Here’s Why Oil Stocks Have NOT Peaked Yet

Last week’s four-day trading week was an absolute boon for the stock market, with the S&P 500 rallying 6.5% and the Dow tacking on a 5.4% gain. The NASDAQ also roared back last week, climbing an impressive 7.5%.

Unfortunately, some stocks did not participate in the market’s rebound last week, namely energy stocks.

The reality is that weak economic news emanating from Europe, as well as all the talk about a potential recession here in the U.S., caused a mini “commodity crunch” last week.

Crude oil, copper and other commodity prices all declined. Even grain prices dipped briefly below their levels prior to the Russia-Ukraine conflict, despite the fact that Ukrainian wheat is not being shipped to its normal markets in Africa, Europe and the Middle East. Moderating commodity prices are a clear sign that inflation is cooling.

While we all want to see inflation moderate, the question remains, what does this recent action mean for energy stocks?

In today’s Market360, we’ll consider whether the oil market has peaked… and if there is still more room to profit in the energy sector.

Record Earnings Expected from Oil

While crude oil prices have dipped from $120 per barrel at the end of May to about $107 per barrel this week, gasoline prices remain elevated. The average price of gasoline in the U.S. has been around $5 per gallon, and some economists have even forecast that $6 per gallon isn’t out of the question as the summer driving season accelerates.

Americans are clearly frustrated with the elevated prices for gasoline, as the higher prices at the pump are now apparently impacting demand.

According to energy data provider OPIS, U.S. gasoline demand declined 8.2% in the latest week (ending on June 10) compared to a year ago. The Energy Information Agency (EIA) also estimates that oil consumption dropped by 110,000 barrels per day compared to the previous week.

Gasoline is widely viewed as a largely “inelastic” commodity where demand is slow to change. But oil consumption is changing right now. The EIA noted that the U.S. was using 9.4 million barrels per day at this time last year, while the U.S. is now using about 9.1 million barrels per day this year.  Clearly, some consumers may be consolidating their trips and driving less. The real test, though, will be the upcoming July 4th holiday weekend.

In the meantime, crude oil and refinery companies are still expected to report record second-quarter earnings. As an example, Cenovus Energy, Inc. (CVE) is forecast to achieve 800% year-over-year earnings growth for its quarter.

Energy Stocks Still Have Room to Run

In my opinion, energy stocks still have room to run and will remain profitable even if crude oil falls to $90 per barrel after September, when seasonal demand naturally ebbs.

As I laid out last week, oil companies continue to boast strong operating margins, which is why I expect them to report record earnings in the coming quarter. Currently, FactSet expects the energy sector’s earnings to grow a whopping 215.4% year-over-year. This compares to initial estimates made on March 31 for earnings growth of 137.4%. For perspective, the S&P 500’s earnings growth rate is forecast to come in at 4.3%. Wall Street typically rewards companies that post strong earnings and sales results, so I fully expect energy companies’ stock to be dropkicked and driven higher in the wake of their better-than-expected earnings reports.

I should also add that yesterday, as the market started falling apart after a strong open, energy stocks remained the bright green light in a sea of red.

So, I remain very bullish on energy stocks, and view the recent dip as a good buying opportunity.

That’s why in last Friday’s Growth Investor Monthly Issue for July my Top 5 Stocks list is chock-full of energy stocks.

I also added three exciting new stocks. These companies not only have strong forecasted earnings growth but have also benefited from positive analyst estimates and persistent institutional buying pressure.

To access the issue, simply click here.

The bottom line: The energy bull has not run out of steam yet.

Sincerely,

Signed:

Louis Navellier

P.S. I recently sat down with Wall Street legend Whitney Tilson, who Wall Street has dubbed “The Prophet” for correctly predicting many market moves. Now, our investing approaches may be different, but there’s one thing we can agree on: Something big is happening on August 29, 2022, in downtown Houston, Texas, that could set in motion the biggest investment opportunity in three generations.

So, if you think the market has been shaken-up this year… you haven’t seen anything yet.

Whitney and I have been tracking this event for 40 years, and what you do on that day will forever define who saw it coming, and had their money first… and who missed it completely.

We’ll be making an exciting announcement about this event soon, so keep an eye on your inbox!

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:

Cenovus Energy, Inc. (CVE)

Weekly Upgrades and Downgrades

During these busy times, it pays to stay on top of the latest profit opportunities. And today’s blog post should be a great place to start. After taking a close look at the latest data on institutional buying pressure and each company’s fundamental health, I decided to revise my Portfolio Grader recommendations for 97 big blue chips. 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 act accordingly.

This Week’s Ratings Changes:

 

Upgraded: From Hold to Buy
Symbol Company Name Quantitative
Grade
Fundamental
Grade
Total
Grade
ABMD ABIOMED, Inc. B C B
AWK American Water Works Company, Inc. B C B
BAH Booz Allen Hamilton Holding Corporation Class A B C B
BR Broadridge Financial Solutions, Inc. B C B
CAG Conagra Brands, Inc. B C B
CAH Cardinal Health, Inc. B C B
CCI Crown Castle International Corp B C B
CL Colgate-Palmolive Company B C B
EA Electronic Arts Inc. B B B
EL Estee Lauder Companies Inc. Class A B C B
GFL Environmental Inc Seagen, Inc. B C B
GOOGL Alphabet Inc. Class A B C B
HRL Hormel Foods Corporation B C B
INTU Intuit Inc. B C B
IQV IQVIA Holdings Inc. B C B
KHC Kraft Heinz Company B C B
KMB Kimberly-Clark Corporation B C B
LDOS Leidos Holdings, Inc. B C B
LUMN Lumen Technologies, Inc. B B B
MAS Masco Corporation B B B
MDLZ Mondelez International, Inc. Class A B C B
PAYC Paycom Software, Inc. B B B
PKI PerkinElmer, Inc. B C B
PODD Insulet Corporation B B B
RACE Ferrari NV B C B
RCI Rogers Communications Inc. Class B B C B
RPRX Royalty Pharma Plc Class A B C B
SJM J.M. Smucker Company B C B
SJR Shaw Communications Inc. Class B A C B
T AT&T Inc. B C B
TAP.A Molson Coors Beverage Company Class A B C B
WTRG Essential Utilities, Inc. B C B
XEL Xcel Energy Inc. A C B
XPEV XPeng, Inc. ADR Sponsored Class A B C B
ZI ZoomInfo Technologies Inc. B B B
ZS Zscaler, Inc. B B B
ZTS Zoetis, Inc. Class A B C B

 

Upgraded: From Sell to Hold
Symbol Company Name Quantitative
Grade
Fundamental
Grade
Total
Grade
ANSS ANSYS, Inc. C C C
ARE Alexandria Real Estate Equities, Inc. C D C
ATVI Activision Blizzard, Inc. C D C
BLK BlackRock, Inc. C C C
CHWY Chewy, Inc. Class A C D C
CRL Charles River Laboratories International, Inc. D C C
CRM Salesforce, Inc. C C C
CSGP CoStar Group, Inc. C B C
DLR Digital Realty Trust, Inc. B D C
ECL Ecolab Inc. C D C
EQIX Equinix, Inc. C C C
GMAB Genmab A/S Sponsored ADR C C C
NIO NIO Inc. Sponsored ADR Class A C C C
PEAK Healthpeak Properties, Inc. D C C
RBLX Roblox Corp. Class A C C C
RYAAY Ryanair Holdings Plc Sponsored ADR C C C
SSNC SS&C Technologies Holdings, Inc. C C C
TTWO Take-Two Interactive Software, Inc. C D C
U Unity Software, Inc. C C C
UL Unilever PLC Sponsored ADR D C C
Downgraded: From Buy to Hold
Symbol Company Name Quantitative
Grade
Fundamental
Grade
Total
Grade
BBVA Banco Bilbao Vizcaya Argentaria, S.A. Sponsored ADR C B C
BKNG Booking Holdings Inc. C B C
BNS Bank of Nova Scotia C C C
CAT Caterpillar Inc. C C C
CBOE Cboe Global Markets Inc. B C C
CCK Crown Holdings, Inc. B C C
CNHI CNH Industrial NV C C C
DB Deutsche Bank Aktiengesellschaft C C C
DFS Discover Financial Services C C C
DOW Dow, Inc. C B C
DRI Darden Restaurants, Inc. C C C
EC Ecopetrol SA Sponsored ADR C B C
FITB Fifth Third Bancorp B C C
GOLD Barrick Gold Corporation C C C
HLT Hilton Worldwide Holdings Inc B C C
INFY Infosys Limited Sponsored ADR C C C
JD JD.com Inc. Sponsored ADR C C C
KMI Kinder Morgan Inc Class P B C C
NICE NICE Ltd Sponsored ADR C C C
NKE NIKE, Inc. Class B D C C
NXPI NXP Semiconductors NV C B C
RIO Rio Tinto plc Sponsored ADR C C C
SCCO Southern Copper Corporation C C C
SUZ Suzano SA Sponsored ADR C B C
URI United Rentals, Inc. C B C
VMW VMware, Inc. Class A B D C
WFC Wells Fargo & Company B C C

 

Downgraded: From Hold to Sell
Symbol Company Name Quantitative
Grade
Fundamental
Grade
Total
Grade
COF Capital One Financial Corp D C D
CRH CRH Plc Sponsored ADR D C D
FMX Fomento Economico Mexicano SAB de CV D C D
GNRC Generac Holdings Inc. D C D
HON Honeywell International Inc. D C D
LSXMB Liberty Media Corp. Series B Liberty SiriusXM D C D
PARA Paramount Global Class B D C D
PARAA Paramount Global Class A D C D
PKX POSCO Holdings Inc. Sponsored ADR F B D
ROST Ross Stores, Inc. D D D
STLA Stellantis N.V. D C D
SYF Synchrony Financial D C D
TRMB Trimble Inc. D C D

To stay on top of my latest stock ratings, plug your holdings into Portfolio Grader, my proprietary stock screening tool. You may get started here.

Sincerely,
Louis Navellier

Louis Navellier

The Switch to Coal in Europe

Europe is currently in the height of a summer heatwave. And while this means folks have no use for their heating systems right now, concerns over how houses will be heated in the cold winter months have begun to arise.

Earlier this week, Russian energy giant Gazprom cut gas flow via the Nord Stream 1 pipeline, causing fears over the future winter gas supplies to escalate. The Nord Stream 1 pipeline flows from Russia to Germany under the Baltic Sea.

Gazprom cited technical problems for the constraints. The company said the return of equipment serviced by Germany’s Siemens Energy in Canada was delayed.

But German Economic Minister Robert Habeck coined the pipeline as a political move. A spokesperson for the bloc called the move “another example of Gazprom and Russia’s use of its energy supplies as an instrument of blackmail.”

And while Gazprom maintains the cut was not meant to send a message, CEO Alexei Miller said that the company will continue to do as it pleases.

“Our product, our rules,” Miller said during the St. Petersburg International Economic Forum. “We don’t play by rules we didn’t create.”

It is not yet known when or if the Nord Stream 1 gas flows will return to normal levels. But it does have impact on the market as a whole…

In today’s Market360, we’ll talk about those impacts and I’ll share the profit opportunities that I see in the near future.

The Impact of Russia’s Actions

Since the Russian invasion of Ukraine in February, Russia has cut off gas supply to several European countries. Typically, the EU receives roughly 40% of its gas via Russian pipelines. And last year, 55% of Germany’s natural gas supply came from Russian imports. After the Russian invasion, Berlin cut its consumption of Russian gas supply by 20%, as it began to purchase gas from Norway, the United States, and the United Arab Emirates.

Europe uses the summer months as the “filling season.” The bloc fills underground storage networks, including salt and porous-rock caverns, aquifers and depleted gas fields, with natural gas to store for the winter months.

In May, the EU set a goal for these storage facilities to reach 80% capacity by November. As of last weekend, storage was 54% full, according to Gas Infrastructure Europe. While above the 44% capacity at this time last year, the new strains on supply threaten that 80% goal.

And as Europe now scrambles for natural energy, countries are considering a return to coal-fired plants to produce heat in the winter and compensate for Russian supply shortages.

Coal burning produces carbon dioxide and methane gas, among others, and poses a serious threat to the environment. It is the most carbon-intensive fossil fuel in terms of emissions and has thus been one of biggest targets in the transition away from fossil fuels and into more renewable energy sources.

But policymakers have agreed upon coal burning as a necessity if Europe wants a solid heat supply in the winter.

Habeck said that, while a “bitter” choice, the decision to burn coal and limit the use of natural gas is one Germany had to make in order to store as much gas as possible.

In a statement Sunday, he announced Germany’s decision to restart coal-fired power plants. Industrial lobby Federation of Germany Industries (BDI) said last week that companies had already begun making the switch to coal to make more natural gas available for storage.

The German government has also called upon its people to use less natural gas in the coming months.

Europe Beyond Coal Managing Director Mahi Sideridou told CNBC:

“Decades of failed energy and infrastructure policies have led to a point where our governments are (re)considering coal, a fuel that is responsible for millions of deaths as well as irreversible climate damage. The critical thing now is that they ensure that any new measures are temporary, and that we are on the pathway to fully exit coal in Europe by 2030 at the latest.”

While the latest coal developments bode well for coal companies, that doesn’t mean that we should disregard oil companies.

Remember, in the U.S., oil is king, and I anticipate that it’s going to reign supreme for at least the next two decades. The fact of the matter is we’re still in the early innings of the new oil boom, which is why now is the perfect time to invest in the energy sector.

There are three main catalysts that will spur the oil boom over the coming years, but let me share one with you today…

The ESG Delusion

I call it the ESG Delusion.

For years, ESG investing (Environmental, Social, Governance) was all the rage. Folks wanted companies to decrease their investments in fossil fuels and reward them for long-term “climate friendly” solutions. The concept essentially ended fossil-fuel investing among those who followed the ESG ethos (including many big-money institutions) and caused energy stocks to fall to barely 2% of the S&P 500 holdings last year.

So, over the past couple of decades, oil companies were quick to rebrand themselves as “climate friendly,” too. For example, BP p.l.c. (BP) invested $220 million into U.S. solar projects and even temporarily renamed itself “Beyond Petroleum,” Shell plc (SHEL) spent $4 million on a wind farm and Chevron Corporation (CVX) invested $3 billion into a renewable energy growth. Today, more than half of the Fortune 500 companies are spearheading major ESG initiatives.

However, following the recent rise of energy stocks, oil companies now represent approximately 5% of the S&P 500 and continue to steadily rise. During its recent annual rebalancing, the S&P 500 ESG index kicked out Tesla, Inc. (TSLA) and added ExxonMobil (XOM). According to the University of Massachusetts’ 2021 Toxic Air Polluters Index, which ranks the 100 largest corporations based on 2019 emissions, Tesla ranked 22. ExxonMobil and Marathon Petroleum Corporation (MPC) ranked 28. The University of Massachusetts found that the vast majority of Tesla’s air pollution is attributable to its lithium-ion battery plant outside of Reno, Nevada.

If you’d like to know the other catalysts that should light a fire under oil stocks, sign up for Growth Investor now. I’ll send you my special report called 5 Stocks for the New Oil Age, which reviews the three big catalysts, as well as five oil companies that perfectly positioned from the oil boom.

I’ll also send you three other special reports – 10 Stocks to Sell in the New American Age, which details the 10 companies that I think are immediate sells, as well as 3 Income Opportunities for the New American Age and The Best Gold Play for the New American Age. I believe that the information in these reports will allow you to protect your wealth in the days to come.

I should also add that if you choose to become a member of Growth Investor today, you’ll be just in time to receive my Growth Investor Monthly Issue for July right off the presses. In this Monthly Issue, we’ll consider the recent inflation data, the Federal Reserve’s reaction to inflationary pressures and the threat of recession here in the U.S. I’ll also reveal three new additions to the Growth Investor Buy Lists that not only have strong forecasted earnings growth but have also benefitted from positive analyst estimates and persistent institutional buying pressure.

For full details, click here.

Sincerely,

Signed:

Louis Navellier

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:

BP p.l.c. (BP), Shell plc (SHEL)

Quant Ratings Updated on 60 Stocks

I hope you enjoyed the long weekend! There’s no doubt that Wall Street needed it. Not only did the S&P 500 fall into a bear market last week, but it recorded its worst weekly performance since early 2020.

So, today’s rally is a breath of fresh air. Even better? Odds are high that this strength will continue. The folks at Bespoke documented that the S&P 500 has only experienced 5%-plus slips two weeks in a row seven times since 1945, and they found that the S&P 500 tends to move up after. Specifically, the S&P 500 climbed an average 5.24% over the next month, 5.74% over the next three months, 20.64% over the next six months and 28.16% over the next year.

If history repeats, we should see a nice, healthy rebound here – especially in fundamentally superior stocks, as these will be the companies the “smart money” turns to first as it looks to invest in names that can continue to grow their sales and earnings in the current inflationary environment.

So, it pays to stay on top of the latest profit opportunities. Now, if you’re not sure where to start, you’ll want to check out my latest Weekly Upgrades and Downgrades post. After taking a close look at the latest data on institutional buying pressure and each company’s fundamental health, I revised my Portfolio Grader recommendations for 60 stocks.

I’ve included the first 10 stocks that were upgraded from a Hold (C-rating) to a Buy (B-rating), but you can click here for the full list of 60 stocks, as well as their Quantitative Grade and Fundamental Grades. 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 act accordingly.

Ticker Company Name Total Grade
BBVA Banco Bilbao Vizcaya Argentaria B
BF.A Brown-Forman Corporation Class A B
CBOE Cboe Global Markets Inc B
DB Deutsche Bank Aktiengesellschaft B
DFS Discover Financial Services B
FITB Fifth Third Bancorp B
GOLD Barrick Gold Corporation B
HPE Hewlett Packard Enterprise Co. B
MUFG Mitsubishi UFJ Financial Group B
NEM Newmont Corporation B

Of course, if you’re looking for the best stocks to invest in right now, you’ll want to review my Growth Investor Buy Lists. I feature more than 30 stocks in my High-Growth Investment Buy List and Elite Dividend Payers Buy List, so you’ll have plenty of fundamentally superior companies to choose from. I should also add that I will be recommending three more stocks in my Growth Investor Monthly Issue for July on Friday. These companies are energy, food and electric vehicle (EV) plays that are forecast to post strong second-quarter results.

Join me at Growth Investor today so you can receive my next Monthly Issue as soon as it’s available on Friday!

Sincerely,

Signed:

Louis Navellier

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:

Newmont Corporation (NEM)

Weekly Upgrades and Downgrades

During these busy times, it pays to stay on top of the latest profit opportunities. And today’s blog post should be a great place to start. After taking a close look at the latest data on institutional buying pressure and each company’s fundamental health, I decided to revise my Portfolio Grader recommendations for 60 big blue chips. 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 act accordingly.

This Week’s Ratings Changes:

 

Upgraded: From Hold to Buy
Symbol Company Name Quantitative
Grade
Fundamental
Grade
Total
Grade
BBVA Banco Bilbao Vizcaya Argentaria C B B
BF.A Brown-Forman Corporation Class A B B B
CBOE Cboe Global Markets Inc B C B
DB Deutsche Bank Aktiengesellschaft B C B
DFS Discover Financial Services B C B
FITB Fifth Third Bancorp B C B
GOLD Barrick Gold Corporation B C B
HPE Hewlett Packard Enterprise Co. B C B
MUFG Mitsubishi UFJ Financial Group B C B
NEM Newmont Corporation B C B
SGEN Seagen, Inc. B C B
SIRI Sirius XM Holdings, Inc. B C B
SNA Snap-on Incorporated B C B
TAP Molson Coors Beverage Company B C B
TFC Truist Finanical Corporation B C B
VICI VICI Properties Inc. B C B
ZTO ZTO Express (Cayman), Inc. B B B

 

Upgraded: From Sell to Hold
Symbol Company Name Quantitative
Grade
Fundamental
Grade
Total
Grade
BBY Best Buy Co., Inc. C D C
FDX FedEx Corporation C C C
FMX Fomento Economico Mexicano SAB C C C
HON Honeywell International Inc. C C C
LFC China Life Insurance Co. Ltd C C C
ROST Ross Stores, Inc. C D C
TT Trane Technologies plc D C C
WBA Walgreens Boots Alliance Inc C C C
WTW Willis Towers Watson Public Limited C D C
Downgraded: From Buy to Hold
Symbol Company Name Quantitative
Grade
Fundamental
Grade
Total
Grade
AMBD ABIOMED, Inc. C C C
APO Apollo Global Management Inc. B D C
AVTR Avantor, Inc. C C C
AWK American Water Works Company, Inc. C C C
CE Celanese Corporation C B C
IR Ingersoll Rand Inc. B C C
ITUB Itau Unibanco Holding S.A. C B C
KKR KKR & Co Inc B D C
KMB Kimberly-Clark Corporation B C C
LULU Lululemon Athletica Inc C B C
MA Mastercard Incorporated Class A C B C
MAS Masco Corporation C B C
MFC Manulife Financial Corporation C C C
MTD Mettler-Toledo International Inc. C C C
PAYC Paycom Software, Inc. C B C
PKI PerkinElmer, Inc. B C C
POOL Pool Corporation C B C
RCI Rogers Communications Inc. Class B C C C
RMD ResMed Inc. C C C
SBNY Signature Bank C B C
SHW Sherwin-Williams Company C C C
SPLK Splunk Inc. C B C
WST West Pharmaceutical Services, Inc. C C C
WTRG Essential Utilities Inc. C C C
XEL Xcel Energy Inc. B C C
ZI ZoomInfo Technologies Inc. C C C
Downgraded: From Hold to Sell
Symbol Company Name Quantitative
Grade
Fundamental
Grade
Total
Grade
CRL Charles River Laboratories International D C D
CRM Salesforce, Inc. D C D
CSGP CoStar Group, Inc. D B D
EQIX Equinix, Inc. D C D
ISRG Intuitive Surgical, Inc. D C D
JCI Johnson Controls International plc D D D
LBRDK Liberty Broadband Corp. Class C D B D
SSNC SS&C Technologies Holdings, Inc. D C D

To stay on top of my latest stock ratings, plug your holdings into Portfolio Grader, my proprietary stock screening tool. You may get started here.

Sincerely,
Louis Navellier

Louis Navellier

The Economic Reports That Shook Wall Street

We received a slew of economic reports this week: The Producer Price Index (PPI), retail sales report for May and the Federal Open Market Committee (FOMC) statement – all of which weighed on the broader market and triggered bouts of volatility.

So, in today’s Market360, I’d like to dig deeper into the economic reports from this past week. Let’s start with the biggest: the FOMC statement.

The FOMC Statement

On Wednesday, the Federal Reserve did exactly what Wall Street wanted: It raised key interest rates by 75 basis points.

This was the largest rate increase since 1994, and the Fed plans to continue lifting rates this year at the quickest pace in decades. The Fed anticipates two more 0.75 percentage point rate hikes. This will put the Federal Funds rate at 3%, right below where the two-year Treasury yield stands.

Initially, investors seemed pleased with the Fed’s decision, as the S&P 500, Dow and NASDAQ ended the day up 1.5%, 1% and 2.5%, respectively. However, Wall Street changed its tune on Thursday after fully digesting the report, prompting a big selloff.

Here’s the reality: The Federal Reserve is not on the same page as other economists regarding the direction of the U.S. economy.

While the central bank did revise its GDP growth forecast to 1.7%, down from 2.8% in March, the Atlanta Fed revised its second-quarter GDP growth estimate to 0%, down from previous estimates for 0.9% annual GDP growth.

Fed Chair Jerome Powell also said the central bank was not trying to induce a recession, but that outside factors affecting the economy, like Russia’s invasion of Ukraine, cannot be controlled.

Unfortunately… a negative second-quarter GDP result is now possible, since the Commerce Department noted that the U.S. economy contracted 1.5% in the first quarter. If this recurs in the second quarter, the U.S. will officially be in a recession. And the Fed’s aggressive rate hike could very well take us there. Thursday’s broader market selloff tells me that Wall Street finally came to this realization, too.

The fact of the matter is fears of a recession are growing following the latest inflation data and May’s retail sales, as well as the brief inversion of the 10-year Treasury yield and two-year Treasury yield curve.

Now, I covered the Consumer Price Index (CPI) report last Friday, but here’s a quick review:

  • CPI rose 1% and accelerated to an 8.6% annual pace in May – the highest level of inflation in over 40 years
  • Core CPI, which excludes food and energy, rose 0.6% in May and is running at a 6% annual pace
  • Food prices rose 1.2% in May and 10.1% in the last 12 months
  • Energy prices surged 3.9% in May and 34.6% in the last 12 months

The bottom line: Consumer inflation did not peak in March, as I’d earlier hoped. And the May PPI data further confirms that.

The Producer Price Index

On Tuesday, the Bureau of Labor Statistics reported a 0.8% rise from April and a 10.8% jump in the past 12 months. This was in line with economists’ projections. The core PPI, which excludes energy and trade, accelerated 8.3% in the past 12 months. For May, core PPI climbed 0.5%, which was slightly below estimates for a 0.6% increase but still above the 0.4% reading in April. Higher food and energy costs were the biggest factors behind the increase.

The wholesale prices of goods rose 1.4%, thanks in large part to energy. The final energy demand index rose 5% and gasoline rose 8.4%. Over the course of the last year, wholesale energy prices have skyrocketed 44.6%. I should also add that the national average for a gallon of gas hit $5 at the retail level, as the AAA reported.

Consumers did see some small wins. Wholesale food prices did not increase month-over-month despite the rising retail prices seen at the grocery store. Wholesale food prices have jumped 13.3% over the past 12 months.

And the wholesale prices for cars and trucks only rose 0.4%, compared to April’s 1% rise, indicating positive forward momentum for the auto industry. The past year has been majorly difficult due in large part to chip shortages.

But the truth of the matter is that while wholesale inflation is below the peak levels in March – 11.5% PPI and 7.1% core PPI – it remains near record highs.

The May Retail Sales Report

Retail sales for May did not fare much better. Wednesday morning it was revealed that for the first time in five months retail sales fell. Retail sales slipped 0.3%, down from a revised 0.7% increase in April.

Spending at gas stations increased 4%, reflecting the higher prices at the pump. The more conservative spending in May shows how inflation is impacting consumers’ purchases of nonessential goods – daily necessities like gasoline are taking priority for consumers’ wallets.

The value of overall retail purchases decreased 0.3%. But excluding sales of vehicles, which saw a 3.5% decrease in sales in May due to price markups, retail sales rose 0.5%. However, this was largely due to gas prices, which climbed 4%. Excluding gas prices, retail sales slipped 0.7%.

Ecommerce sales fell 1%, signaling consumers return to physical stores. Six out of 13 retail categories dipped last month, including electronics and furniture.

Grocery stores saw a 1.2% increase in sales, though this can be attributed to the higher prices at the stores, not to increased consumption.

The retail report does not include services like hotels or plane tickets. Restaurants, the only service component, rose 0.7%.

Where To Look

The latest economic data clearly shows that the inflationary pressure is not slowing down anytime soon and that a recession is growing more likely. And while this has caused Wall Street some panic, that does not mean that now is the time to jump out of the market. In fact, I continue to see great opportunities in the energy sector.

As I mentioned, wholesale energy prices spiked 44.6% in the last year, and the price of gas jumped 4% in the past month. The reality is energy prices are still soaring, as evidenced by the sky-high gas prices. This all bodes well for the energy sector.

So, in the current environment, now is the time to buy fundamentally superior oil companies that are leveraged to the price of oil.

Because oil companies are leveraged, they can see even bigger gains from just a small change in the price of oil. In other words, a 10% move in oil could cause a 100% gain in an oil stock.

However, you need to invest in the right ones. Luckily, I’ve found five energy stocks that are great buys right now.

If you’re interested in the names, sign up for Growth Investor today. Once you do, I’ll send you my brand-new special report 5 Stocks for the New Oil Age, which details the five best energy plays. You’ll also receive three other special reports – 3 Income Opportunities for the New American Age, The Best Gold Play for the New American Age and 10 Stocks to Sell in the New American Age.

For full details, click here.

Sincerely,

Signed:

Louis Navellier

 

Quant Ratings Updated on 62 Stocks

It was an absolute bloodbath on Wall Street on Monday. At one point during market hours, every single S&P 500 stock slipped lower. By the close, the S&P 500, Dow and NASDAQ were down 3.9%, 2.8% and 4.7%, respectively, and the S&P 500 officially fell into a bear market. I should also add that out of the 505 stocks in the S&P 500 index, only four were positive for the day…

The brutal selloff was due in large part to investors’ concerns over rising inflation, big interest rate hikes, the threat of recession and poor consumer sentiment.

As we learned last week, consumer inflation is back at 40-year highs. Following this morning’s release of the May Producer Price Index (PPI) report, we know that wholesale inflation isn’t faring much better. PPI accelerated 10.8% in the past 12 months and rose 0.8% in the past month. This was in line with economists’ projections. The core PPI, which excludes energy and trade, accelerated 8.3% in the past 12 months. For May, core PPI climbed 0.5%, which was slightly below estimates for a 0.6% increase but still above the 0.4% reading in April. Higher food and energy costs were the biggest factors behind the increase.

The bottom line is that while wholesale inflation is below the peak levels in March – 11.5% PPI and 7.1% core PPI – it remains near record highs.

High inflation plays into fears that the Federal Reserve will need to raise key interest rates even higher at its June Fed meeting to catch up to market rates and curb inflation. Specifically, some analysts believe the Fed will up key interest rates tomorrow by 0.75%, rather than 0.50%. Personally, I expect the Fed will stick with a 0.50% key interest rate hike, but we’ll know more on Wednesday after the Federal Open Market Committee (FOMC) statement for June is released at 2 p.m. Eastern time.

But given the accelerating inflation, it’s no surprise that the University of Michigan’s consumer sentiment plunged to a record-low of 50.2 in June. That’s down from May’s reading of 58.4. The report also pointed out that the current conditions gauge slipped to 55.4 in June, down from 63.3 in May. A record-low reading in consumer sentiment does not bode well for consumer spending.

Despite these issues weighing on Wall Street, there are still plenty of strong stocks in the market. Case in point: Over the weekend, I took a close look at the latest data on institutional buying pressure and each company’s fundamental health and decided to revise my Portfolio Grader recommendations for 62 big blue chip stocks. Out of these stocks, 28 were upgraded from a C-rating (Hold) to a B-rating (Buy). I should also add that only eight stocks were downgraded from a C-rating to a D-rating (Sell).

I’ve laid out the first 10 stocks that were upgraded to “Buys” in the chart below, but you can view the full list of 62 stocks – including the companies’ Fundamental Grade and Quantitative Grade – by clicking here.

Upgraded: From Hold to Buy
Symbol Company Name Total
Grade
ALL Allstate Corporation B
BF.A Brown-Forman Corporation Class A B
CAT Caterpillar Inc. B
CME CME Group Inc. Class A B
CPB Campbell Soup Company B
FNV Franco-Nevada Corporation B
HBAN Huntington Bancshares Incorporated B
IR Ingersoll Rand Inc. B
JD JD.com Inc. Sponsored ADR Class A B
KDP Keurig Dr Pepper Inc. B

Personally, I believe the best buying opportunities are in the energy sector. The reality is energy prices are still soaring, as evidenced by the latest Consumer Price Index (CPI) and PPI reading for May. Couple this with sky-high oil prices (as of this writing, crude oil sits at $120 per barrel) and record-high gas prices, and that bodes well for the energy sector.

So, in the current environment, now is the time to buy fundamentally superior oil companies that are leveraged to the price of oil. Because oil companies are leveraged, they can see even bigger gains from just a small change in the price of oil. In other words, a 10% move in oil could cause a 100% gain in an oil stock.

However, you need to invest in the right ones. Luckily, I’ve found five energy stocks that are great buys right now. If you’re interested in the names, sign up for Growth Investor today. Once you do, I’ll send you my brand-new special report 5 Stocks for the New Oil Age, which details the five best energy plays. You’ll also receive three other special reports – 3 Income Opportunities for the New American Age, The Best Gold Play for the New American Age and 10 Stocks to Sell in the New American Age.

Become a member of Growth Investor today and get immediate access to my brand-new reports, as well as my latest recommendations, Weekly Updates, Monthly Issues and Special Market Podcasts.

Sincerely,

Signed:

Louis Navellier

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:

 

Weekly Upgrades and Downgrades

During these busy times, it pays to stay on top of the latest profit opportunities. And today’s blog post should be a great place to start. After taking a close look at the latest data on institutional buying pressure and each company’s fundamental health, I decided to revise my Portfolio Grader recommendations for 62 big blue chips. 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 act accordingly.

This Week’s Ratings Changes:

Upgraded: From Hold to Buy
Symbol Company Name Quantitative
Grade
Fundamental
Grade
Total
Grade
ALL Allstate Corporation B D B
BF.A Brown-Forman Corporation Class A B B B
CAT Caterpillar Inc. B C B
CME CME Group Inc. Class A B C B
CPB Campbell Soup Company B C B
FNV Franco-Nevada Corporation B C B
HBAN Huntington Bancshares Incorporated B C B
IR Ingersoll Rand Inc. B C B
JD JD.com Inc. Sponsored ADR Class A B D B
KDP Keurig Dr Pepper Inc. B B B
KMB Kimberly-Clark Corporation B C B
MAS Masco Corporation B B B
MFC Manulife Financial Corporation B C B
MKC McCormick & Company, Incorporated B C B
MKC.V McCormick & Company, Incorporated B C B
MNST Monster Beverage Corporation B C B
NKE NIKE, Inc. Class B B C B
PCAR PACCAR Inc B C B
POOL Pool Corporation B B B
PRU Prudential Financial, Inc. B D B
SBNY Signature Bank B B B
SHW Sherwin-Williams Company B C B
STX Seagate Technology Holdings PLC B C B
TEL TE Connectivity Ltd. B C B
URI United Rentals, Inc. B B B
VMW VMware, Inc. Class A B D B
VOD Vodafone Group Plc Sponsored ADR B C B
WFC Wells Fargo & Company B C B
Upgraded: From Sell to Hold
Symbol Company Name Quantitative
Grade
Fundamental
Grade
Total
Grade
APD Air Products and Chemicals, inc. C C C
BEN Franklin Resources, Inc. C C C
CMI Cumminc Inc. C C C
COF Capital One Financial Corp C C C
CRM Salesforce, Inc. C C C
DD DuPont de Nemours, Inc. C D C
GGG Graco Inc. C C C
JCI Johnson Controls International plc C D C
JPM JPMorgan Chase & Co. C D C
LBRDK Liberty Broadband Corp. Class C D B C
UI Ubiquiti Inc. C F C
VEEV Veeva Systems Inc Class A D C C
Downgraded: From Buy to Hold
Symbol Company Name Quantitative
Grade
Fundamental
Grade
Total
Grade
AMH American Homes 4 Rent Class A C B C
BAH Booz Allen Hamilton Holding Corporation B C C
BBVA Banco Bilbao Vizcaya Argentaria C B C
BKI Black Knight Inc. C B C
CBOE Cboe Global Markets Inc. B C C
EA Electronic Arts Inc. C B C
GFL GFL Environmental Inc C C C
IFF International Flavors & Fragrances Inc. C B C
SGEN Seagen, Inc. C C C
TAP.A Molson Coors Beverage Company C C C
VALE Vale S.A. Sponsored ADR C B C
VICI VICI Properties Inc. B C C
ZS Zscaler, Inc. C B C
ZTS Zoetis, Inc. Class A C C C
Downgraded: From Hold to Sell
Symbol Company Name Quantitative
Grade
Fundamental
Grade
Total
Grade
ARE Alexandria Real Estate Equities, Inc. D D D
FMX Fomento Economico Mexicano SAB D C D
GMAB Genmab A/S Sponsored ADR D C D
INTC Intel Corporation D B D
MCO Moody’s Corporation D D D
PEAK Healthpeak Properties, Inc. D C D
RYAAY Ryanair Holdings Plc Sponsored ADR D C D
TT Trane Technologies Plc D C D

To stay on top of my latest stock ratings, plug your holdings into Portfolio Grader, my proprietary stock screening tool. You may get started here.

Sincerely,
Louis Navellier

Louis Navellier

Here’s How to Protect Your Portfolio Against Inflation

In a recent Wall Street Journal survey conducted with NORC at the University of Chicago, 83% of respondents described the state of the economy as “poor or not so good.” According to the report, that is “the highest level of dissatisfaction since NORC began asking the question every few years starting in 1972 as part of the General Social Survey.”

The main culprit for dissatisfaction? Inflation.

High inflation has been a topic of concern since the end of last year. With inflation still sitting at decade highs, Americans are feeling the pinch.

As we’ve covered, the main reasons for these record numbers remain action from the Federal Reserve, ongoing supply chain issues and the Russia-Ukraine war.

Just this morning we had our monthly pulse check on how inflation is faring when the most recent Consumer Price Index (CPI) numbers were released. So, in today’s Market360, we’ll take a look at today’s CPI report and review the best place to put your money in this inflationary environment.

Inflation Continues Higher

This morning’s CPI report for May came in much higher than expected.

Specifically, the Labor Department reported CPI rose 1% in May and accelerated to an 8.6% annual pace in May, which is the highest level of inflation in over 40 years (since December 1981). The core CPI, which excludes energy and food, rose 0.6% in May and is now running at a 6% annual pace.

This is 0.3% higher than April and higher than the previous peak of 8.5% in March.

If you are looking for a silver lining, the core CPI decelerated slightly from the 6.2% annual pace in April.

However, many details in the CPI report remain shocking. As an example, food prices rose 1.2% in May and have risen 10.1% in the past 12 months. Energy prices surged 3.9% in May and 34.6% in the past 12 months, led by gasoline that rose 4.5% in May and 50.3% in the past 12 months.

Also notable is that fuel oil soared 16.9% in May and 106.7% in the past 12 months!

The bottom line is that inflation did not peak in March, as I had earlier hoped. This means that in the current inflationary environment, companies profiting from inflation, like energy, fertilizer, food and shipping stocks, remain an oasis for investors.

Energy Stocks Remain a Buy

It’s why at Growth Investor we’ve been loading up on stocks that do well in the inflationary environment. One sector of the market that continues to hand out wins for us is oil and energy. The fact is they have accelerating earnings momentum at a time when earnings momentum is slowing for many S&P 500 companies. FactSet recently reported that analysts have lowered second-quarter earnings estimates for seven of 11 sectors, but analysts have upped energy earnings estimates by a whopping 29.4%.

Here’s the reality: Oil is king, and I predict it’s going to remain king for at least the next two decades. Right now, we’re at the start of a new, inevitable oil bull market. The staggering price moves in oil bull markets make them truly phenomenal opportunities.

It’s why I released a new special report called 5 Stocks for the New Oil Age. In this report, I review the three catalysts that will keep oil prices surging and reveal the five best oil stocks that can protect your portfolio in the coming years. (For details on how to gain access to this report go here.)

The fact of the matter is my Growth Investor stocks continue to profit from inflation, and they should remain an oasis in the current chaotic environment. If you want to position your portfolio to prosper, join me at Growth Investor today. You’ll have full access to all of my recommendations, as well as my Weekly Updates, Monthly Issues, Special Market Podcast, special reports, and much more.

Click here for more information on how to join and receive my top five energy stocks today.

 

Signed:

Louis Navellier

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:

 

Quant Ratings Updated on 66 Stocks

Target Corporation (TGT) has been having a very rough go of it since its disastrous first-quarter earnings report on May 18.

Target reported that fuel and freight costs exceeded expectations by $1.0 billion in the first quarter, and the company noted that higher wages and excessive inventories also weighed on results.

For the first quarter, sales grew 4% year-over-year to $25.2 billion, which beat estimates for $24.49 billion. Sales were driven by strong demand for household essentials, food, beverages and beauty products, as well as increased sales of Target brands with consumers seeking deals. Target noted that the first quarter was the 20th-straight quarter of sales growth.

However, first-quarter adjusted earnings slipped 40.7% year-over-year to $2.19 per share, down from $3.69 per share in the first quarter of 2021. Analysts expected adjusted earnings of $3.06 per share.

Due to the weaker first-quarter results, Target trimmed its full-year operating earnings outlook. It now expects its operating margin this year to be about 6%, down from previous forecasts for 8% or more.

Today, Target shares took another hit after company management revealed that it was lowering its second-quarter guidance. Specifically, Target cut its second-quarter operating margin projections from 5.3% to 2%. For the second half of the year, Target anticipates its operating margin rate to be about 6%. For the full year, the company expects revenue to increase in the low- to mid-single digits.

The company is also planning on “pricing actions to address the impact of unusually high transportation and fuel costs.” In other words, Target will be raising prices in the second quarter to offset the higher costs due to inflation.

Now, following the weaker-than-expected earnings results and subsequent selloff, Target was downgraded to a D-rating in Portfolio Grader. It was briefly upgraded to a C-rating last week, but then downgraded to a D-rating again over the weekend. The reality is Target hasn’t held a B-rating (or been consider a “Buy”) since its earnings report. So, folks following my Portfolio Grader would’ve known not to invest and avoided the stock’s more than 25% fall since May 18.

Of course, Target isn’t the only company that was downgraded to a D-rating over the weekend. Out of the 66 stocks that were upgraded/downgraded this weekend, 12 were downgraded from a C-rating to a D-rating. I’ve listed the first 10 below, but for the full list of stocks and their Quantitative Grade and Fundamental grade, please click 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 act accordingly.

Upgraded: From Hold to Buy
Symbol Company Name Total
Grade
ATVI Activision Blizzard Inc. D
BEN Franklin Resources, Inc. D
BIIB Biogen Inc. D
COF Capital One Financial Group D
DLR Digital Realty Trust, Inc. D
IP International Paper Company D
JHX James Hardie Industries PLC D
TAK Takeda Pharmaceutical Co. Ltd. D
TGT Target Corporation D
UI Ubiquiti Inc. D

If you’re looking for the best stocks to buy, then I encourage you to give my Growth Investor Buy List stocks a look. I recently added eight new energy, fertilizer and commodity-related stocks to the Buy Lists, as they represent the “sweet spot” in the current environment. I also revealed my latest Top Stocks list, which is also dominated by energy and commodity-related companies.

For full details, click here and join me at Growth Investor today!

Sincerely,

Signed:

Louis Navellier

P.S: Crypto pioneer Charlie Shrem and legendary investor Luke Lango are holding an emergency briefing called Crypto in Crisis on June 14, at 7 p.m. Eastern time. They’ll review the phenomenon that’s been plaguing cryptos recently and how it could spark a new era in crypto and a new wave of millionaires.

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:

Digital Realty Trust, Inc. (DLR), Ubiquiti Inc.(UI)

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