Popular US Stocks traded on POEMS in June 2022 July 18, 2022
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At a glance:
- Interest rate hike of 0.75%
- Inflation reached a 40-year high
- Market turned bear
The three US major indices – Dow Jones, S&P 500 and Nasdaq Composite entered bear territory.
Major US Indices performance in the month of June 2022
| NASDAQ | DOW JONES | S&P 500 | |
| Month Open | 12,176.89 | 33,156.31 | 4,149.78 | Month Close | 11,028.74 | 30,775.44 | 3,785.39 | Monthly return | -9.43% | -7.18% | -8.78% |
The Federal Reserve increased the interest rate by 75 basis points which is the highest increase since 19941. The latest hike pushed the federal-funds rate to a range of 1.5% and 1.75%. During June’s meeting, all of the members expected the rates to be at least 3% this year, suggesting that more rate hikes are to be expected.
Inflation has reached its highest in 40 years2. The latest consumer-price index (CPI) figure released by the labour department is 8.3% for May 2022. The increase in inflation is largely attributed to energy and groceries. May’s CPI figure did not suggest inflation may ebb.
With the soaring high inflation figures, the equities market went deeper into the bear market. A bear market is defined by a fall in equities by 20% or more from its recent high3. With the 3 major indices dropping more than 20% from its high, the market bottomed towards the middle of the month, and recovered some losses in the later half.
Here are some of the more popular US stocks – not ranked in any order – traded by POEMS customers in the month of June 2022.
HP Inc (NYSE: HPQ)
HPQ dropped 17.56% in June. It opened at USD39.76 and closed at USD32.78. HPQ posted stronger than expected results this quarter. Earnings per share (EPS) was reported at USD1.08 beating estimates of USD1.05. Revenue was reported at USD16.5 billion beating estimates of USD16.17 billion. The company expects Q3 2022 EPS to be in the range of USD1.03 – USD1.08, better than the consensus estimate of USD1.02. On a full-year basis, the company raised its EPS to a range of USD4.24 – USD4.38, compared to its prior guidance of USD4.18 – USD4.384.
Technical analysis
Status: Neutral
Support: USD31.24
Resistance: USD33.98
Range bound
SALESFORCE INC (NYSE: CRM)
CRM’s earnings per share and revenue beat estimates for this quarter. CRM opened this month at USD178.01 and dropped 7.29% to close at USD165.04. EPS of USD0.98 and revenue of USD7.41 billion beat estimates of USD0.9449 and USD7.38 billion respectively. For the next quarter, CRM expects adjusted EPS in the range of USD1.01 to USD1.02 and revenue in the range of USD7.69 billion to USD7.70 billion. On a full-year basis, CRM forecasts adjusted EPS in the range of USD4.74 to USD4.76, up from previous guidance of USD4.62 to USD4.64, beating the consensus estimates of USD4.68 per share5.
Based on Phillip Securities Research (PSR), CRM is a BUY with a target price of USD253.00.
Technical analysis
Status: Neutral
Support: USD155.85
Resistance: USD185.39
Range bound
NVIDIA Corporation (NASDAQ: NVDA)
NVDA’s earnings beat estimates for this quarter but stock price fell in extended trading after the chipmaker gave a light forecast for the current quarter. NVDA opened this month at USD187.24 and dropped 19.04% to close at USD151.59. EPS of USD1.36 beat estimates of USD1.29 with revenue reported at USD8.29 billion, beating estimates of USD8.11 billion. The company’s forecasted revenue for the current quarter is about USD8.1 billion, with analyst expectations at USD8.54 billion6.
Technical analysis
Status: Neutral
Support: USD149.06
Resistance: USD159.09
Range bound
Crowdstrike Holdings Inc (NASDAQ: CRWD)
CRWD delivered earnings results that beat estimates this quarter. CRWD EPS was reported at USD0.31 against the estimate of USD0.2321. Reported revenue of USD487.83 million beat estimates of USD463.96 million7. For the current quarter, CRWD expects revenue of USD512.7 million to USD516.8 million, versus the consensus of USD509 million. They see Non-Generally Accepted Accounting Principles (GAAP) EPS of USD0.27 to USD0.28, versus the consensus of USD0.24. CRWD opened June at USD163.01 and gained 3.4% to close at USD168.56.
Technical analysis
Status: Neutral
Support: USD156.39
Resistance: USD180
Range bound
NIO Inc (NYSE:NIO)
NIO reported this quarter’s earnings and beat estimates in the month of June. NIO’s EPS of USD0.79 is higher than the estimates of USD0.9416 and revenue of USD9.91 billion beat estimates of USD9.9 billion8. For Q2 2022, the company expects a revenue of USD1.47 to USD1.59 billion and between 23,000 to 25,000 vehicles to be delivered, representing an increase of approximately 5.0% to 14.2% from the same quarter of 20219. NIO opened June at USD17.59 and gained 23.48% to close at USD21.72.
Technical analysis
Status: Neutral
Support: USD19.37
Resistance: USD25.05
Range bound
Oracle Corporation (NYSE: ORCL)
ORCL reported this quarter’s earnings and beat estimates in the month of June. EPS of USD1.54 and revenue of USD11.84 billion both beat estimates of USD1.37 and USD11.66 billion respectively10 . The company warned of a USD100 million hit per quarter in fiscal year 2023 as a result of suspending services in Russia, but still expects upcoming quarter revenue growth between 17% and 18%, boosted by its USD28 billion acquisition of healthcare IT company Cerner Corp (NASDAQ:CERN). ORCL opened June at USD73.02 and dropped 4.31% to close at USD69.87.
Technical analysis
Status: Neutral
Support: USD64.45
Resistance: USD74.11
Range bound
Zoom Video Communications Inc (NASDAQ: ZM)
ZM delivered earnings results that beat expectations this quarter. ZM earnings per share (EPS) was reported at USD1.03, higher than the estimate of USD0.8765. Reported revenue was USD1.07 billion, meeting expectations of USD1.07 billion. For the upcoming quarter, the company forecasts that revenue would be about USD1.12 billion, above analysts’ expectations of USD1.11 billion. EPS is expected to range between USD0.90 to USD0.92, above analysts’ expectation of USD0.8411. ZM opened June at USD107.96 and gained 0.01% to close at USD107.97.
Technical analysis
Status: Neutral
Support: USD101.41
Resistance: USD131.87
Range bound
Adobe Inc (NASDAQ: ADBE)
ADBE reported this quarter’s earnings and beat estimates in the month of June. Reported earnings per share (EPS) and revenue of USD3.35 and USD4.39 billion both beat estimates of USD3.31 and USD434 billion respectively. However, prices fell shortly after the company announced guidance that missed estimates. For Q3, the company expects EPS and revenue of USD3.33 and USD4.43 billion versus consensus estimates of USD3.40 and USD4.51 billion. ADBE opened June at USD428.00 and dropped by 14.47% to close at USD366.06.
Technical analysis
Status: Neutral
Support: USD340.12
Resistance: USD386.17
Range bound
SPDR® Dow Jones® Industrial Average ETF Trust (NYSE-ARCA: DIA)
DIA is an exchange-traded fund (ETF) that attempts to track the performance of the Dow Jones Industrial Average index12. DIA is a price-weighted ETF of 30 stocks. DIA commenced trading on 14 January 1998 with an expense ratio of 0.16%. DIA is also the oldest continuous barometer of the US stock market. DIA’s last 3 month performance was -11.67%. DIA opened at USD322.41 and gained 7.40% to close at USD307.82.
Technical analysis
Status: Neutral
Support: USD302.81
Resistance: USD318.33
Range bound
ProShares UltraShort 10+ Year Treasury (NYSE-ARCA: PST)
PST aims to achieve results of 2x the inverse of the ICE US Treasury 7-10 Year Bond Index13 . PST commenced on 29 April 2008 with an expense ratio of 0.95%. As of 30 June 2022, PST’s last 3 months return of 6.78% beat the 3 major indices. The outperformance by PST is due to raising yield in the Treasuries along with the leverage factor amplifying the returns and losses. This ETF is commonly used to seek returns during market declines and/or for hedging purposes. PST opened the month at USD19.47 and gained 1.54% to close at USD19.77.
Technical analysis
Status: Bullish
Support: USD19.80
Resistance: USD21.40
Bloomberg analysts’ recommendations
The table below shows the consensus ratings and average ratings of all analysts updated on Bloomberg in the last 12 months. Consensus ratings have been computed by standardising analysts’ ratings from a scale of 1 (Strong Sell) to 5 (Strong Buy). The table also shows a number of analysts’ recommendations to buy, hold or sell the stocks, as well as their average target prices.
| Security | Consensus Rating | BUY | HOLD | SELL | 12 Mth Target Price (US$) |
| Crowdstrike Holdings Inc (NASDAQ: CRWD) | 4.97 | 30 (100%) | 0 | 0 | 233.5 |
| NIO Inc (NYSE:NIO) | 4.85 | 32 (94.1%) | 2 (5.9%) | 0 | 36.26 |
| SALESFORCE INC (NYSE: CRM) | 4.75 | 46 (88.5%) | 6 (11.5%) | 0 | 250.15 |
| Adobe Inc (NASDAQ: ADBE) | 4.7 | 28 (84.8%) | 5 (15.2%) | 0 | 493.77 |
| NVIDIA Corporation (NASDAQ: NVDA) | 4.54 | 40 (80%) | 9 (18%) | 1 (2%) | 254.14 |
| Zoom Video Communicatio Inc (NASDAQ: ZM) | 3.97 | 14 (48.3%) | 15 (51.7%) | 0 | 125.67 |
| Oracle Corporation (NYSE: ORCL) | 3.43 | 8 (28.6%) | 18 (64.3%) | 2 (7.1%) | 87.43 |
| HP Inc (NYSE: HPQ) | 2.75 | 3 (18.8%) | 8 (50.1%) | 5 (31.3%) | 36.96 |
To round up
Even with the positive earnings reported by numerous companies, their share prices still tanked. The latest sell off can be seen as the market having a bearish outlook with investors attempting to reduce their exposure in the stock market. Investors may find that shares are now at a big discount. A good strategy that investors can adopt during this period of volatility is dollar cost averaging.
For the coming month, the Federal Open Market Committee may be having a debate over raising interest by 50 or 75 basis points14. Under a rising interest rate environment, a recession seems imminent.
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Reference:
- [1] “Fed Raises Rates by 0.75 Percentage Point, Largest Increase Since ….” 15 Jun. 2022
- [2] “U.S. Inflation Hit 8.6% in May – WSJ.” 10 Jun. 2022
- [3] “Bear Market Definition: Phases & Examples – Investopedia.”
- [4] “HP Gains on Q2 Earnings Beat and Raise – Investing.com.” 31 May. 2022
- [5] “Salesforce Stock Soars 8% After Earnings Beat, Analyst Says Not as ….” 1 Jun. 2022
- [6] “Nvidia stock falls on light guidance, CFO says company will slow hiring.” 25 May. 2022
- [7] “CRWD Earnings Date & Report (Crowdstrike Holdings Inc).”
- [8] “NIO Earnings Date & Report (Nio Inc Class A ADR) – Investing.com.”
- [9] “NIO Inc. Reports In-Line Q1 EPS, Delivers 25768 Vehicles.” 9 Jun. 2022
- [10] “Oracle shares rise on better-than-expected earnings report – CNBC.” 14 Jun. 2022
- [11] “Zoom Stock Surges on Better-Than-Feared Results and Guidance ….” 24 May. 2022
- [12] “DIA: SPDR® Dow Jones® Industrial Average ETF Trust – SSGA.”
- [13] “PST – Proshares.”
- [14] “Fed’s Mester backs 75 basis point hike in July if conditions remain ….” 29 Jun. 2022
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About the author
Global Markets Desk US Dealing Team
The Global Markets Desk US Dealing team specialise in handling the US Markets in the Global Markets Desk.
Their responsibilities and capabilities extend from managing and taking orders from clients trading in the US market, to content generation, Technical Analysis and providing educational content to POEMS clients.
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