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The Zacks Analyst Blog Highlights: Carnival, Macy???s, Microsoft, Alibaba and Sea

Zacks Equity Research

For Immediate Release

Chicago, IL – March 24, 2020 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Carnival CCL, Macy’s M, Microsoft MSFT, Alibaba BABA and Sea Limited SE.

Here are highlights from Monday’s Analyst Blog:

One Thing We Know for Sure

The Fed has taken another unprecedented measure today, limitless asset buying (unlimited QE), which will include US treasuries, mortgage price security, some types of corporate bonds, and municipal debt. This was following congress’s inability to pass a fiscal stimulus plan last night.

Monday’s futures surged on the Feds unlimited purchase plan only to break down once the cash markets opened. The lack of cohesion between congress and the Trump administration is disconcerting, but Jerome Powell and his dovish board of governors at the Fed are attempting to alleviate some of the anxiety.

We are in uncharted economic and market waters. This is the first global pandemic we have seen in the technological age where information is disseminated at light speed. This hyper-fast information distribution is useful for controlling this virus but bad for the fearmongering that follows.

The Fed’s no cap QE at the lowest Fed Funds rate is a scary proposition, especially considering the 10-year US Treasury yield is trading at its lowest level in history. These unprecedented measures by the Federal Reserve could send us into the monetary black hole of negative interest rates. A black hole that Japan has struggled with for over 2 decades.

Fixed income instruments are becoming decreasingly desirable assets as yields drop. This is creating a springboard for the historically high-returning stock market. Once this pandemic is under control and the economy switches back on, I suspect that all this pent-up demand will be unleashed, in the best way possible. The novel coronavirus came in the wake of ostensibly the strongest US economy in history, and I am confident that our robust economic conditions will resume once we have controlled the virus. 

The overhanging question and justified cause for this market crash is, how long will this pandemic and “economic shutdown” endure? How long can companies survive with no sales?

The biggest unknown right now is to what extent the federal government will come in and provide aid. A $2 trillion aid bill failed to pass last night, and another fiscal stimulus plan is expected to be voted on again today. The US economy needs aid. We need an effective economic stimulus to alleviate our anxiety-ridden stock market.

Only One Thing We Know For Sure

I suspect that a robust US government aid package, in combination with the Fed’s limitless asset buying, will boost the equity markets. Still, I would not suggest that you trade these volatile markets if you are not a seasoned trader. You will get burned if you try to call a bottom to this market break down. These markets are unbelievably choppy, and predicting the next move is no better than a coin flip.

Among all this uncertainty, there is only one thing that we know for sure, and that is that stocks will recover. With this as a given, it would only make sense to begin buying up some of the healthiest stocks at their discounted rates.

What Not To Do

Don’t try to be a hero in this market and buy up toxic assets like Carnival or even Macy’s. These companies are not essential to our economy, and they were on the decline before the novel coronavirus hit.

What I'm Buying

Microsoft

This enterprise has a very robust balance sheet with over $134 billion in cash & equivalence. Microsoft’s product offering includes essential cloud-based business functions that will remain a necessity during these uncertain times. Work from home policies are going to help drive not only MSFT’s cloud segment but also its laptop computer segment.

Alibaba

Alibaba is the largest e-commerce and cloud player in the most populous country in the world (China). It has a robust balance sheet to weather this storm, and its necessity is becoming increasingly evident as quarantined China becomes more reliant on its services.

Sea Limited

This firm controls the e-commerce, digital entertainment, and electronic payment segments in Southeast Asia. The internet world in this region is exploding. Digital revenues have tripled in Southeast Asia over the past 5 years and are expected to triple again in the next 5. Sea Limited is exhibiting prolific topline growth, appreciating its revenue by 163%. This company has an enormous amount of growth ahead of it.

Take Away

I believe that we are closing in on a bottom to this market crash, with the S&P 500 roughly 34% off its all-time highs last month, and the US government is on the brink of an over $1 trillion rescue plan. I am beginning to buy healthy equity assets, and I think it is time you think about doing the same.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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Microsoft Corporation (MSFT) : Free Stock Analysis Report
 
Carnival Corporation (CCL) : Free Stock Analysis Report
 
Sea Limited Sponsored ADR (SE) : Free Stock Analysis Report
 
Macy's, Inc. (M) : Free Stock Analysis Report
 
Alibaba Group Holding Limited (BABA) : Free Stock Analysis Report
 
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