Stocks are approaching a “once-in-a-generation” buying opportunity, analysts from RBA say.
Corporate-profit indicators are hitting a trough in the US and global stock markets.
That means earnings are about to take off in nearly every area of the market, the firm says.
Investors could soon face a once-in-a-lifetime investment opportunity in stocks, thanks to a coming pop in corporate profits across sectors of the market, the investment firm Richard Bernstein Advisors says.
“Our view has been that the economy isn’t actually landing,” RBA said in a note Tuesday, pointing to fears that the economy could be headed for a hard landing or a coming recession. “Furthering the airplane metaphor, we see profits taking off,” it continued, adding: “Corporate profits are accelerating and the overall economy looks set to remain quite healthy.”
Though global stocks tipped into a profits recession this year, earnings appear to have troughed, RBA says. The firm says it’s expecting profits to accelerate into the end of 2023 and in 2024.
In the US, leading indicators for corporate profits have also bottomed, which suggests earnings will gain momentum into next year. The firm says it sees S&P 500 earnings growth to pick up 10%-15% through 2024.
Those growth trends are supported by a highly robust economy. Before adjusting for inflation, GDP grew a whopping 8.5% in the past quarter, the highest pace of nominal growth seen since 2006.
And that growth already appears to be showing up in corporate earnings. An RBA analysis found there were about 130 US firms that had reported at least 25% earnings growth as of October.
Profits could jump in nearly every area of the stock market, the firm says, apart from companies among the Magnificent Seven, which have seen shares soar this year already on Wall Street’s enthusiasm for artificial intelligence. By now, those mega-cap tech giants are overvalued, RBA says, which makes virtually any other bet a great opportunity for investors.
“Such narrow leadership seems totally unjustified and their extreme valuations suggest a once-in-a-generation investment opportunity in virtually anything other than those 7 stocks,” the firm added.
Other market forecasters have made a bullish case for stocks through the end of the year despite the S&P 500 set to end October with a third consecutive monthly loss. That decline has largely been sparked by surging bond yields and fears of higher-for-longer interest rates in the economy, though there are some signs that equities could quickly rebound from the recent correction.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.
The S&P/TSX composite index was up 0.05 of a point at 24,224.95.
In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.
The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.
The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.
The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.
This report by The Canadian Press was first published Oct. 10, 2024.
