Here Comes Santa Claus
After a tumultuous last two weeks, the bulls have made a stand this week as the major indexes are back in the green for December. This month normally gives investors a few reasons to feel cheerful. Historically one of the strongest months, December is up 1.5% on average going back to 1950 and finishes in the green nearly 75% of the time.
– Zacks
Another stat to keep the bulls feeling jolly – when the S&P 500 is up greater than 20% on the year heading into December (as is the case in 2021), December posts stronger than normal returns at an average of 1.7%. With this week’s gap up to striking distance of all-time highs, it certainly appears that history will rhyme and we may end the year with a solid finish.
The Invesco Nasdaq 100 ETF QQQM has withstood the recent volatility and is within 2% of its all-time highs. QQQM seeks to track the investment results of the Nasdaq 100 Index and contains many of the top technology companies in the world. The Invesco Nasdaq 100 ETF also holds all three of the Zacks #1 Ranked Strong Buys we will discuss today and is up about 27% on the year. As shown below, while many stocks plunged in weeks prior, QQQM appears to have found support in the midst of its continued uptrend.
Image Source: Zacks Investment Research
Let’s peel back the curtain on three of the QQQM holdings that have seen positive earnings estimate revision activity in recent weeks, each garnering our top stock ranking.
Alphabet Inc. (GOOGL)
Alphabet is best known for its web-based search engine and provides advertisements, software applications, mobile operating systems, mapping technologies, and consumer content. Headquartered in Mountain View, CA, GOOGL also offers enterprise solutions, in addition to commerce and hardware products through its subsidiaries.
Between GOOGL’s strong cloud division, its expanding data centers, and enhanced mobile search segment, Alphabet’s substantial revenue growth continues to impress investors. The company dominates the online search market with a 94% share. There’s also that video entertainment application…what’s it called again? Oh that’s right. YouTube. Last year, YouTube alone generated $20 billion in advertising revenues.
The Zacks Consensus Estimate for current year revenues stands at $209.34 billion, a 39.8% growth rate over 2020. This is a staggering growth rate for a company of its size, and the sales trend looks to continue for GOOGL into 2022.
Image Source: Zacks Investment Research
Alphabet has also made its way into other profitable markets such as autonomous driving and healthcare. Clearly, GOOGL is one of the most innovative companies in the world, and its stock has followed suit this year with a gain of over 68% YTD.
Alphabet (GOOGL) Price, Consensus and EPS Surprise
Image Source: Zacks Investment Research
GOOGL last reported EPS back in October of $27.99, a 21% positive surprise over estimates. The company has produced an average earnings surprise of +41.53% over the past four quarters. Analysts have increased their full-year earnings outlook by 6.31% to $108.29 over the past 60 days. If GOOGL simply meets this expectation, it would represent a roughly 85% increase in earnings compared to 2020. Whether you’re a short-term trader or long-term investor, having exposure to Alphabet is a good idea.
JD.com, Inc. (JD)
JD.com operates as an online direct sales company based in China. Through its website and mobile applications, JD provides a host of products including mobile handsets, computers, home appliances, automobile accessories, luxury goods, jewelry, and many more consumer goods.
Much has been said and written about China’s technology crackdown this year, and Chinese equities have responded negatively with many tech companies down significant double-digit percentages on the year. The Chinese Internet ETF (KWEB) is down nearly 44% this year. Despite the severe underperformance, JD has held up relatively well and is currently making a series of intermediate higher highs, looking to end the year on a high note.
Revenues are set to grow nearly 36% this year compared to 2020. JD last reported earnings in November of $0.49, a +44.12% surprise over consensus. The company has posted a positive average earnings surprise 18.4% over the past four quarters.
JD.com (JD) Price, Consensus and EPS Surprise
Image Source: Zacks Investment Research
In the last 30 days, analysts covering JD have upped their annual earnings estimates by 18.57% to $1.66. Looking out at next year, the Zacks Consensus Estimate for 2022 EPS sits at $2.18, which would translate to a 31.63% growth rate over this year. JD.com is next scheduled to announce quarterly earnings on 3/10/22.
Marvell Technology, Inc. (MRVL)
Marvell Technology is a designer, developer and marketer of analog, mixed-signal and digital signal processing integrated circuits. MRVL is headquartered in Santa Clara, CA, and provides data infrastructure semiconductor solutions.
MRVL has benefitted from robust demand for its storage and networking chips pertaining to the 5G and data-center end markets. The company last reported quarterly EPS of $0.43, a 13.16% surprise over consensus. MRVL has posted an average positive earnings surprise of 7.56% over the past four quarters, aiding the stock’s 92% return this year.
Marvell Technology (MRVL) Price, Consensus and EPS Surprise
Image Source: Zacks Investment Research
Revenues for the current year are estimated at $4.44 billion, translating to a nearly 50% growth rate over last year. Analysts have upped their earnings estimates by 6.9% within the past week, and the Zacks Consensus Estimate for 2021 EPS is now $1.55. If MRVL is able to achieve this, the company’s earnings will have increased by over 68% compared to last year.
Looking at out next year, analysts covering MRVL have recently revised EPS estimates to $2.21, an increase of 15.7% from just seven days ago. Even with the stellar year Marvell Technology has had, those estimates would represent a 42.62% increase in EPS.
Infrastructure Stock Boom to Sweep America
A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.
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Marvell Technology, Inc. (MRVL): Free Stock Analysis Report
Alphabet Inc. (GOOGL): Free Stock Analysis Report
JD.com, Inc. (JD): Free Stock Analysis Report
Invesco NASDAQ 100 ETF (QQQM): ETF Research Reports
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