Happy Sunday to everyone on The Street. 

JPMorgan, Wells Fargo, and Citi kicked off reporting season for America’s big banks on Friday, and investors weren’t impressed by what they saw.

Here’s how the three banks’ stocks moved after posting financial results:

• JPMorgan: -1%

• Citigroup: -2%

• Wells Fargo: -6%

Despite the stock declines, not everything the banks reported was bad news. In fact, a lot of it was very good news.

JPMorgan reported that its investment banking fees surged 52% from a year earlier, and revenue rose 20%. Similarly, Citigroup reported that its net income rose by 10% from a year earlier, and its investment banking revenue surged by 60%.

Wells Fargo was the ugly ducking, though. The bank reported a 9% YoY decline in net interest income, a key measure of what a bank makes on lending. However, it still reported Q2 earnings and revenue that beat Wall Street expectations.

So, why all the pessimism? Blame the messenger, Jamie Dimon.

JPMorgan CEO Jamie Dimon warned in his bank’s second-quarter results that inflation and interest rates might stay higher for longer, citing factors like large fiscal deficits, infrastructure needs, and the remilitarization of the world.

If borrowing rates remain high, banks could suffer from a decline in loan demand, borrower defaults, and a decrease in the value of fixed-income securities.

In summary, this week’s financial results and commentary from some of America’s biggest banks were a mixed bag of news.

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ICYMI: Here’s what drove the markets last week and what to keep an eye out for in the coming week.

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Take a Bite of This Delivery Stock

The Glory Days

Jefferies (JEF) has high hopes for Just Eat Takeaway.com (TKWY-NL), the company that operates Grubhub in the US.

The stock is looking to return to its glory days from a few years ago when customers were stuck at home ordering food delivery. Its shares have fallen by more than 80% since 2021.

Analysts at Jefferies believe the sell-off has been overdone. They have set a price target expecting the stock to more than double.

Take off the Cap

Limits on the fees that takeout companies can charge for services in some parts of the US have been hampering Just Eat’s earnings.

This is where Jefferies is optimistic. Last year Uber (UBER), DoorDash (DASH), and Grubhub were given the green light to sue the city of New York over the fee caps. 

Jefferies analyst Giles Throne sees the legal battles leading to policy changes that would boost Grubhub. The Grubhub parent company has told investors that amending the fee caps would improve EBITDA by $100 million.

You Gotta Fight, for Your Right, to Deliver

Outside of regulations, the food delivery space is still relatively competitive.

Just Eat has seen deliveries drop year-over-year as Uber and DoorDash battle to win over businesses and consumers.

Despite the climate, Jefferies makes the case that Just Eat’s stock is undervalued and its shares should have an upward trajectory. 

Investors have largely given up on Just Eat, but if Jefferies is correct, there could be gains on the horizon.

Earnings Growth Is King

Rate Cut Prognosis

The Fed has been discussing rate cuts for some time while remaining insistent that it won’t make a move until inflation reaches the desired benchmark. 

According to the CIO of Landsberg Bennett Private Wealth Management Michael Landsberg, current economic conditions don’t warrant a cut, but we might get one anyway. Landsberg believes it’s likely the Fed will cut rates just one time.

Rising Inflation

Landsberg expects inflation to continue climbing thanks to increasing oil prices and rising shipping prices from China. He believes these factors will translate to higher inflation toward the end of 2024 and the start of 2025. 

As a result, Landsberg says investors should gravitate towards companies already generating strong earnings growth and commodities and stocks with the pricing power to hedge from inflation.

Stock Picks

The chief investment officer named three stocks he’s particularly bullish on right now: TJX Companies (TJX), Stryker (SYK), and Trade Desk (TTD). 

According to Landsberg, TJX is bringing in wealthier consumers, improving the company’s future outlook. Medical technology company Stryker has seen surging organic growth as more Americans lose the weight necessary for joint implants. And Trade Desk is continuing to seize market share in the marketing technology space. 

Investors have been patiently waiting for rate cuts this year, and Landsberg thinks they’ll see at least one. The CIO thinks these stocks are positioned for success in his expected economic environment.

Stocks Heating up This Summer

Carnival

Last week Bank of America (BAC) provided investors with a list of stocks that could see growth as we move through the rest of the summer. 

Carnival (CCL) is on the bank’s list, following its strong earnings report at the end of June. Analyst Andrew Didora says the cruise line’s bookings look good, and cost savings are improving its balance sheet. 

The stock is up over 3% YTD but down 7% over the past 12 months. Didora has given the stock a $24 price target, representing a 34% upside from Tuesday’s close.

Block

Financial technology company Block (SQ) also made the list, despite its share price dropping over 12% YTD. According to analyst Jason Kupferberg, it’s a great time to buy the dip. 

BofA is blaming the recent lackluster performance on management turnover and poor earnings across the software industry. Kupferberg believes the company’s fundamentals are strong and that industry concerns have the stock over-discounted.

Palantir

On the other hand, software company Palantir (PLTR) has soared this year, up 66% YTD. According to analyst Mariana Perez Mora, it still has plenty of room to run. The analyst is bullish on the stock’s technicals, saying that its pricing “remains within bullish trends on an absolute price basis and relative to the S&P 500.” 

Perez Mora also cited the possibility of the stock joining the S&P 500 and its burgeoning business with the US Department of Defense as reasons to be bullish. 

As the summer gets hotter, these stocks have the potential to heat up as well.

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Last Sunday’s Poll Results

Which stock will deliver the best returns in the second half of 2024?

🟩🟩🟩🟩🟩🟩 Nvidia (NVDA)

🟨🟨🟨🟨⬜️⬜️ Apple (AAPL)

🟨🟨🟨⬜️⬜️⬜️ Viking (VIK)

Which stock do you think will outperform over the next 12 months?

🟨🟨⬜️⬜️⬜️⬜️ Cintas (CTAS)

🟩🟩🟩🟩🟩🟩 Charles Schwab (SCHW)

Are you bullish or bearish on BYD (BYDDY) over the next 12 months?

🟩🟩🟩🟩🟩🟩 Bullish

🟨🟨🟨⬜️⬜️⬜️ Bearish