We’ve officially reached the home stretch of the fourth-quarter earnings season, with more than 79% of S&P 500 companies having now released their latest quarterly results.
However, Wall Street took a brief reprieve last week from earnings to focus on the latest inflation data as well as the U.S. retail sales report for January.
We recapped those reports in a previous Market 360 (click here to read it now). But the bottom line is that they were disappointing. However, I don’t want you to worry too much about that. The reality is Wall Street is now shifting its focus back to earnings – and earnings are clearly working…
We saw that happen today with NVIDIA Corporation (NVDA). The company, which makes semiconductor chips that are in high demand for artificial intelligence applications, posted blowout quarterly results on Wednesday evening.
For its fourth quarter in fiscal year 2024, NVIDIA reported that revenue soared 265% year-over-year to a record $22.1 billion. The analyst community expected revenue of $19.14 billion. For context, NVIDIA reported $27 billion in revenue for the entire year in 2022.
Earnings, meanwhile, surged a whopping 486.4% year-over-year to $5.16 per share, well above expectations for $4.29 per share.
As a result of this news, the stock soared by more than 15% today.
We’ll have more to say about NVIDIA and its place in this impressive market rally tomorrow. But you should know that it’s not just mega-cap stocks like NVIDIA that are posting impressive results.
For example, over at my Accelerated Profits premium service, one stock on our Buy List that’s up big on earnings news today is Tenaris S.A. (TS). It is an energy company that produces steel casings, tubular products, pipes, joints, rods and couplings that are used in several oil and gas drilling activities.
Tenaris soared out of the gates this morning after the company smashed analysts’ earnings expectations yesterday evening. Fourth-quarter earnings increased 40% year-over-year to $1.92 per ADS, up from $1.37 in the same quarter a year ago. Fourth-quarter sales came in at $3.42 billion, down from $3.62 billion last year. Analysts expected earnings of $1.00 per ADS and sales of $3.09 billion, so Tenaris posted a stunning 92% earnings surprise and a 10.7% sales surprise.
For its fiscal year 2023, Tenaris reported earnings of $6.65 per ADS and total sales of $14.9 billion, which represented 53% annual earnings growth and 26% annual sales growth. These results also beat estimates for earnings of $5.25 per ADS and sales of $14.55 billion.
Following this news, Tenaris is up by roughly 8%, as of this writing.
As I said earlier, earnings are working, folks – regardless of how well-known the company is.
In total, we’re up by more than 35% on TS since adding it to our Accelerated Profits Buy List in February 2022. The S&P 500, meanwhile, is up by about 13% during that time. (I should also add that I recommended NVDA in August 2023, and we’re up about 65% in that position in about six months.)
The bottom line is that the market remains fundamentally focused. Stocks with solid fundamentals get rewarded, especially during earnings season. Those that don’t, meanwhile, get shot.
This means one simple thing – your best bet for profits for the remainder of this earnings season (and beyond) is in fundamentally superior stocks.
So, in today’s Market 360, I’ll share 10 stocks that are likely to struggle in the current market environment, due to their weak fundamentals. And then, I’ll share where you can find fundamentally superior stocks that truly represent the crème de la crème of the market.
This Week’s Ratings Changes
After taking a closer look at the latest institutional buying pressure and each company’s financial health, I decided to revise my Portfolio Grader for 96 big blue chips. Of these 96 stocks, 24 were downgraded from a B-rating (Buy) to a C-rating (Hold), and 29 stocks were downgraded from a C-rating to a D-rating (Sell).
I’ve listed the first 10 stocks to sell below, but you can find the full list – including the stocks’ Fundamental and Quantitative Grades – here.
Chances are that you have at least one of these stocks in your portfolio, so you may want to give this list a skim and adjust accordingly.
| Ticker | Company Name | Total Grade |
|---|---|---|
| ACM | AECOM | D |
| ADI | Analog Devices, Inc. | D |
| BHP | BHP Group Ltd Sponsored American Depositary Receipt Repr 2 Shs | D |
| BTI | British American Tobacco PLC Sponsored ADR | D |
| DGX | Quest Diagnostics Incorporated | D |
| DOCU | DocuSign, Inc. | D |
| ELS | Equity LifeStyle Properties, Inc. | D |
| EXR | Extra Space Storage Inc. | D |
| GM | General Motors Company | D |
| KHC | Kraft Heinz Company | D |
Use AI to Tilt the Market in Your Favor
Look, I’ve been in this game for 40 years. And I fully expect the market to continue rewarding fundamentally superior stocks, just as it always does during earnings season.
But with thousands and thousands of stocks to invest in, it can be hard to find fundamentally superior stocks set to prosper during earnings season.
That’s where my Accelerated Profits service can help.
That’s why we remain laser-focused on these stocks in my Accelerated Profits service. I’m confident that we are invested in the crème de la crème of the market, so our stocks should continue to rally strongly.
One of the reasons I’m so confident is because the system I use in Accelerated Profits harnesses the power of financial superintelligence to help me pinpoint companies that are primed to post strong earnings results – sending their stocks soaring as a result.
(Already an Accelerated Profits member? Click here to log in to the members-only website now.)
Sincerely,
Louis Navellier
Editor, Market 360
The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:
NVIDIA Corporation (NVDA)
