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Stocks Power Higher, Led by Netflix, Disney, Facebook – The Daily Rundown
MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN SHARES OF DIS AND NFLX
The S&P 500 continued to surge rising by nearly 40 basis points to 2,850. Stock’s look strong here, and I can’t see much standing in the way of its continue rise to 2,900 and probably beyond.
Disney reports results tomorrow, and the earnings are expected to rise by more than 23 percent to $1.95 per share, while revenue is expected to grow by nearly 8 percent to $15.34 billion. But I think more critical may what the technical chart is saying. When I look at the chart, I see a big breakout, and it would suggest to me the market for the first time is beginning to look past the problems of ESPN and subscriber losses plaguing shares since August of 2015.
Now three full years later the market is looking at Disney as a potential stream media powerhouse, that no longer needs advertising or cable provider to push out its content. Now investors realize the stock only trades at 15 times 2019 earnings estimates, multiple times cheaper than Netflix and Amazon. If an investor likes Netflix as a stock than I can’t see how they do not like Disney. True, Disney has a lot of other pieces to its pie, so it will keep the stock grounded to some extent. But could the market re-rate Disney to be a stock that trades at 25 times earnings? Maybe someday. The stock would be $191.
Facebook broke above resistance at $185, and now upside looks like $195. Not sure what to make of it. Analysts have grown bearish on Facebook, now expecting earnings in the third quarter to decline by more than 3 percent in the third quarter, and growth of just 19 percent for the year. I’m not entirely sure the stock is finished shaking out from the last round of results.
Netflix got going again too, and could be set to climb to about $357, and then maybe on to $373.
Micron got close to breaking the uptrend but held.
$Baba is looking pretty bad right here, and a drop to $165 could be on the way.
The dollar is nearing a potential break out, and that could be more bad news for investors looking for inflation, pressuring commodity prices lower.
By the way, I think the market has decided pretty clearly who is winning the trade war! What do you think?
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Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future.
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