Popular US Stocks traded on POEMS in May 2022 June 16, 2022
Here are some of the more popular US stocks – not ranked in any order – traded by POEMS customers in the month of May.
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At a glance:
- The Fed hiked rates by 0.5%
- More interest rate hikes are expected in the coming meetings
- US GDP shrank by 1.5% in Q122
The three US major indices – Dow Jones, S&P 500 and Nasdaq Composite produced differing results. The tech heavy NASDAQ suffered a loss, showing underperformance in the tech sector.
| NASDAQ | DOW JONES | S&P 500 | |
| Month Open | 12,331.69 | 33,012.77 | 4,130.61 | Month Close | 12,081.39 | 33,096.94 | 4,132.16 | Monthly return | -2.03% | 0.25% | 0.04% |
In May, the US Federal Reserve raised interest rate by 0.5% in order to combat the 40-year high inflation1.
There were two factors that triggered the selloff in April, one of which was the latest rate hike increases in the federal funds rate, moving it into the range of 0.75% – 1%.
According to the minutes of the Federal Reserve’s meeting in May, officials hinted that interest rates may need to be raised more than what the markets currently anticipate to curb inflation2. Other than that, more 50-point hike in rates may take place in the upcoming meetings. With regards to the balance sheet, the plan is to reduce it to USD95 billion by August 2022 to include USD60 billion worth of Treasuries and USD35 billion for mortgages.
The US real gross domestic product (GDP) shrank by an annual rate of 1.5% for the first quarter of 2022, which is mainly attributed to a widening trade deficit and lower government stimulus3. Other components of the GDP such as personal consumption and investments increased.
Microsoft Corp (NASDAQ:MSFT)
MSFT fell by 2.1% in May. It opened at US$ 277.71 and closed at US$ 271.87. This quarter, MSFT posted results that were stronger than expected. Earnings per share (EPS) was reported at US$2.22 beating estimates of USD 2.19. Revenue was reported at USD 49.36 billion, beating estimates of USD 49.05 billion. Moving down the line, MSFT is planning to acquire Activision Blizzard for almost USD 69 billion which will be the company’s largest purchase to date. Amy Hood, Microsoft’s finance chief, spoke of a fiscal fourth-quarter revenue of $52.4 billion to $53.2 billion on a conference call with analysts.4
Phillip Securities Research gave MSFT a BUY rating with a target price of USD 410.00.
Technical analysis
Status: Short term bullish
Support: USD 257.76
Resistance: USD 274.28
As long as prices hold above the 274.30 mark, we should see a continuation of a short term bullishness towards the 290.70 mark.
Meta Platforms Inc (NASDAQ: FB)
FaceBook’s (FB) earnings per share beat estimates for this quarter, however revenue came in below expectations. FB opened in May at USD 201.17 and dropped 3.74% to close at USD 193.64. Earnings Per Share (EPS) of USD 2.72 beat estimates of USD 2.56 and revenue of USD 27.91 billion fell below estimates of USD 28.2 billion. Facebook lowered its total expenses guidance for 2022 to between USD 87 billion and USD 92 billion, below its earlier estimate of USD 90 billion to USD 95 billion. The increase in the current quarter expense is driven by its family of App segments, followed by Reality Labs5,6.
Phillip Securities Research gave FB a BUY rating with a target price of USD 312.00.
Technical analysis
Status: Short term bullish
Support: USD 185.40
Resistance: USD 202.90
Range-bound until price breaks 203
Apple Inc (NASDAQ: AAPL)
AAPL’s earnings beat estimates for this quarter but stock price fell as management warned of a possible USD 8 billion hit from supply constraints. AAPL opened in May at USD 156.71 and dropped 5.02% to close at USD 148.84. EPS of USD 1.52 beat estimates of USD 1.43 with revenue reported at USD 97.28 billion, beating estimates of USD 93.89 billion. The company did not provide a forecast for the current quarter and has yet to provide official revenue guidance since February 2020, citing uncertainty tied to the pandemic7.
Phillip Securities Research gave AAPL a BUY rating with a target price of USD 214.00.
Technical analysis
Status: Short term bullish
Support: USD 135.80
Resistance: USD 156.60
Price has to form a new support at the 149 level, and as long as it can hold, bullish momentum should continue towards the 156 levels.
Advanced Micro Devices (NASDAQ: AMD)
AMD delivered earnings results that beat estimates this quarter. AMD earnings EPS was reported at USD 1.13 against the estimate of USD 0.91. Reported revenue was higher than the estimate (USD 5.89 billion against the expected USD 5.52 billion). AMD said it expected USD 6.5 billion in sales in the current quarter, ahead of analyst expectations of USD 6.38 billion. The company’s results show that chipmakers are still growing fiercely, and every one of its individual lines of businesses grew by double digits during the quarter8. AMD opened in May at USD 85.66 and gained 18.91% to close at USD 101.86.
Technical analysis
Status: Short term bullish
Support: US$90.20
Resistance: USD 103.80
Price will attempt to break the 103.80 point after forming a new higher low. As long as the price can hold above the 104 mark, we should see continuation of bullish movements towards the 112 mark.
BP PLC (NYSE:BP)
BP has had mixed earnings for this quarter. BP’s EPS of USD 1.92 was higher than the estimates of USD1.41, however the revenue of USD 51.220 billion missed estimates of USD 53.134 billion. The strong quarterly earnings were driven by higher realisations of commodity prices9. The company expects capital expenditure of USD 14-15 billion and to receive total proceeds of USD 2-3 billion during 2022. The company also expects net debt to fall to USD 27.5 billion at the end of the quarter10. BP opened in May at USD 28.55 and gained 13.38% to close at USD 32.37.
Technical analysis
Status: Neutral
Support: USD 32.00
Resistance: USD 33.57
Range-bound
Home Depot Inc (NYSE: HD)
HD’s reported quarter earnings beat estimates in May. EPS of USD 4.09 and revenue of USD 38.91 billion both beat estimates of USD 3.68 and USD 36.72 billion respectively. For the fiscal year, the retailer raised its full-year outlook after reporting solid quarterly earnings, fuelled by the company’s strongest first-quarter sales on record from “slightly positive” sales growth and an earnings per share increase in the low single digits, to 3% increase in sales and earnings per share growth in the mid-single digits11. HD opened in May at USD 301.99 and gained 0.25% to close at USD 302.75.
Technical analysis
Status: Neutral
Support: USD 283.86
Resistance: USD 308.46
Range-bound
Shopify Inc (NYSE: SHOP)
SHOP delivered earnings results that fell short of expectations this quarter. SHOP earnings per share (EPS) was reported at USD 0.20 lower than the estimate of US$0.63. Reported revenue was USD 1.2 billion against the expected USD 1.24 billion. The company forecasted that revenue growth would be lower in the first half of the year. E-commerce activity has cooled as the economy reopens and consumers return to stores. SHOP opened in May at USD 421.15 and lost 10.93% to close at USD 375.1212.
Technical analysis
Status: Neutral
Support: USD 312.96
Resistance: USD 477.25
Range-bound
Walt Disney Co (NYSE: DIS)
DIS reported stronger-than-expected growth in streaming subscribers across all of its media platforms for this quarter. Total subscriptions rose to 137.7 million compared to estimates of 135 million. However, reported, earnings per share (EPS) and revenues of USD 1.08 and USD 19.25 billion, missing estimates of USD 1.17 and USD 20.1 billion13 respectively. The company is confident in their long-term Disney+ subscriber guidance of 230 million to 260 million and expects profitability in fiscal 202414. DIS opened in May at USD 111.71 and dropped by 1.14% to close at USD 110.44.
Technical analysis
Status: Short term bullish
Support: USD 98.70
Resistance: USD 109.45
Price will have to hold above the 110 point for bullish momentum to continue towards 115.36 mark.
United States Oil Fund (NYSE-ARCA: USO)
USO is an exchange-traded fund that attempts to track the price of West Texas Intermediate Light Sweet Crude Oil. Its performance is determined by the price of oil futures contracts that they invest in and is traded on regulated futures exchanges15. The prospect of the oil industry is mixed. European Union leaders have agreed to the banning of 90% of Russian oil by the end of 202216. In Asia, India and China are taking advantage of the cheap oil prices to stock up17. Between 74 million and 79 million barrels from OPEC+ producer were in transit and floating storage over the past week as compared of the 27 million barrels just before the February invasion of Ukraine. USO opened in May at USD 75.38 and gained 13.39% to close at USD 85.47.
Technical analysis
Status: Neutral
Support: USD 79.91
Resistance: USD 90.61
Range-bound.
ProShares UltraShort 20+ Year Treasury (NYSE-ACRA: TBT)
TBT aims to achieve results of double the inverse of the ICE U.S. Treasury 20+ Year Bond Index18. TBT commenced on 29 April 2008 with an expense ratio of 0.9%. As of 31 May 2022, TBT’s last 3 months return of 36.86% has beaten the 3 major indices. The outperformance by TBT 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 when yields keep rising and/ or for hedging purposes. TBT opened in May at USD 25.41 and gained 0.94% to close at USD 25.65.
Leveraged and Inversed (L&I) ETFs are designed for short-term trading needs and are not intended for buy-and-hold purposes. They are very volatile and are appropriate for sophisticated tactical traders who have market views that they want to express. It is of utmost importance that investors monitor and manage their trades daily if they intend to use L&I ETFs as part of their trading strategy.
Technical analysis
Status: Neutral
Support: USD 23.87
Resistance: USD 26.74
Range bound.
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$) |
| Microsoft Corp (NASDAQ:MSFT) | 4.85 | 48 (92.3%) | 4 (7.7%) | 0 | 359.75 |
| Meta Platforms Inc (NASDAQ: FB) | 4.31 | 43 (70.5%) | 16 (26.2%) | 2 (3.3%) | 284.10 |
| Apple Inc (NASDAQ: AAPL) | 4.46 | 36 (75%) | 11 (22.9%) | 1 (2.1%) | 185.69 |
| Advanced Micro Devices (NASDAQ: AMD) | 4.16 | 28 (62.2%) | 16 (35.6%) | 1 (2.2%) | 131.50 |
| BP PLC (NYSE:BP) | 4.13 | 10 (62.5%) | 5 (31.3%) | 1 (6.3%) | 37.82 |
| Home Depot Inc (NYSE: HD) | 4.32 | 24 (70.6%) | 9 (26.5%) | 1 (2.9%) | 355.28 |
| Shopify Inc (NYSE: SHOP) | 3.93 | 25 (54.3%) | 18 (39.1%) | 3 (6.5%) | 535.65 |
| Walt Disney Co (NYSE: DIS) | 4.61 | 29 (80.6%) | 7 (19.4%) | 0 | 156.45 |
To round up
Despite the uncertain macro environment, most of the management team of the companies featured in this article are optimistic of the near future. However, the Federal Reserve committee does not share the same sentiment and is greatly concerned with inflation as can be seen from the latest meeting. The market is expecting a further hike in June’s meeting.
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Reference:
- [1] “Fed raises rates by half a percentage point — the biggest hike in two ….” 4 May. 2022
- [2] “Fed minutes point to more rate hikes that go further than the market ….” 26 May. 2022
- [3] “Gross Domestic Product (Second Estimate) and Corporate Profits ….” 26 May. 2022
- [4] “Microsoft earnings beat across the board, stock up on outlook – CNBC.” 26 Apr. 2022
- [5] “Facebook shares spike on better-than-expected quarterly earnings.” 27 Apr. 2022
- [6] “Meta Reports First Quarter 2022 Results.” 27 Apr. 2022
- [7] “Apple (AAPL) earnings Q2 2022 – CNBC.” 28 Apr. 2022
- [8] “AMD sales jump 71%, shrugging off concerns about PC slowdown.” 3 May. 2022
- [9] “BP Beats Q1 Earnings Estimates, Announces Share Buyback.” 3 May. 2022
- [10] “bp’s first quarter 2022 results | News and insights | Home.” 3 May. 2022
- [11] “Home Depot (HD) Q1 2022 earnings – CNBC.” 17 May. 2022
- [12] “Shopify sinks after earnings miss, $2.1 billion purchase of Deliverr.” 5 May. 2022
- [13] “Disney Earnings: Disney+ Hits 138M Subscribers – The Hollywood ….” 11 May. 2022
- [14] “Walt Disney (DIS) Q2 2022 Earnings Call Transcript | The Motley Fool.” 11 May. 2022
- [15] “United States Oil Fund – Wikipedia.”
- [16] “Oil prices jump after EU leaders agree to ban most Russian crude ….” 31 May. 2022
- [17] “More Russian Oil Than Ever Before Is Heading for China and India.” 27 May. 2022
- [18] “TBT – Proshares.”
Disclaimer
These commentaries are intended for general circulation. It does not have regard to the specific investment objectives, financial situation and particular needs of any person who may receive this document. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of the units and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. Investors may wish to seek advice from a financial adviser before investing. In the event that investors choose not to seek advice from a financial adviser, they should consider whether the investment is suitable for them.
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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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