AN ENCOURAGING SESSION - By WSS Research Desk

Sep. 11, 2013 4:01 PM ETAAPL
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Long/Short Equity, Portfolio Strategy

Contributor Since 2008

Wall Street Strategies has been providing independent stock market research since 1991 to individual, retail and institutional clients through a balanced approach to investing and trading. Charles Payne, our founder and chief analyst, is routinely sought after for his stock market, political, and general opinions by several prestigious news organizations. Currently, Mr. Payne is a contributor to the Fox News Network and Fox Business Network. He also hosts his own radio show on KFIAM 640 every Saturday from 2-4pm PST. Mr. Payne recently released his first book entitled Be Smart Act Fast Get Rich. Our all-star analytical team is called first when the media needs to know. We are regularly featured on several well respected finance-oriented radio and television programs such as Fox, CNBC, BNN, WSJ to name a few and widely recognized in the media as a leaders in the analyst community. In addition, Wall Street Strategies is part of Factset, Jaywalk, and Thomson-Reuters Consensus Estimates. Meet our analysts: Brian Sozzi is an equity research analyst specializing in the softline/hardline goods sectors of the retail industry for Wall Street Strategies Inc. Mr. Sozzi graduated Summa Cum Laude from Dowling College, receiving his Bachelors of Business Administration with a concentration in Finance and Accounting. Routinely sought after as a trusted point of reference for opinions and insight on the global economy and retail sector stock evaluation, Mr. Sozzi is a frequent on air contributor to CNBC, Fox Business Network, and Bloomberg, and is cited regularly by online/print publications that include Forbes, Bloomberg, The Wall Street Journal, Thestreet.com, CBS Marketwatch, Reuters, Seekingalpha, Associated Press, Crain’s NY Business, Fortune, Barron’s, AOL Finance, and the Financial Times. In 2009, Mr. Sozzi became recognized by Starmine as a top-ranked equity research analyst for stocks under coverage in such categories as EPS Estimate Accuracy and Industry Excess Return. David Silver is a Research Analyst for Wall Street Strategies. He is a graduate of Tulane University’s A.B. Freeman School of Business where he received his Bachelor of Science in Management with a dual degree in Finance and Accounting. David actively covers companies in the Transports, Autos, and Beverage sectors. He is routinely invited to appear on business oriented television and radio shows including CNBC, Fox News, Fox Business News, the Business News Network of Canada, WCBS Radio, and the Wall Street Journal Radio. In addition, David has been quoted in major business publications such as the Wall Street Journal, Forbes, Marketwatch, CNN Money, and Autoweek. David Urani is a research analyst with concentrations on the homebuilding, staffing, medical devices, and logistical services industries. Along with providing institutional clients with up-to-date reports of individual stocks within his industry coverage, David assists the rest of the Wall Street Strategies research desk with timely analysis of vital economic data. A graduate of the A.B. Freeman School of Business at Tulane University, David earned a Bachelor of Science in Management while majoring in finance. With prior training experience running small businesses, he has an eye for key fundamentals that keep Companies running efficiently. David’s insight has been featured in several outside sources, including the Fox Business Network, MarketWatch, and SeekingAlpha. Carlos Guillen is an Equity Research Analyst providing coverage of the technology sector for Wall Street Strategies, Inc. Mr. Guillen has had experience working in both the sell side and the buy side. Prior to working as an analyst, he was a Design Engineer for Lambda Electronics. Mr. Guillen holds an M.B.A. from NYU’s Stern School of Business, and he has a B.S. in Electrical Engineering from Manhattan College. Conley Tuner is a Research Analyst with Wall Street Strategies Inc. He is a frequent contributor to a number of media outlets including MarketWatch, Bloomberg, BBC news and Xinhua news. Conley holds a Masters in Business Administration and a Masters in International Affairs from the George Washington University. Jennifer N. Coombs is an Equity Research Analyst at Wall Street Strategies. She previously worked on the buy side as an Associate Equity Research Analyst covering the transportation subsector of the industrials sector at AIG SunAmerica Asset Management Corporation. Jennifer also covered Real Estate Investment Trusts (REITs) and has done broader research for the industrials, financials and consumer sectors. Prior to joining their research department, Jennifer worked as a Trading Assistant for SunAmerica’s index funds. She also worked briefly in the client portfolio management department at Dwight Asset Management Company – a fixed income subsidiary of Goldman Sachs. Jennifer graduated with distinction from Clarkson University where she earned a B.S. in Financial Information Analysis and Political Science, with minors in Economics and Law. Jennifer specialized in international markets, and briefly studied East Asian Economics at Sungkyunkwan University in Seoul, South Korea. Jennifer is currently a member of the New York Society of Security Analysts (NYSSA).

In Remembrance of 9-11 Never Forget

By Carlos Guillen

Equity markets are continuing to make very encouraging moves to the upside with the Dow Jones Industrial Average up over 90 points, up every single day this week, after tensions over the situation in Syria simmer down.

Last night, President Barack Obama delayed a call for military action against Syria, putting off a request that Congress authorize U.S. strikes targeting the Syrian regime after a deadly chemical-weapons attack last month, and this has ensured a short term sigh of relief for markets. However, things can change soon if Russia and Syria decide to do a 180 on their proposals. Nonetheless, it is very encouraging to see markets reacting positively even as risks still remain.

Among the risks is next week's Fed policy-setting meeting, as we have seen markets shake in recent months over discussions of rolling back Federal Reserve stimulus efforts. The Federal Open Market Committee's (OTCPK:FOMC) meeting will be take place Tuesday and Wednesday of next week, and as it stands, the Street is under the belief that the FOMC will scale back their quantitative easing program in spite of last Friday's disappointing nonfarm payrolls report. The consensus view is that the Fed will scale back their quantitative easing program from purchasing a total of $85 billion of Treasuries and mortgage-backed securities every month by $10 billion to $75 billion per month.

On a couple of note worthy items, Apple is down over 5 percent so far into the session, a day after it unveiled two new iPhone offerings. This comes after the stock had rallied 11 percent in the month leading up to the announcement. Analysts have criticized the cost of Apple's lower-priced iPhone, saying it would prove too pricey to succeed in emerging markets. Given its massive weight on the NASDAQ, it has this index lower while the Dow is up strong. Also MasterCard said today that card purchases and other transactions accelerated in July and August, a positive sign for consumer spending. And lastly, the Mortgage Bankers Association revealed that the number of mortgage applications filed in the latest week fell 14 percent from the previous week (but it could be skewed by the Labor Day week), amid rising mortgage rates. Wholesale inventories for July rose 0.1 percent on the month, below expectations for a 0.3 percent increase.

In all, the Dow is holding up well and even showing sign of continuing momentum, which we believe may continue for the rest of the week, but next week is a different story.

Market on Sale
By David Urani

So in August we got that much-heralded selloff but now the market has reassessed and the S&P 500 is back up 3.4% from the late August low. But, you might ask, what about all those negative things that are supposed to happen in September? True, the Fed still hasn't tapered, Congress still has yet to take on the debt ceiling debate, and we've even got this Syria issue still weighing on us. But as we've been saying all along if you're looking to invest it's all about corporate profits and arguably those aforementioned events aren't things that directly affect companies' bottom lines.

What happened all last month is that stocks went down but their respective earnings estimates still held up. So by Wall Street's calculations corporate profits for the rest of this year and next continue to trend higher but the price for buying those companies got cut. In effect, stocks went on sale.

In a nutshell, that effect is illustrated below. The so-called 'value' of the stock market in terms of price-to-earnings has become discounted. In other words, the growth premium on stocks is lower. The S&P 500 is currently trading at just over 14 times its expected earnings a year from now. As you can see below, that's quite low by historical standards.

This is a similar market valuation to that of mid-2010 but of course back then there were still a lot of glaring reasons for one to be cautious on stocks. However, right now U.S. and global growth look to be on track and simply put, stocks look undervalued here. Stocks appear to be making a run back to those all-time highs and deservedly so.

https://www.wstreet.com/user/register.asp?source=3

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