As expected, last week’s action was positive for stocks with the NASDAQ ending the week on a high note and outperforming the S&P 500. That’s a good thing. It’s also not surprising for prices to take a pause after the NASDAQ rose by more than 1000 points in a short order.
A little more off the top is possible. To the downside, the NASDAQ could find its way to 13,600ish where there is support. However, the current trend suggests bulls will return before too long and push the NASDAQ back to its high.
Despite the minor pullback in Monday’s price action, Invesco QQQ Trust (QQQ) moved into buy territory on our technical analysis screen, which measures the scores for 12 different criteria. Our momentum and market leadership measuring sticks are also bullish.
Although nothing is foolproof, it’s been our experience that mostly good things happen when all of our readings align and point in the same direction.
Speaking of direction, indexes could get a boost from first quarter earnings season that gets started in earnest right about now and accelerates through the early part of May. So far, 21 S&P 500 companies have reported earnings with 17 topping Wall Street’s forecast and four missing the mark. If that pace continues, it will be one of the best quarters in the last 10 years, which should be a positive for stocks.
Once again, tech sectors were amongst the top performers on our leaderboard with a few exceptions, like Media, Retail, and Home Builders. Mobile payment exchange-traded fund (ETF) ETFMG Prime Mobile Payments ETF (IPAY) was number one with First Trust Dow Jones Internet Index Fund (FDN) in hot pursuit.
IPAY is poised to possibly break out if it can get past resistance at its 52-week high of $72.38. The last time IPAY busted through resistance, it ran higher by about 10% in a couple of weeks. Investors who want exposure to mobile payment companies might wait for the ETF to close above $72.38 before stepping in. If bulls fail to bust through the barrier, then IPAY could drift back to $66-68. A close below $66 and IPAY could stumble to $62ish.
There is nothing like a leading tech stock that was founded in 1881. That’s when NCR Corporation (NCR) was established and today they are a leader in Banking, Retail, Hospitality, and Telecommunications & Technology segments, including digital banking solutions for financial institution’s consumers and business customers.
Maybe their age is why the tech company offers investors value and growth. As we type, NCR trades at 9.72 times trailing earnings and at 15.31 times projected earnings per share (EPS). Meanwhile, Wall Street sees NCR’s bottom line increasing by 50% this year, to $2.54 per share from $1.69. In 2022, earnings are predicted to rise another 28.7%. At the moment, NCR trades at just 12.4 times next year’s consensus earnings estimate of $3.27.
In other words, NCR’s forward P/E is less than half the projected growth. It’s been our experience that those discounts eventually disappear. NCR also offers shareholder a robust return on equity (ROE) of 21% (from what we’ve read, Warren Buffet looks for ROEs of 14 and up) and is valued at $0.82 per dollar in revenue.
NCR Corporation (NCR) might not be a highflyer, but it does appear to offer shareholders strong growth prospects at a reasonable price.