Goldman list is Nasdaq (NDAQ), the global markets company. Analysts at the bank like the revenues the index creates, and foresee buybacks coming soon.

This cheat sheet could help investors stock up on good deals for April.

If you had to choose, which stock would you buy?

POWERED BY FINANCE BUZZ

5 Things To Try If You Need Extra Money This Month

Small-Cap Season

Small Cap, Big Value

Raymond James (RJF) market strategist Matt Orton is bullish on small caps this year.

Orton believes small caps will see strong earnings in the second half of 2024. He says valuation differentials between small and large caps are at unprecedented levels.

The Russell 2000 is up around 5% in 2024, despite being down at the beginning of the year.

Orton has pinpointed two stocks, Vertiv Holdings (VRT) and CyberArk (CYBR), as small caps he’s bullish on.

Vertiv Holdings

Vertiv Holdings provides power management and cooling equipment to data centers. Orton thinks the company’s demand will increase as the AI craze continues.

He also believes Vertiv will benefit from its position in a high-margin industry, which should lead to increased free cash flow.

Shares are up around 475% over the past 12 months, and 12 of 13 analysts covering the stock give it a buy or overweight rating. The average price target for Vertiv is $77.31.

CyberArk

Cybersecurity company CyberArk should also benefit from the AI frenzy, according to Orton. The analyst believes cyber threats will increasingly impact companies and governments, increasing demand for CyberArk’s services.

Orton predicts increased earnings and free cash flow for the company moving forward.

Shares are up around 80% over the past 12 months. 30 of 32 analysts covering the stock give it a buy or overweight rating with an average price target of $299.75.

There’s been a lot of chatter this year about small caps. These stocks could provide an opportunity for investors looking to add small caps to their portfolios.

Which stock do you think will outperform the rest of 2024?

Fueling the Fire

Powering AI

As AI continues to spread like wildfire, so does the technology's need for power to keep it running.

Data centers suck up a massive amount of power, and according to Morgan Stanley’s (MS) Aaron Dunn, this creates an opportunity for investors within the utilities sector.

The analyst has singled out one stock he’s particularly bullish on, CMS Energy (CMS).

Poised for Growth

CMS is an American energy provider with a strong focus on renewable energy, a priority within the AI industry.

Dunn thinks the company is set to see exponential growth as it works to reduce its carbon footprint and increase renewable energy production.

The energy stock is up over 19% over the past 6 months. If the company can capitalize on the world’s growing demand for energy, the stock could continue to provide solid returns.

Energy Consumption is Rising

Per Bank of America (BAC) research, AI servers shipped by Nvidia (NVDA) alone have used about as much energy as 20 million homes.

The bank also estimates that AI data centers use somewhere between 1 and 2% of global electrical supply. BofA believes that number will swell to 11% by 2030.

With AI’s rise and its demand for more energy, Dunn believes CMS stock could stand to benefit.