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Category: Dow Jones, Nasdaq and S&P 500
Date: 25 July 2020 We take a look at the performance of the Dow Jones, Nasdaq and S&P 500 for the week ending 25 July 2020. The markets continue to be worried about the continued rise in Covid-19 cases across the world. In a rare occurence the Nasdaq has underperformed against the S&P 500 and the Dow Jones as tech stocks starts to fall out of favor and sector rotation out of tech stocks starts taking place.
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In a rare occurence the tech heavy Nasdaq has underperformed against the Dow Jones and S&P 500 as it looks like sector rotation out of tech stocks is starting to take place."
Dow Jones, Nasdaq and S&P 500 all recorded modest increases for the week ending 24 July 2020
The image below shows the returns of the Dow Jones (DJIA), Nasdaq and S&P 500 over the last week (20 July 2020 to 24 July 2020). The week that was was relatively mixed bag and was the opposite of what we have seen in recent weeks, months and years. More about this below the graphic
And in a rare turn of events, for the trading week ending 24 July 2020 the Dow Jones and S&P 500 outperformed the Nasdaq. In our recent studies and other week ending performance articles the Nasdaq and S&P 500 tended to outperform the Dow. The weak performance of the Nasdaq this week is a clear sign that there was some sector rotation taking place during the week and money moved out of the tech heavy Nasdaq into other sectors.
Below the returns of the main market indices over the last week, 20 July 2020 to 24 July 2020 (sorted from best performer to worst performer)
We are however surprised at the current strength of the financial markets considering the fact that there is an alarming spike in the number of coronavirus cases in the the United States. This will have a negative impact on businesses, consumers and the health care sector in general. The impact of Covid-19 on consumers can already be seen in the earnings reported by banks in which the major banks made massive provisions for credit losses and write offs. We feel the markets are significantly overvalued at current levels and its due a strong correction.
Below the returns of the main market indices over the last week, 20 July 2020 to 24 July 2020 (sorted from best performer to worst performer)
- S&P 500: -0.28%
- Dow Jones: -0.76%
- Nasdaq: -1.29%
We are however surprised at the current strength of the financial markets considering the fact that there is an alarming spike in the number of coronavirus cases in the the United States. This will have a negative impact on businesses, consumers and the health care sector in general. The impact of Covid-19 on consumers can already be seen in the earnings reported by banks in which the major banks made massive provisions for credit losses and write offs. We feel the markets are significantly overvalued at current levels and its due a strong correction.
So lets take a look at some of the major market events during the last week
24 July 2020: The Dow Jones ended the day down -0.68%
Dow Jones Updates:
Website Updates:
We covered the latest earnings report of three of the major airlines in the USA, that included Southwest Airlines (LUV), American Airlines (AAL) and Delta Airlines (DAL) and compared the three's stock performance and earnings report against one another. Below a short extract of that article
Lets look at the horrible declines reported in revenues by the three airline groups (compared to the same quarter of the previous year):
Daily cash burn rate:
So taking all of the above into consideration which one of these airline stocks is set to outperform its peers in coming years due to its better financial position and their current stock price? Based on all the above we rate the stock of Southwest as the WINNER, as their revenues declined the least, they have the best Price/Stockholders equity ratio and their cash position (cash as percentage of total assets) is by far the strongest, making them the least likely to borrow money or issue stock to raise money to stay afloat during the Covid-19 pandemic. And their cash burn rate is the lowest, granted they are the smallest of the three airlines we looked at in this article
Read the full article here
23 July 2020: The Dow Jones ended the day down -1.31%
Dow Jones Updates:
Website Updates:
We covered the latest earnings report of Chipotle (CMG). Below a short extract from that article
So based on Chipotle's 2nd quarter 2020 earnings report what do value Chipotle Mexican Grill shares at? And is there value in the stock considering the strong run the stock price had over the last two years? Based on the earnings report our valuation model provides a target price (full value price) for Chipotle at $427.80 a stock (up from our 1st quarter 2020 earnings valuation of Chipotle). We therefore believe the stock of Chipotle is overvalued.
We usually recommend that investors look to enter a stock at least 10% below our target price which in this case s $412.80. A good entry point into the stock of Chipotle would therefore be at $371.50 or below. Since the stock of Chipotle is trading at well above our full value price we rate the stock of Chipotle as a sell
Read the full article here
22 July 2020: The Dow Jones ended the day, 22 July 2020 up by 0.62%
Dow Jones Updates:
Website Updates:
We covered the latest earnings report of Philip Morris. Below a short extract from that article
So what is Philip Morris stock worth based on the release of their 2nd quarter 2020 earnings report ? Based on Philip Morris latest earnings report our valuation models provide a target price (full value price) of Philip Morris stock at $80 a stock. Based on our target price (full value price) we believe the stock of Philip Morris is close to being fully valued
We usually recommend that long term fundamental or value investors look to enter the stock at 10% below our target price (full value price) which in this case is $80, so a good entry point into Philip Morris' stock would be at $72 or below. We expect the stock of Philip Morris (PM) to trade in a narrow range around its current price in coming weeks and months.
Read the full article here
21 July 2020: The Dow Jones ended the 21 July 2020 up by 0.6%
Dow Jones Updates:
Website Updates:
We covered the latest earnings report of Cal-Maine Foods. Below a short extract from that article
So what is Cal-Maine Foods (NASDAQ: CALM) stock worth based on the release of their 4th quarter and full fiscal 2020 earnings report? .Based on the earnings reported and their current financial position we value the stock of Cal-Maine
All things consider our valuation models provide a target price (full value price) for Cal-Maine Foods (CALM) at $34.40 a stock. We therefore believe that Cal-Maine Foods (CALM) stock is overvalued at this point in time.
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target price, which in this case is $34.40. We therefore believe a good entry point into Cal-Maine stock would be at $31 or below. Based on all the above we expect the stock price of Cal-Maine Foods to pull back to closer to our target price in coming weeks and months and we rate the stock as Cal-Maine as avoid.
Read the full article here
20 July 2020: The Dow Jones ended the day pretty flat with it being up by 0.03%
Dow Jones Updates:
Website Updates:
Towards the end of last week we covered the latest earnings report of Netflix. Below a short extract of that article
So based on the earnings report of Netflix (NASDAQ: NFLX) what do we value Netflix (NFLX) stock at? Based on the earnings report and the increased competition our valuation models sets a target (full value) price on Netflix of $386.20. (up strongly from our 1st quarter 2020 Netflix earnings report valuation). Based on our target price (full value price) we believe the stock of Netflix is overvalued.
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target price (full value price) which in this case is $386.20 We therefore believe a good entry point into Netflix is $347.60 or below. Since the stock of Netflix is well above our recommended entry point we would not recommend buying into Netflix right now as we believe there is still a lot of hope and fairytales and butterflies built into their future earnings expectations with the group trading at a PE ratio of over 83.
We therefore rate the stock of Netflix (NFLX) as a SELL
Read the full article here
Dow Jones Updates:
- (10:50 ET): The Dow Jones is currently trading down by -0.34%
- (07:30 ET): Dow Jones futures are currently trading down by -0.26%
- (03:44 ET): Dow Jones futures are currently trading down by -0.95%
Website Updates:
We covered the latest earnings report of three of the major airlines in the USA, that included Southwest Airlines (LUV), American Airlines (AAL) and Delta Airlines (DAL) and compared the three's stock performance and earnings report against one another. Below a short extract of that article
Lets look at the horrible declines reported in revenues by the three airline groups (compared to the same quarter of the previous year):
- Cash as percentage of total assets for Southwest Airlines (LUV): -82.9%
- Cash as percentage of total assets for Delta Airlines (DAL): -88%
- Cash as percentage of total assets for American Airlines (AAL): -86.4%
Daily cash burn rate:
- Cash as percentage of total assets for Southwest Airlines (LUV): $13 million
- Cash as percentage of total assets for Delta Airlines (DAL): $27 million
- Cash as percentage of total assets for American Airlines (AAL): $30 million
So taking all of the above into consideration which one of these airline stocks is set to outperform its peers in coming years due to its better financial position and their current stock price? Based on all the above we rate the stock of Southwest as the WINNER, as their revenues declined the least, they have the best Price/Stockholders equity ratio and their cash position (cash as percentage of total assets) is by far the strongest, making them the least likely to borrow money or issue stock to raise money to stay afloat during the Covid-19 pandemic. And their cash burn rate is the lowest, granted they are the smallest of the three airlines we looked at in this article
Read the full article here
23 July 2020: The Dow Jones ended the day down -1.31%
Dow Jones Updates:
- (14:07 ET): Dow Jones is currently trading down by -1.22%
- (12:02 ET): Dow Jones is currently trading down by -0.37%
- (09:02 ET): Dow Jones futures are currently trading down by -0.06%
- (04:27 ET): Dow Jones futures are currently trading up by 0.49%
Website Updates:
We covered the latest earnings report of Chipotle (CMG). Below a short extract from that article
So based on Chipotle's 2nd quarter 2020 earnings report what do value Chipotle Mexican Grill shares at? And is there value in the stock considering the strong run the stock price had over the last two years? Based on the earnings report our valuation model provides a target price (full value price) for Chipotle at $427.80 a stock (up from our 1st quarter 2020 earnings valuation of Chipotle). We therefore believe the stock of Chipotle is overvalued.
We usually recommend that investors look to enter a stock at least 10% below our target price which in this case s $412.80. A good entry point into the stock of Chipotle would therefore be at $371.50 or below. Since the stock of Chipotle is trading at well above our full value price we rate the stock of Chipotle as a sell
Read the full article here
22 July 2020: The Dow Jones ended the day, 22 July 2020 up by 0.62%
Dow Jones Updates:
- (12:20 ET): Dow Jones is currently trading up by 0.33%
- (06:52 ET): Dow Jones futures are currently trading down by -0.37%
- (01:27 ET): Dow Jones futures are currently trading up by 0.07%
Website Updates:
We covered the latest earnings report of Philip Morris. Below a short extract from that article
So what is Philip Morris stock worth based on the release of their 2nd quarter 2020 earnings report ? Based on Philip Morris latest earnings report our valuation models provide a target price (full value price) of Philip Morris stock at $80 a stock. Based on our target price (full value price) we believe the stock of Philip Morris is close to being fully valued
We usually recommend that long term fundamental or value investors look to enter the stock at 10% below our target price (full value price) which in this case is $80, so a good entry point into Philip Morris' stock would be at $72 or below. We expect the stock of Philip Morris (PM) to trade in a narrow range around its current price in coming weeks and months.
Read the full article here
21 July 2020: The Dow Jones ended the 21 July 2020 up by 0.6%
Dow Jones Updates:
- (14:40 ET): The Dow Jones is currently trading up by 1.02%
- (11:44 ET): The Dow Jones is currently trading up by 1.28%
- (05:24 ET): Dow Jones futures are currently trading up by 0.65%
Website Updates:
We covered the latest earnings report of Cal-Maine Foods. Below a short extract from that article
So what is Cal-Maine Foods (NASDAQ: CALM) stock worth based on the release of their 4th quarter and full fiscal 2020 earnings report? .Based on the earnings reported and their current financial position we value the stock of Cal-Maine
All things consider our valuation models provide a target price (full value price) for Cal-Maine Foods (CALM) at $34.40 a stock. We therefore believe that Cal-Maine Foods (CALM) stock is overvalued at this point in time.
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target price, which in this case is $34.40. We therefore believe a good entry point into Cal-Maine stock would be at $31 or below. Based on all the above we expect the stock price of Cal-Maine Foods to pull back to closer to our target price in coming weeks and months and we rate the stock as Cal-Maine as avoid.
Read the full article here
20 July 2020: The Dow Jones ended the day pretty flat with it being up by 0.03%
Dow Jones Updates:
- (11:50 ET): The Dow Jones is currently trading down by -0.1%
- (08:00 ET): Dow Jones futures are currently trading down by -0.06%
- (04:35 ET): Dow Jones futures are currently trading down by -0.48%
Website Updates:
Towards the end of last week we covered the latest earnings report of Netflix. Below a short extract of that article
So based on the earnings report of Netflix (NASDAQ: NFLX) what do we value Netflix (NFLX) stock at? Based on the earnings report and the increased competition our valuation models sets a target (full value) price on Netflix of $386.20. (up strongly from our 1st quarter 2020 Netflix earnings report valuation). Based on our target price (full value price) we believe the stock of Netflix is overvalued.
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target price (full value price) which in this case is $386.20 We therefore believe a good entry point into Netflix is $347.60 or below. Since the stock of Netflix is well above our recommended entry point we would not recommend buying into Netflix right now as we believe there is still a lot of hope and fairytales and butterflies built into their future earnings expectations with the group trading at a PE ratio of over 83.
We therefore rate the stock of Netflix (NFLX) as a SELL
Read the full article here
Chart of the Dow Jones Industrial Average (DJIA) vs Nasdaq vs S&P500 over last 10 years
The graphic below shows the performance of the Dow Jones Industrial Average (DJIA) index over the last month. As soon as a user clicks on the Nasdaq or S&P500 the graphic recalculates and shows the returns of the additional indices selected. The graphic will recalculate the returns if users provide their own dates, within the last 10 year (or they can select predefined dates from our Zoom box in the graphic). Data for the graphic obtained from MacroTrends.Net
Below the returns of the main market indices over the last 12 months (sorted from best performer to worst performer)
So from the above its is clear that the Nasdaq has easily outperformed other major indices such as the S&P 500 and The Dow Jones over the last 12 months. The same can be said about the 2 year performance, 3 year performance, 5 year performance and 10 year performance, as tech giants listed on the Nasdaq has been driving the performance of the Nasdaq.
Below a summary of the returns provided by the three major US stock market indices over the last 10 years:
- Nasdaq: 29.53%
- S&P 500: 9.65%
- Dow Jones (DJIA): -0.06%
So from the above its is clear that the Nasdaq has easily outperformed other major indices such as the S&P 500 and The Dow Jones over the last 12 months. The same can be said about the 2 year performance, 3 year performance, 5 year performance and 10 year performance, as tech giants listed on the Nasdaq has been driving the performance of the Nasdaq.
Below a summary of the returns provided by the three major US stock market indices over the last 10 years:
- Nasdaq: 332.4%
- S&P 500: 174.92%
- Dow Jones (DJIA): 143.80%