Life is often about expectations. And the stock market doom and gloom the past several weeks has swung so hard into bearishness that company executives will use that to their advantage — it gives them a built-in excuse… like the pandemic, for example.
They use that bearishness as a crutch so they can then outperform and deliver to the upside. Then everyone is surprised and they start buying the stock hand over fist again…
So as we head into the meat of the earnings season, I see a lot of companies outperforming this quarter, which we discussed on this morning’s edition of The Big Picture With Jeff & Roger. I also see companies that don’t… well, they could get taken behind the ol’ woodshed.
So it’s a dicey situation…
And like we said last week… Now is not the time to be selling your favorite stocks and cutting your losses — it’s too late to panic sell. We rallied hard on another bad Consumer Price Index inflation number, and while we gave it back the next day, that rally has continued into this week.
Unless we get a fresh round of bad news, I see a market poised to head higher for a couple of weeks or so…
The Big Picture With Jeff & Roger
We like to talk a lot about low-hanging fruit when it comes to trading, and we’ve discussed Energy and Financials as the two sectors you can still get a pretty big bang for your buck. Is that still the case?
Banks like Goldman Sachs Group Inc. (NYSE: GS) are crushing earnings on heavy volume among fixed-income traders, which generated $3.53 billion in revenue, a 41% year-over-year increase and $500 million more than analysts expected.
Goldman now has a P/E ratio of 6.78 after being down 20% on the year, so people are looking at these stocks as super cheap.
Just like Financials, I’ve also been loving Energy stocks, which have been doing quite well.
Let’s break down Warren Buffett’s favorite stock this year, Occidental Petroleum Corp. (NYSE: OXY)…
Is this stock still a good buy? Buffett certainly thinks so. Its price-to-sales ratio, which indicates the value the markets have placed on each dollar of the company’s sales or revenue, is 2.32. This number is well below its peak of 3.81, which it hit twice in 2018.
And its price-to-book value, a measure of the market’s valuation relative to a stock’s book value, is 3.5.
These numbers make it one of the strongest stocks on Wall Street right now — not overvalued like a lot of people think.
In fact, I think we’re in just the beginning of an “energy supercycle.”
If we don’t get a bad recession, these stocks are likely to bounce, and bounce hard.
There’s another sector both Roger and I like right now, so be sure and check out The Big Picture With Jeff & Roger in the video up top so we can discuss an opportunity.
We also had an interesting discussion that once seemed insane: Which would you rather have right now, dollars in an account… or gold? You may be surprised by what we have to say on this matter…
Are there any topics you’d like to see me cover or questions you’d like answered? Send me an email at jeff@joyofthetrade.com. And be sure to stay ahead of the markets by subscribing to our YouTube channel and our Instagram page for all of the latest! Don’t forget to like, subscribe and leave us a comment!
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P.S. The Oh-So Rare Energy Supercycle Is Here
We have all the makings of an extraordinary opportunity… Over the past month, we’ve experienced unprecedented events in the energy markets…
- The Russia-Ukraine war continues to escalate.
- OPEC cut production by 2 million barrels a day.
- Strategic Petroleum Reserves hit new 40-year lows.
- The Nord Stream pipeline was just sabotaged.
- Energy prices in Europe are up 700%.
All these events contribute to an “Energy Supercycle” — the first in decades.
Those who play it right could stand a chance to collect a windfall over the coming months. So I went LIVE to issue my “No. 1 Energy Supercycle Play” so you can take advantage of the upcoming opportunity.
