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Last week, President Trump shocked everyone by implementing 25% tariffs on two of the U.S.’s biggest trading partners: Canada and Mexico. But these threats were short-lived.
As discussed in a previous Market 360, Mexico managed to delay the threatened implementation of tariffs by a month. Canada, on the other hand, put up a little bit more of a fight. But in the end, tariffs were also delayed by a month while negotiations commence.
On the other hand, 10% tariffs on China did go into effect. And this week brought even more trade uncertainty, as President Trump announced 25% tariffs on steel and aluminum imports on Monday. Later this week (Tuesday or Wednesday), the White House is expected to announce “reciprocal” tariffs, designed to bring balance to tariffs on goods traded between the U.S. and other countries.
Switching gears, investors will be keen to get a look at the latest inflation numbers this week.
Things kick off with the Consumer Price Index (CPI) on Wednesday. Economists are looking for January CPI to show a 0.3% gain. On a yearly basis, that would bring CPI to 3.1%, down from December’s 3.2% gain. Then on Thursday, we’ll get a look at the Producer Price Index (PPI). Economists are calling for January PPI to rise to 0.3%, up from 0.2% in December.
Both of these reports will be closely watched, and we will discuss them in more detail in Thursday’s Market 360. The fact is, investors are looking for signs of whether the Federal Reserve will cut key interest rates more than twice this year. Many officials have been hinting that this will be that case, but the numbers will have to be there to back it up.
This Week’s Ratings Changes
For now, earnings season is back in focus as we continue to see wave after wave of positive earnings. In fact, according to our friends at FactSet, over half of the S&P 500’s companies have reported earnings so far, with 77% reporting earnings per share above analyst estimates. Currently, the earnings growth rate for the S&P 500 is 16.4% which would be the highest growth rate since the fourth quarter of 2021.
Bottom line: Earnings are working. These positive reports are driving the S&P 500’s average higher. And we want to ensure we are in the stocks that are best positioned to benefit from this rise. So, with that in mind, I took a fresh look at the latest institutional buying pressure and each company’s financial health. I decided to revise my Stock Grader (subscription required) recommendations for 135 big blue chips (subscription required.) Of these 135 stocks…
- Twenty-one stocks were upgraded from a Buy (B-rating) to a Strong Buy (A-rating).
- Twenty-eight stocks were upgraded from a Hold (C-rating) to a Buy (B-rating).
- Sixteen stocks were upgraded from a Sell (D-rating) to a Hold.
- Four stocks were upgraded from a Strong Sell (F-rating) to a Sell.
- Thirteen stocks were downgraded from a Strong Buy to a Buy.
- Twenty-five stocks were downgraded from a Buy to a Hold.
- Twenty stocks were downgraded from a Hold to a Sell.
- And eight stocks were downgraded from a Sell to a Strong Sell.
I’ve listed the first 10 stocks rated as Strong Buys below, but you can find a more comprehensive list – including all 135 stocks’ Fundamental and Quantitative Grades – here. Chances are that you have at least one of these stocks in your portfolio, so you may want to give this list a skim and adjust accordingly.
| Ticker | Company Name | Total Grade |
|---|---|---|
| AFL | Aflac Incorporated | A |
| AU | Anglogold Ashanti PLC | A |
| BAC | Bank of America Corp. | A |
| BJ | BJ’s Wholesale Club Holdings, Inc. | A |
| CMS | CMS Energy Corporation | A |
| COKE | Coca-Cola Consolidated, Inc. | A |
| COST | Costco Wholesale Corporation | A |
| EQH | Equitable Holdings, Inc. | A |
| EXC | Exelon Corporation | A |
| EXPE | Expedia Group, Inc. | A |
The Next Market Leaders Emerge
Now, I should add that artificial intelligence-related stocks are stepping back into the spotlight.
Actually, they haven’t exactly left the spotlight after the DeepSeek drama and the latest Magnificent Seven earnings. But I think the headlines will be much more positive in the upcoming days, especially given the latest DeepSeek news.
The fact is that the narrative that DeepSeek would revolutionize AI and curtail demand for AI chips and servers, as well as data centers, is false.
Over the past two weeks, the DeepSeek app has crashed, with outages hindering users’ ability to log in and use the app. The app also has a cybersecurity problem after it was hit with a cyberattack that led the company to limit app registrations. I should also add that the DeepSeek founder previously ran a hedge fund. This has raised suspicions that the DeepSeek announcement two weeks ago was orchestrated as a big short-selling opportunity.
So, DeepSeek’s “day in the sun” may be coming to an end – and those companies with real sales and earnings related to AI will step back into the spotlight.
In fact, you may have noticed that stocks like Netflix, Inc. (NFLX), Palantir Technologies Inc. (PLNT) and Spotify Technology S.A. (SPOT) have all emerged as new market leaders this earnings announcement season.
This is important because these three companies all utilize AI to boost efficiency. So, an emerging theme is that the AI enablers are breaking out as new market leaders.
How You Can Profit From the Next Market Leaders
I predict this theme will have some real staying power. In fact, I predict that it will create a monumental chasm in the stock market – and you need to be prepared…
You see, the early adopters of AI are becoming more efficient and profitable.
And as AI’s infrastructure continues to build out, these market ruptures will become bigger… leading to some clear winners and losers.
In this new world, there will be two kinds of companies…
Those that master AI and employ fewer and fewer people and have very low-cost structures but generate huge amounts of revenue…
And companies that don’t could risk going out of business altogether.
Let me be clear, folks. If you don’t own the stocks that are on the right side of this rupture, you could be in big trouble… because the gap is about to widen in an unthinkable way.
The companies that are quickly applying the transformational technology of AI to their businesses right now are poised to deliver generational outperformance.
So, if you have money in the market right now, you DO NOT want to miss this warning. You absolutely MUST get on the right side of this thing.
Sincerely,
Louis Navellier
Editor, Market 360
The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:
BJ’s Wholesale Club Holdings, Inc. (BJ), Coca-Cola Consolidated, Inc. (COKE), Costco Wholesale Corporation (COST) and Spotify Technology S.A. (SPOT)
The post Quant Ratings Updated on 135 Blue Chips—See What Changed appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
