Our Equity Top Pick List
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Commodities - Technical Analysis
Gold and silver have broken their downtrends, triggering upward waves that still hold potential for further gains. After a strong retest, the oil price may settle into a range, but there are still opportunities for further gains. Natural gas prices did not reach a new low, but no pattern indicating a reversal has yet emerged. Copper is maintaining its upward trend; it must rise again within the next few days, or the rally could break down. Wheat and corn are also beginning to turn upward again from key support levels after strong retests.
Strong performance from Expedia
Despite the war in the Middle East and rising energy prices, U.S. consumer spending—and, by extension, travel DEMAND—proved to be sufficiently resilient in the second quarter, from which Expedia also benefited greatly. The company beat analysts’ expectations across all major metrics, with revenue growing by 14%, while also successfully maintaining its strategic goal of cost control, resulting in profit growth of over 20%. Cash generation is very strong, which is being used to repurchase shares, and for now, there's no sign of a slowdown on the demand side, leading the company to raise their full-year expectations for this year. Given the improving fundamentals, we are raising our fair value estimate to $365.
Our latest Investment Strategy recommends an overall neutral exposure to the equity asset class over the next 6-12 months. We believe this should be taken into account when making investment decisions in individual equities (the timing of investments or the size of positions).
The list includes those stocks, typically US and European ones, that we consider to be proper investment choices from a fundamental point of view. At the sector level, we examine the relative position of each stock on the basis of indicators (like valuation, profit growth prospects, indebtedness, quality), and then, after an individual analysis of the best performers, we select the companies we consider most attractive from a risk/return perspective.
Given the fundamental selection process, the stocks on the list should be treated as longer-term investment opportunities, but are reviewed on a quarterly basis to check whether the stock is on track with our original expectations or whether there is a sector peer with a better risk/return profile. The list can provide a starting point for building a sector-diversified equity exposure in portfolios, but can also be used as a watch list. In the latter case, the technical analysis methodology should be used to time/determine the specific investment decision. This is the purpose of our Trading Ideas report, which will also provide a specific trading strategy for the stocks on the list, if indicated.
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