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Flying high in July

Published 2023/08/01, 10:46
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Market scorecard

US markets looked like an Airbus A380 struggling to get airborne at OR Tambo airport yesterday. The S&P 500 and the Nasdaq crept into the green at the close, extending a run of monthly gains. The broader index finished up 3.1% for the month, its fifth in a row and reaching a 16-month high. The Nasdaq Composite was up 4% in July. Our patience has been rewarded.

In company news, Exxon Mobil (NYSE:XOM) shares climbed after reports that it's in talks with Tesla (NASDAQ:TSLA), Ford (NYSE:F) and other EV makers about supplying them with lithium. SoFi Technologies (NASDAQ:SOFI) surged 20% as the online bank raised its revenue guidance. Elsewhere, Toyota Motor (TYO:7203) beat profit estimates in results released this morning.

Yesterday, the JSE All-share closed up 0.60%, the S&P 500 rose 0.15%, and the Nasdaq was 0.21% higher.

One thing, from Paul

If you visit the front page of the Vestact website and scroll down a bit, you will find a list of stocks that we currently recommend. A click on the name of the share will take you to an archive of company-specific comments that we have written over the years.

I like the short descriptions that we have come up with for each portfolio holding, adjacent to the links. Here's an example: Nike (NYSE:NKE) designs and retails running shoes and swoosh-branded sports equipment. Another: Visa (NYSE:V) runs a payments network that connects banks, merchants and cardholders.

As Albert Einstein said, "if you can't explain it to a 6 year old then you don't understand it yourself".

Byron's beats

With the benefit of hindsight, there have been a few stocks that we have held onto for too long. But we do this for good reason. If the underlying thesis that originally led us to invest in a company has not changed, then we do not like to sell, regardless of the share price move.

Paul covered Meta (NASDAQ:META) yesterday which is a great example. The share price dropped from $379 to $88 in the space of nine months. It felt horrible, but we held on for dear life because we still thought the underlying business was a good one. The share price is now back at $320, nine months on from those lows. Holding on was the right thing to do.

Many people's reaction to a plummeting share price is to sell, but it's often best to do the opposite. We have also endured big drops and then recoveries from Tesla (NASDAQ:TSLA), Nvidia (NASDAQ:NVDA), Amazon (NASDAQ:AMZN) and Netflix (NASDAQ:NFLX). Deciding to do nothing is actually doing something.

Michael's musings

Last week Enphase Energy (NASDAQ:ENPH) released numbers which disappointed the market, resulting in a share price drop of 7.5%. Enphase's quarterly revenue increased by 34% to $711 million, but they only expect sales for the current quarter to be between $555 and $600 million.

The US market for solar systems and inverters is tough at the moment, with sales falling by 12%. This is a result of solar rebates in California being changed, coupled with higher interest rates.

By contrast, Enphase's sales in Europe grew by 25% thanks to very attractive government rebates and incentives to install panels. The race to reduce reliance on Russian gas for power and heating in that continent has been a strong tailwind.

We are excited about Enphase's future but this is a high-risk holding. The stock currently trades at 30 times it's expected earnings, which is expensive for a manufacturing company, particularly given that revenue growth has stalled.

Bright's banter

Healthcare professionals are among the highest-paid individuals in the US. According to data from the Bureau of Labor Statistics, cardiologists top the list with an annual mean wage of $421 330 in 2022.

Orthopedic surgeons closely follow with $371 400, and paediatric surgeons rank third with $362 970. Professional athletes are the only other group to feature on this list.

Healthcare specialists are clearly in demand. I'm surprised none of the popular tech jobs and high-finance jobs made the cut.

You will find more infographics at Statista

Signing off

Asian markets are mixed this morning but the MSCI Asia Pacific index is up for its seventh consecutive day. Equities climbed in Japan and South Korea, while they ebbed in Hong Kong and mainland China. Home sales and manufacturing numbers were muted in the world's second-largest economy.

US equity futures are marginally lower in early trade. The Rand is trading at around R17.81 to the Dollar. This morning Uber reports results, and this evening it will be the turn of Starbucks (NASDAQ:SBUX).

It's a new month and we have a streak of market gains to maintain. Let's get this party started!

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