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💔 Loveable Losers

💔 Loveable Losers

Two stocks that struggled last year, but might be worth watching in 2024.

January 14, 2024

Happy Sunday to everyone on The Street.

Okay, I'm biased because it's our newsletter, but I love what our team has been curating in The Street Sheet daily over the past two weeks. One of the headlines we included that really caught my eye was Cathie Wood's bull case for Bitcoin by the year 2030.

The Ark Invest Chief said she thinks the blue-chip cryptocurrency could hit $1.5 million by the end of the decade. That is not a typo.

If Bitcoin does hit $1.5 million, or even $600,000, which is her bear case, that will make Mrs. Wood a very wealthy individual. Not just because of her funds' holdings, but because she personally owns a ton of BTC.

During an interview with Schwab Network on Wednesday, she said that excluding Ark and real estate, roughly a quarter of her net worth is tied up in Bitcoin.

I don't have a ton of exposure to Bitcoin, but does this mean I'm an idiot if I don't buy more? Or is Wood just talking up her book? I'm sincerely curious, which is why I love our poll function:

Do you think Bitcoin will hit $1.5 million by 2030?

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Review

Bitcoin took center stage this week when the U.S. Securities and Exchange Commission (SEC) approved the trading of spot Bitcoin exchange-traded funds (ETF) on a deadline that had investors on edge.

On their initial trading day Thursday, Bitcoin ETFs recorded inflows exceeding $4.3 billion, establishing an unprecedented milestone for exchange-traded fund products. BlackRock Inc.‘s iShares Bitcoin Trust ETF (IBIT) attracted over $1 billion and the Grayscale Bitcoin Trust (GBTC) experienced inflows surpassing $2 billion.

The Consumer Price Index increased to 3.4% in comparison to December 2022, up from November's 3.1% and exceeding the anticipated 3.2%. This unexpected increase in inflation may have significant implications for financial markets and future Fed policies.

JPMorgan Chase & Co. (JPM) posted robust earnings and raised its 2024 net interest income outlook but cautioned about economic risks. Bank of America Corp. (BAC) saw a 10% revenue dip last quarter. Wells Fargo & Company (WFC)’s 2023 profit rose by 9% due to higher interest rates but the bank anticipates lower revenue ahead. Citigroup had a challenging quarter with lower revenue and plans for substantial job cuts amid ongoing restructuring efforts.

Microsoft (MSFT) briefly surpassed Apple Inc. (AAPL) to become the world’s most valuable company, marking a significant shift in the tech industry’s leadership. This change reflects Microsoft’s strong performance in the artificial intelligence sector. Apple also experienced its third analyst downgrade in January, highlighting uncertainties in the market’s assessment of Apple’s future performance.

Speaking of artificial intelligence, a recent study by Cognizant & Oxford Economics predicts a potential $ 1 trillion boost to the U.S. economy through generative AI. The study also raises concerns about potential job disruptions as automation and AI technologies continue to advance.

Preview

Economic Data

Monday: Martin Luther King Jr. holiday, none scheduled
Tuesday: Empire State manufacturing survey
Wednesday: Import price index , U.S. retail sales, Fed Beige Book, Industrial production, and Capacity utilization.
Thursday: Initial jobless claims, Housing starts, and Building permits
Friday: Consumer sentiment (prelim) and Existing home sales

Earnings

Monday: Vision Marine Technologies, Rite Aid Corp, Great American Bancorp
Tuesday: Morgan Stanley, Goldman Sachs, Interactive Brokers
Wednesday: US Bancorp, Prologis, Alcoa Corporation
Thursday: KeyCorp, Signature Bank, Truist Financial Corp
Friday: Schlumberger, The Travelers Companies, Ally Financial

Loveable Losers

Barron’s Names Two Underperformers To Watch

Last year was a good year for the “popular” stocks.

The mega-cap tech darlings, or the “Magnificent Seven,” generated eye-popping returns in 2023.

Barron’s thinks it might be time to show some love to two stocks that struggled with famine in a year of plenty.

This duo boasts dividends with yields of around 6%.

Banking On Cost Cuts

Truist Financial (TFC) was formed in a merger between SunTrust and BB&T in 2019. Since then, the stock has dropped by more than 20%.

Barron’s believes the best is yet to come for this sluggish merger. Future rate cuts from the Federal Reserve could help grease the wheels.

The bank plans to reduce costs by consolidating some tech and administrative responsibilities. Executives are also aiming to keep expenses flat in 2024.

BofA recently upgraded the stock to a “buy” rating.

Can You Hear Me Now?

Verizon Communications (VZ) has also seen better days, with its stock down over 30% in the last five years.

Increased competition and aggressive promotions have hindered the communication provider’s growth. Despite an unimpressive couple of years, Barron’s sees blue skies ahead.

Growing subscribers and cooling competition might pave the way for Verizon to shine in 2024. Healthy cash flow and possible buybacks in the future also lend to Barron’s optimistic outlook for the company.

After a few difficult years, 2024 might be the year that these two stocks see the light at the end of the tunnel.

Which stock will have a better performance in 2024?

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Don’t You Forget About Me

“Forgotten” Stocks To Remember

Boyar Value Group is serving up its “Forgotten Forty” list on a silver platter. The list is composed of stocks that have been neglected by investors in recent years.

Medical device maker Medtronic (MDT) made the cut. The company has seen its shares fall almost 40% since a 2021 high. Supply chain issues and new weight loss drugs have impacted the company’s performance.

Boyer thinks a growing aging population will spur demand for Medtronic’s products. The group also argues that the stock is undervalued and fair value would put shares in the triple digits. Medtronic stock currently trades at around $87 per share.

A Bright Future

Boyer also puts Comcast (CMCSA) on its list. The stock trades at about $43 per share today, well below the $60 per share in 2021.

The investment firm likes two main pieces of the Comcast puzzle: the balance sheet and free cash flow. These elements lead to an intrinsic value estimate of $70, much ahead of the current $43.

Positive numbers from theme parks and slowing losses within Peacock are also expected to bolster Comcast.

Take Me Out to the Ballgame

The Atlanta Braves (BATRA) are now a publicly traded, stand-alone group after a spinoff last year.

Owning shares of BATRA doesn’t let you weigh in on the starting lineup, but Boyer believes the current valuation is attractive.

The investment group thinks the 2021 World Series champs should be valued at almost $3 billion. The stock currently prices the team at around $2.5 billion.

Along with 37 others on the list, these 3 forgotten stocks might experience a turnaround in 2024.

Which “forgotten” stock would you buy first?

Electrifying Rate Cuts

Don’t Call It a Comeback

2023 was a bad year for utility companies. The sector was down 10% last year, largely due to the Fed’s rate hikes. According to Barclays analysts, the sector is primed to bounce back in a big way in 2024.

Utility stocks are known for dividends, making them a popular investment choice. However, in a period of high-interest rates, which we saw last year, other investments like Treasurys can provide a similar or better return with less risk. This was bad news for utility names.

Hoping for Increased Demand

Following a rough 2023, most analysts believe that utilities are currently undervalued. This is especially true following the Fed’s announcement of plans for rate cuts in 2024.

A projected increase in the electricity demand could drive stock prices upward. The rise of electric vehicles and data centers is expected to play a role in this demand.

However, unlike other industries, utility companies have to cut through red tape to increase prices. This process is known as a “rate case.” It makes for a more complicated pricing landscape.

Stocks To Watch

Barclays has highlighted a few stocks set to see potential gains in 2024. First up is Evergy (EVRG), which recently closed out a rate case in Kansas, allowing for a rate increase in some parts of the state.

Another stock that Barclays labels as a “buy” is PG&E Corporation (PCG), citing its recent increase in return on equity.

Duke Energy (DUK) is another favorite, due to its earnings per share outlook for the year and a 4.2% dividend.

As the Fed begins cutting rates, analysts believe that these stocks could provide investors with an opportunity to generate some income in 2024.