Weekly Radar: Our Top Picks for The Coming Week

The major indexes edged slightly higher Friday–but finished lower for the week– as investors weighed recession and banking sector concerns against expectations for the remainder of the earnings season. Two weeks into the earnings season, 76% of the S&P 500 companies that have reported have beaten expectations, according to FactSet. That so-called beat rate ranks slightly below the 77% five-year average.

Market participants will likely have a better sense of whether the next leg for equity markets is higher or lower next week, based on results from some of the largest companies in the world, including big tech companies Apple, Amazon, Google parent Alphabet, Microsoft, and Meta Platforms. Investors will also be tuned in on Friday for a critical update on inflation with the Personal Consumption Expenditures (PCE) Price Index—the Federal Reserve’s preferred inflation gauge–for March.

Expectations that the Fed will pause rate hikes next month are growing. This wouldn’t be a cure-all but an important step towards a more sustainable recovery. In light of this, our first recommendation for this week may be looking at a substantial move higher in the near future.  

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BTC

After eclipsing $30,000 the previous week, the price of Bitcoin dropped to nearly $27,000 on Sunday. Despite the latest week’s roughly 10% decline, the most widely traded cryptocurrency remained well above a recent low of just under $20,000. 

Bitcoin bulls have claimed the digital currency is a way for investors to shield themselves against government moves, such as quantitative easing and looser monetary policy, which they say erodes the value of fiat currency. Industry insiders are saying that the anticipation of a slower pace of interest rate hikes from the Federal Reserve is helping Bitcoin. Proponents also point to its finite supply as a key feature of its being a store of value.

“This past week’s events around the failure of SVB and other banks have also shone a spotlight on the power of decentralized currencies that people can fully custody and own,” said Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno. “Decentralized finance is beginning to hit home in terms of a concept to many more people now.”

Bitcoin is up over 65% this year, beating major stock indexes and commodities.

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While earnings results so far have proved resilient, traders are on the lookout for insight into how companies are holding up amid a period of persistent inflation and rising interest rates. Our following recommendation has surpassed analyst expectations in the past two quarters and seems well-positioned to continue this trend when it reports earnings this week.

Warner Bros. Discovery, Inc. (WBD)

Warner Bros. Discovery is a leading global media company, TV and movie studios. Management’s top priority in the next six months is the relaunch of a consolidated streaming service with live sports content as a central part of the company’s portfolio, including its rights to the NHL, MLB playoffs and the NBA.

Over the last four quarters, the company has surpassed consensus EPS estimates three times. Most recently, the company blew past earnings expectations with a 1,500% surprise. Prior to that, WBD delivered a 750% earnings surprise.  

On average, Wall Street analysts predict WBD’s share price could reach $18.72 in the next 12 months. The average price prediction forecasts a potential upside of 29% from the current WBD share price. Look out for WBD’s next earnings release, expected on April 25.  

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Novocure Ltd. (NVCR) 

In the last five years, NovoCure saw its revenue grow at 22% per year. That’s well above most pre-profit companies. Meanwhile, its share price performance certainly reflects the strong growth, given the share price grew at 24% per year, compound, during the period. So it seems likely that buyers have paid attention to the strong revenue growth.

Novocure makes a novel therapy for treating cancer called Tumor Treating Fields (or TTFields). The treatment uses electrical fields to disrupt cancer cell division. TTFields has already been approved for treating glioblastoma (a type of brain cancer) and mesothelioma (cancer caused by exposure to asbestos). The company is evaluating the therapy in clinical studies targeting non-small cell lung cancer, ovarian cancer, brain metastases, and pancreatic cancer. Combined, these additional indications represent a potential market 14 times greater than Novocure’s current market opportunity making it a high-growth stock to watch.

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