Current state of the market
The first four months of 2022 have been choppy for the SPDR S&P 500 (SPY). The current trading price is $417.56, down 12.33% from this year’s opening price. The price range from $414.59 to $421.84 represents an important support level which is being tested again. The SPY tested this range from late February to mid-March 2022. The current price action testing this range represents an inflection point for the market. Either we will break through this support level and test lower lows or we will see price action pull back to $425.35-$457.93 within the near-term price range.
The SPDR S&P 500 (SPY), iShares Russell 2000 ETF (IWM) and iShares 20+ Year Treasury Bond ETF (TLT) have all fallen since the start of the year. All three are down between 10% and 20% since the start of the year. Meanwhile, the SPDR Gold Trust (GLD) is currently up 5.33% year-to-date. The price action on these four commodities represents rising interest rates, falling stock values, and a possible flight to gold quality.
GLD, SPY, IWM & TLT percentage return YTD
5 best stocks to watch in May
API BP (BP)
Winning date: May 3, 2022 (before opening)
A few oil producing and operating companies will report earnings in May. BP represents an interesting opportunity in May 2022. We have seen price action at BP after highs and lows since late 2020. BP is currently trading at $29.29, up 9.72% from its stock price. opening of 2022.
The last four quarters of BP earnings reports have shown us an increase in sales while announcing a slightly positive to slightly negative net profit. Over the same period, BP’s total assets have increased and so have total liabilities. This tells us that while BP claws back its sales figures, which have been hit hard due to travel restrictions put in place during the Covid-19 pandemic, the company is keeping net income low by spending more assets and thus acquiring more liabilities.
Ideally, the reinvestment of BP’s net income represents the opportunity for significant future growth. The current earnings consensus for May 3 is around $1.41. If BP can meet or exceed expectations this quarter, we can expect BP to test a new high for 2022. If BP misses earnings, price action is likely to remain in the $27.58-31 range. $.42.
Pfizer Inc (PFE)
Winning date: May 3, 2022 (before opening)
Pfizer, the biopharmaceutical company, has received a lot of attention over the past 24 months, including bringing the first FDA-approved Covid-19 vaccine to market in 2021. PFE is currently trading at $49.54, in down 15.32% from its 2022 opening price. The PFE has posted higher lows since early 2021.
Pfizer’s last four quarterly reports have shown us a huge increase in sales, from $5 billion at the start of 2021 to over $20 billion. PFE has recorded more than $20 billion in sales over the past two quarters. Net income had hovered between about $3 billion and $8.5 billion over the same period. The last four quarters have also shown us an increase in total assets and total liabilities. This relationship between increased sales, a positive net income and increased assets and liabilities gives us the idea that PFE is experiencing significant real growth.
The real growth Pfizer has seen over the past four quarters coincides with its stock price appreciation. The current earnings consensus for May 3 is around $1.66. If the PFE can meet or exceed the consensus this quarter, we will likely see price action stay within the $45.45-$55.48 range. However, if PFE is unable to sustain its sales numbers and reports relatively weak net income, we will likely see price action drop below $45.45 and test a new low range, eventually finding a support around the $38.00-$40.00 range.
CVS Health Society (CVS)
Win date: May 4, 2022 (before opening)
The last 14 months of price action for CVS Health Corporation has been very bullish, increasing over 50% during this period. It’s only in the past couple of months that the price action has started to show bearish trends. CVS is currently trading at $96.59, down 6.05% from its 2022 opening price.
The last four quarters of CVS Health Corporation’s earnings reports showed us an increase in sales, from just over $69 billion to over $76 billion last quarter. However, CVS does not make much revenue from its sales. During the same period, CVS reported between $1.3 billion and $2.8 billion in net income. At the same time, CVS reported very consistent total assets and total liabilities. We can interpret the increase in their sales and the slight decrease in their net profit, while maintaining the assets and liabilities, as CVS trying to maintain their current size and number of stores while maintaining a positive net profit, which they’ve been able to do over the past four quarters.
Based on their last four quarterly financial reports, CVS Health Corporation is currently trading at a price that does not necessarily reflect the growth of the business over the past 12 months. The current earnings consensus for May 4 is around $2.14. If CVS meets or exceeds the consensus this quarter, we still may not see CVS maintain its current valuation. It is possible that recent price action is already anticipating this. If CVS misses earnings estimates this quarter, we will likely see CVS price action develop a bearish look and begin testing lower support levels. Maybe flip the price range from $80.43 to $88.95.
The Home Depot, Inc. (HD)
Win date: May 17, 2022 (before opening)
Home Depot (HD)’s year-to-date price action has been bearish, posting lower lows and lower highs since its 2022 opening price. HD is currently trading at $305.07, in down 26.77% from its 2022 opening price.
Over the past four quarters, Home Depot has reported rising and then falling sales and net income. Shrinking, sales and net profit for the past three quarters have declined each quarter. During the same period, HD reported constant total assets, which remained between $70 billion and $73.25 billion, and total liabilities, which remained between $68.5 billion and $73.6 billion. billions of dollars. We can interpret the rise and fall in sales and net income, while holding total assets and total liabilities constant, as a reflection of Home Depot’s customer behavior. HD has exhibited cyclical selling behavior in the past, which was exaggerated by the Covid-19 pandemic, due to the increased time consumers spent at home and could work on home improvement projects. ‘habitat.
The earnings consensus for May 17 is around $3.67. Home Depot’s current stock price reflects the decline in sales that has been reported over the past three quarters. If HD reaches or exceeds the consensus this quarter, we will likely see price action stay above the $284.91 support level and possibly revert to a bullish position. If the HD lacks income in May, it is likely that the price action will retest lower support levels moving into the $252.06-$284.91 range.
Target Corporation, Inc. (TGT)
Winning date: May 18, 2022 (before opening)
Price action for Target is currently down from new 2022 highs, returning to within $1.00 of its 2022 opening price. As of today, TGT is roughly unchanged from its opening price of 2022. Over the past month, TGT’s price action has set a new range.
The past four quarters of Target earnings reports have shown us increasing sales and a consistent positive bottom line. Over the past four quarters, sales figures have grown from just over $24 billion to over $30.9 billion. During the same period, net income increased from just over $2 billion to just over $1.5 billion. The last four quarters have remained constant for total assets, ranging between $50 billion and $54.5 billion. At the same time, TGT increased its total liabilities from just over $35.5 billion to just over $40.9 billion. Total liabilities increased from a constant total assets. We can interpret the growth in sales, a slight decline in net profit, constant total assets and growing total liabilities as TGT pushing to grow its business by taking on more liability risks while maintaining a positive net profit. This is a net benefit for investors.
The earnings consensus for May 18 is around $3.03. The current price level reflects a positive outlook for short-term investors. If Target meets or exceeds consensus this quarter, TGT is likely to move sideways with the potential to retest all-time highs that were posted in mid to late 2021. If TGT misses earnings in May, it is likely that we were seeing price action. move to retest the low of the range that has been set over the past month by moving towards the $209.25 support level.
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