The primary week of 2021 introduced a whole lot of surprises. Traders appeared unfazed, persevering with to push inventory costs larger.
The S&P 500 logged a 1.8% acquire, led by cyclical teams corresponding to Power and Supplies. However, Actual Property names lagged following an additional improve within the 10-year Treasury price to 1.11%.
The speculative nature of the present bull market was exhibited by a 5.9% rise within the Russell 2000 index, a proxy for smaller corporations. The worth of Bitcoin additionally jumped to over $40,000.
The primary shock this week got here when Democrats received each Senate seats in Georgia throughout Tuesday’s runoff election. This secures a majority in each homes of Congress.
Lower than 24 hours later, a mob of protesters forcefully occupied the U.S. Capitol constructing for a few hours in the course of the formal means of confirming the Presidential victory of Joe Biden.
The occasion resulted in a tragic lack of life. Political leaders are pushing for a possible second impeachment trial for President Trump, within the waning days of his time period.
In financial information, the December jobs report on Friday confirmed a shock lack of 140,000 non-farm payrolls. This information, together with newfound Democrat management of the Senate, sparked stories that extra reduction/stimulus packages might be introduced within the early days of the Biden administration.
It could not be the highest information story within the monetary press, however the coronavirus pandemic remains to be with us.
This week we crossed the somber milestone of 90 million instances reported globally, at the same time as vaccines proceed to be distributed.
If the pandemic continues to persist, it might hamper the constructive trajectory of the financial restoration in 2021.
What to Count on Subsequent Week
Earnings season kicks off on Friday. High banks Citigroup (C), JP Morgan (JPM), and Wells Fargo (WFC) will publish quarterly outcomes. Refinitiv predicts that combination S&P 500 revenue will fall 10% within the fourth quarter, from a yr in the past.
In financial information, Friday will provide a take a look at December retail gross sales. We’ll additionally obtain shopper and producer inflation stories earlier within the week. Traders are paying extra intention to those metrics, because the U.S. greenback is falling and long-term charges are signaling that inflation threat is constructing.
Following the snap-back restoration in shares final yr from Pandemic lows, we consider that funding features will likely be tougher to come back by in 2021. Consequently, deciding what and when to purchase will be difficult for any investor.
Nevertheless, the very fact stays that enticing investments are on the market, in case you’re keen to dig slightly deeper.
One such Primary Supplies identify is value a more in-depth look and is our Inventory of the Week.
Inventory of the Week: Myers Industries (MYE)
The corporate operates in two distinct companies: manufacturing plastic containers and distributing tire restore provides.
The inventory gained 4% this week and we consider this momentum can proceed within the early months of 2021. Right here’s why:
Myers is rising earnings and is leveraged to a world economic system that ought to proceed to get well in 2021, because the COVID-19 pandemic progressively subsides.
This progress potential was on show in October, when administration posted quarterly outcomes that exceeded expectations. The corporate earned $0.30 a share within the third quarter, as income elevated 5% from a yr in the past, to $132.3 million. Consensus estimates name for Myers to generate 19.1% common revenue progress over the following two years.
Talking of analysts, Steve Barger of Keybanc upgraded the inventory in December, from Sector Weight to Obese. Barger is rated within the top-5% of over 7,200 analysts tracked by TipRanks, including weight to the decision.
It’s additionally value noting that the corporate returns money to traders by a quarterly dividend of $0.135 a share (2.5% yield). Administration can cowl the payout 2x with anticipated annual earnings, giving Myers room to doubtlessly improve the dividend in 2021.
Lastly, the corporate carries a Smart Score of 10/10 on TipRanks. This proprietary rating makes use of Large Knowledge to rank shares primarily based on 8 key elements which have traditionally been a precursor of future outperformance.
On prime of the constructive points talked about already, the Good Rating signifies that shares have seen insider shopping for, along with enhancing sentiment from monetary bloggers and traders.
FYI: That is simply 1 of the 20+ shares chosen for the Smart Investor portfolio. That’s the place we share extra detailed insights on our weekly inventory picks.