U.S. stocks gained again last Friday, with the S&P 500 inching up 0.3% to another closing record high, with the Dow Jones Industrial Average gaining 0.7%. However, rising bond yields erased 0.1% of the Nasdaq Composite’s earlier gains.
All told, each index saw notable gains for the week as investors bet that higher inflation will ease up as the economy recovers from the pandemic. Moreover, bank shares leaped higher – in fact, the financial sector as a whole performed well on the day – after the Federal Reserve announced it foresaw the banking industry easily withstanding a severe recession after the results of its annual stress test.
Q.ai runs daily factor models to get the most up-to-date reading on stocks and ETFs. Our deep-learning algorithms use Artificial Intelligence (AI) technology to provide an in-depth, intelligence-based look at a company – so you don’t have to do the digging yourself.
Sign up for the free Forbes AI Investor newsletter here to join an exclusive AI investing community and get premium investing ideas before markets open.
Microsoft Corporation (MSFT)
Microsoft Corporation nudged down 0.6% Friday to $265.02 per share on the back of 25.6 million trades. The stock is up over 19% YTD and is trading at 32.9x forward earnings.
Microsoft is trending for a handful of reasons this week – as big companies are wont to do – chief among them being the company marking its place in American history as only the second U.S. company to hit a $2 trillion market cap. (The first was Apple).
Additionally, Microsoft is making the rounds after confirming last week that Windows 11 is coming soon. The refreshed interface includes a new design, Windows store, and various improvements to performance. Windows 11 will also include support for running Android apps, and Microsoft Teams will integrate directly into the taskbar.
The news Windows update will likely prove fruitful to the company’s bottom line – which, admittedly, is already enormous. In the last three fiscal years, Microsoft saw revenue growth of nearly 12% to $143 billion, while operating income exploded 83% to $53 billion. Per-share earnings ballooned 244% to $5.76 in the same period. And return on equity doubled from 19.5% to 40%.
Currently, we expect Microsoft to experience revenue growth around 8.7% in the next twelve months. Our AI rates the tech giant around average overall, with A’s in Low Volatility Momentum and Quality Value, a B in Growth, and a D in Technicals.
Bed Bath & Beyond (BBBY)
Bed Bath & Beyond plunged 4.4% Friday to $28.93 per share on the back of 6.7 million trades. The company is trending below the 22-day price average of $30.70, though the stock remains up 62.9% YTD. Currently, Bed Bath & Beyond is trading at 19.9x forward earnings.
Bed Bath & Beyond has been trending for the past week for mostly the right reasons. The company recently released its “Beyond Big Savings Event” in an effort to spur summer spending, as well as a new private label brand – the fifth this year alone – to drum up business. With a continual blitz of new product lines and higher sales driving the company’s bottom line, Bed Bath & Beyond is doing their best to bring eager consumers back in their doors.
That said, the company has also been a hot topic on a number of message boards in the last month, with the company’s recent announcements feeding plenty of chum to meme-hungry traders. Only time will tell if the company’s good fortunes are of its own doing – or a product of the ongoing meme stock trend.
Hopefully for the company, it’s the former, as Bed Bath & Beyond’s last three fiscal years have been nothing but dismal. The company’s revenue dropped from $12 billion to $9.2 billion in the period, with operating income slashed to $35.9 million from $422.8 million – less than a tenth of its former level.
However, per-share earnings have grown some, ending the last fiscal year at $1.24 compared to $1.02 three years ago. Moreover, return on equity nearly doubled from 5% to 9.9% in the last year.
But unless Bed Bath & Beyond can scrub up, our AI rates this stock as a below-average investment overall, with C’s in Technicals, Growth, and Quality Value, and an F in Low Volatility Momentum.
Morgan Stanley (MS)
Morgan Stanley jumped 1.5% Friday to $88.40 per share with 11.1 million trades on the books. The investment bank and financial giant is trading up 29% YTD at forward earnings of 13.5x.
Morgan Stanley trended last week after making a rather contentious announcement last week: get your vaccine – or get out of its New York offices. The policy applies to clients and staff alike. Anyone who hasn’t received the second dose of Moderna or Pfizer’s vaccine or their single dose of Johnson & Johnson by the July 12 deadline will have to continue working remotely.
In the last fiscal year, Morgan Stanley saw revenue growth around 13.4% to $48 billion compared to $40 billion three years ago. Operating income rose significantly as well, from $13.7 billion to $17.9 billion in the three-year period, while per-share earnings gained 18.3% from $4.73 to $6.46.
Currently, Morgan Stanley is rated as a so-so investment opportunity by our AI: B in Growth and Low Volatility Momentum, C in Quality Value, and D in Technicals.
Intel Corporation closed down 0.29% Friday to $55.91 per share on the back of 21.1 million trades. The stock is up 12.2% YTD, though it’s fallen below the 22-day price average of $56.88. Currently, Intel is trading at a forward 12-month P/E of 13.1x.
Intel has trended frequently this year – somewhat negatively in recent months – as the giant chipmaker has struggled to find its footing again after years of mishaps and production delays. (While some competitors are on to producing 5nm chips, Intel isn’t expected to release its first 7nm chip until 2023).
But that doesn’t mean the company isn’t trying. Just last week, Intel CEO Pat Gelsinger announced that the company would begin restructuring its Data Platform Group into two new divisions that aims to regroup the business around data center, edge computing, and software. The company also hopes to make a (very dry) splash when it opens two new semiconductor manufacturing plants in the Arizona desert.
In the last three fiscal years, Intel has seen revenue growth around 9.7% to $77.87 billion compared to $70.8 billion three years ago. Operating income has seen very minor growth in comparison, from $23.24 billion to $23.88 billion, while per-share earnings have inched from $4.48 to $4.94. That said, return on equity has fallen from 29.3% to 26.4% in the same period.
At this time, our AI views Intel as a less-than-stellar investment. The company has earned ratings of C in Low Volatility Momentum and Quality Value and D in Technicals and Growth.
Facebook, Inc (FB)
Facebook, Inc closed down 0.5% Friday, ending the week at $341.37 per share with 14.6 million trades on the books. The company is still up 25% YTD and is trading around 25.8x forward earnings.
The company trended at the end of last week thanks to a memo from Morgan Stanley that stated Facebook remains the top pick amongst large-cap social media stocks. This is thanks to the company’s increased monetization efforts, product innovation, and ad growth in recent months, which the company hopes will propel it through an expected engagement drop-off period as the world reopens.
In the last three fiscal years, Facebook saw revenue growth of 69%, bringing the company’s cash flow from $55.8 billion to $85.97 billion. Operating profit rose significantly as well, a total of 53% rise from $24.9 billion to $32.67 billion. Per-share earnings also rose about 54% to $10.09 compared to $7.57 three years ago.
All told, Facebook is expected to see 12-month revenue growth around 4.2%. Our AI rates this investment just above average, with B’s in Growth, Low Volatility Momentum, and Quality Value, and a D in Technicals.
Liked what you read? Sign up for our free Forbes AI Investor Newsletter here to get AI driven investing ideas weekly. For a limited time, subscribers can join an exclusive slack group to get these ideas before markets open.