Happy Sunday to everyone on The Street. 

As it turns out, recession fears come and go… US stocks had their biggest percentage gains of the year this past week, with the S&P 500 and Nasdaq Composite rising for their seventh straight session of gains on Friday.

While it’s great to cheer on a comeback, some analysts are still highly skeptical of this bull market.

These analysts are looking at three popular stock market valuation tools that indicate we may be in a fools’ rally: the CAPE, the forward PE, and the Fed Model.

• The CAPE ratio currently shows that the S&P 500 is at one of its most expensive levels in history, only surpassed by the dot-com bubble and the 1929 market peak.

• Forward PE, which compares stock price to estimated future earnings, also suggests that stocks are extremely expensive right now.

• The Fed Model shows that stocks are very expensive when compared to bonds, yet another indication that the market is overvalued.

Before you freak out, none of these market valuation tools are perfect and have led to mistaken investment decisions in the past. But, if the market really is out of sync with reality, it may be a good idea for even long-term investors to switch away from the biggest mega-cap stocks.

Plus, today’s partner highlights a unique investment opportunity…

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Losing Weight and Gaining Ground

Eli Lilly Versus Novo Nordisk

Novo Nordisk (NVO) was at one point the undisputed champ when it came to GLP-1 weight loss drugs. But that has since changed.

Eli Lilly (LLY) stepped into the ring, and the two are now battling it out for the number one spot.

Both stocks have gone on impressive runs, with Novo up more than 400% over the last five years, while Eli Lilly has jumped by over 700% in the same period.

The two are the largest pharma companies in the world based on market cap.

Eli Takes The Latest Round

Eli Lilly wowed investors in its recent earnings report, boosting its revenue outlook by over $3 billion. The stock responded with healthy gains.

On the other side, Novo disappointed shareholders. The company missed Wall Street expectations and saw shares plummet after reporting. The stock grabbed back some of those losses but still trails Eli in the very near term.

The winner in this race is expected to be the company that can boost production fastest.

Analysts say there’s plenty of demand for the drugs the companies produce, but the challenge is building out supply for the relatively new GLP-1 drugs.

Grab Your Sunglasses

Regardless of the ultimate winner, the future looks bright for both pharma companies.

Novo touted $5.9 billion in sales for its weight loss drugs in the latest quarter. Eli Lilly boasted $4.3 billion for its quarter. While those numbers are impressive, Wall Street sees eye-popping growth in the next couple of years.

Analysts believe Eli could harvest $30 billion in revenue by 2026, while Novo is estimated to make $40 billion on its weight loss drugs.

Experts argue Eli Lilly is excelling at expanding production, but Novo got to market a few years earlier, giving it a head start.

While it’s still unclear who will ultimately hoist the belt when all is said and done, there’s one thing everyone seems to agree on: Consumers are willing to pay up for drugs if it means slimming down.

Tech Stock Sale Rack

Apple

Tech stocks have taken a beating lately, but Bank of America (BAC) believes many of them are still a good buy, especially at these lower price points.

First on the bank’s list is Apple (AAPL). Its shares are down around 5% in the past month. The tech giant recently beat revenue and income projections, and analyst Wamsi Mohan thinks a jump in smartphone sales later this year will drive those numbers even further. Mohan is also bullish on its new AI technology, Apple Intelligence.

The analyst has reiterated his buy rating on the stock, citing his expectations that estimates will be moved higher thanks to iPhone upgrades, along with margin and cash flow strength.

Netflix

Netflix (NFLX) recently beat earnings as well, and management’s guidance for the rest of the year is solid. Analyst Jessica Reif Ehrlich noted that its subscriber numbers and revenue are still growing. Additionally, it successfully implemented cost controls, which she believes will improve margins by 26%.

The streaming company is starting to reap the rewards of its ad business, and BofA thinks it holds substantial long-term value, especially in the next two years. Reif Ehrlich believes its multiple catalysts for growth make it the current best-positioned media company. Shares are essentially flat in the past month.

Uber

Uber (UBER) is also coming off a significant earnings beat, and analyst Justin Post is bullish. Shares are down about 1% in the past month. Post believes the company is in a tough spot as far as expectations go, but so far, it hasn’t disappointed.

Some tailwinds include efficiency gains, ad growth, and cost leverage at scale. Thanks to those catalysts and Uber’s continued efforts towards autonomous driving, Post believes it’s in a position for sustained growth.

Until recently, tech stocks had been the driving force behind this year’s market gains. If Bank of America is correct, this downturn could be just a bump in the road for these stocks.

Calling on Uncle Sam

Down, but Not Out

Sales are down, and costs are up for American tech company Intel (INTC). In a desperate attempt to conserve cash, the chipmaker has opted to slash its workforce by 15%, cut funding for production facilities, and halt dividend payments for investors.

This has resulted in a 58% drop in stock price YTD. For the first time since 1981, the stock is trading below its book value.

However, the US government is well aware of the importance of domestic manufacturing, specifically as it relates to chipmaking. Neither side of the aisle wants to see Intel fail.

Government Intervention

Chipmaking plants take a long time to build and cost a pretty penny, with an average price of $20 billion. Intel already has significant infrastructure that government officials want to put to good use. They also hope to see Intel continue to build.

The Chips Act was passed in 2022 and provided some $39 billion in grant money to chip makers to assist in building new facilities. Intel received the largest share of that funding, with $8.5 billion to help build sites in Arizona and Ohio.

Some Life Support

Intel currently accounts for about 41% of domestic 300 mm wafer production capacity, the type of chip typically utilized in key markets. Chip-making is now considered an industry essential to national security, and Intel plays a huge role.

For that reason, Chris Caso of Wolfe Research believes that there’s no chance the US government will allow Intel’s problems to bring it down.

Intel is certainly plagued with issues at the moment, but with substantial government backing, it has a better chance than most to turn things around.

TOGETHER WITH VINOVEST

Unique Investment Opportunity: Whiskey Casks

Here’s an investment opportunity you didn’t know you were missing - whiskey casks.

But where to start?

Try Vinovest.

Vinovest differentiates its whiskey investing platform through strategic sourcing and market analysis. With Vinovest, you can invest in Scotch, American, and Irish whiskey casks, providing diverse and flexible exit options.

Vinovest team targets high-growth markets and caters to a range of buyers, from collectors to brands using casks for cocktails. This approach not only enhances your liquidity but also increases your portfolio’s resilience against market fluctuations. Discover how Vinovest’s innovative strategy sets it apart from competitors.

Schedule a call with a Vinovest advisor to learn more.

Last Sunday’s Poll Results

Which stock on this list would you buy?

🟩🟩🟩🟩🟩🟩 McDonald’s (MCD)

🟨🟨🟨🟨⬜️⬜️ Mondelez (MDLZ)

🟨🟨⬜️⬜️⬜️⬜️ Equinix (EQIX)

🟨🟨🟨⬜️⬜️⬜️ VICI Properties (VICI)

Are you bullish or bearish on industrial REITs over the next 12 months?

🟨🟨🟨🟨🟨🟨 Bullish 🐂 

🟩🟩🟩🟩🟩🟩 Bearish 🐻 

Are you bullish or bearish on Pop Mart (9992-HK) over the next 12 months?

🟨🟨⬜️⬜️⬜️⬜️ Bullish 🐂 

🟩🟩🟩🟩🟩🟩 Bearish 🐻