Nokia may be worth nibbling as it approaches support
Factset, an agency that polls analysts, released a newsletter today titled "S&P 500 NOW PROJECTED TO REPORT A YOY DECLINE IN EARNINGS IN Q1 2020." The newsletter shows that analyst estimates of S&P 500 earnings have fallen from an expected 7% growth rate in Q1 to an expected -0.1% growth rate, and they're still coming down.
However, the newsletter also breaks things down by sector, and when you slice it that way, things look more complicated. The hardest hit sectors are materials, industrials, and consumer discretionary, all poised for double digit earnings decline. A few sectors are still poised for earnings growth in Q1, including communication services, with a 13+% growth rate. Information technology and utilities come in second and third place, with projected growth over 5%. Also set to grow are healthcare and real estate.
Now, earnings expectations likely will continue to decline, and even the outperforming sectors will fall with the rest of the market. But the outperforming sectors will start to find support sooner, and they will get outsized bounces when the market rallies. I don't suggest putting a lot of money here just yet, but it's worth taking a few nibbles at attractively valued companies in these sectors.
Nokia has support from about $3.30-3.50. The company has an attractive PEG of about 0.73, and it's been signing lots of deals lately in connection with the rollout of 5G. It plunged after suspending its dividend last year, but as the company recovers I think we could see the dividend return.
However, the newsletter also breaks things down by sector, and when you slice it that way, things look more complicated. The hardest hit sectors are materials, industrials, and consumer discretionary, all poised for double digit earnings decline. A few sectors are still poised for earnings growth in Q1, including communication services, with a 13+% growth rate. Information technology and utilities come in second and third place, with projected growth over 5%. Also set to grow are healthcare and real estate.
Now, earnings expectations likely will continue to decline, and even the outperforming sectors will fall with the rest of the market. But the outperforming sectors will start to find support sooner, and they will get outsized bounces when the market rallies. I don't suggest putting a lot of money here just yet, but it's worth taking a few nibbles at attractively valued companies in these sectors.
Nokia has support from about $3.30-3.50. The company has an attractive PEG of about 0.73, and it's been signing lots of deals lately in connection with the rollout of 5G. It plunged after suspending its dividend last year, but as the company recovers I think we could see the dividend return.
