Your portfolio in brief
We're talking about Apple stock, which has had a good start to the year. Indeed, the stock has posted gains of 27% since mid-January as the technology sector has been sought after by investors in recent months. The stock has received a number of upward revisions from analysts in recent weeks. JPMorgan said iPhone demand is high compared to Apple's competitors while Jefferies also noted that demand is strong.
In March, Apple benefited from the collapse of Silicon Valley Bank as well as the announcement confirming that it planned to release a mixed reality headset that is expected to launch in June. In addition, like most companies in the technology sector, Apple is focused on cutting costs, delaying bonus payments while continuing its hiring freeze. The company has also increased the cost of its Apple+ and Apple music subscriptions.
"Apple is an important position in our portfolio. Its low volatility relative to peers, combined with its steady growth, makes it a great position. Apple's stock makes up 4.5% of our portfolio and we estimate a price target around $182. With its large cash reserves, the company is able to navigate through all economic cycles and take advantage of downturns in some to potentially make acquisitions. Its price-to-earnings ratio has fallen significantly in recent years and the company is now paying dividends. Apple has become a mature technology company, which reinforces our decision to make it a core position in our portfolio," said Philippe Pratte, President and Portfolio Manager.
Stock Markets at a Glance
What an end of month and quarter for the indices which survived a banking crisis as well as a still rising inflation! After a disastrous 2022, there was plenty to cheer about on Friday when the markets closed. The S&P 500 ended the first three months of the year up 7%, gaining 3.51% in March after the index had fallen about 20% in 2022. For its part, the NASDAQ ended the month up 6.69% and posted gains of nearly 17% for the quarter. The Dow Jones ended the period up 0.38% and closed March up 1.89%.
The technology sector was definitely the big winner of the quarter as many stocks in the sector rebounded. After shunning this sector in 2022, investors are finally back. Many took advantage of the decline in these stocks to fill out their portfolios in hopes that the declines would be short-lived.
The technology sector of the S&P 500 Index posted gains of 21.5% in the first quarter and 10.9% in March as the sector became a safe haven for many investors in the first quarter.
"At Pratte, we did not hesitate to buy these stocks. The earnings prices of several leading technology companies have become extremely attractive, especially in late 2022. In anticipation of the change in the cycle and the end of interest rate hikes, stocks from this sector have become attractive stocks. Positions that created volatility in 2022 seem to be the big winners of the first quarter," adds Philippe Pratte.
First quarter winner Nvidia racked up impressive gains of 90% thanks to the frenzy surrounding AI and rising expectations for the coming quarters. Meta is in second place after posting 76% gains in the first three months as CEO Mark Zuckerberg dubbed 2023 as the "year of efficiency" for Instagram and Facebook. As promised, the company announced in March that it was cutting more than 10,000 jobs and lowered its 2023 spending guidance for the second time this year. In third place is Advanced Micro Devices (AMD) stock, which has gained more than 50% since January, also buoyed by the arrival of AI, which is expected to be good for the company.
Investors were surprised on Monday by the announcement of OPEC members to drastically reduce their production while many analysts were expecting a status quo. Indeed, eight of the 23 OPEC+ participants decided to cut their volume by 1.16 million barrels per day, led by Saudi Arabia. In the midst of the banking crisis, oil prices recorded their lowest level in a year, "an unacceptable level for OPEC+ members," Emirates-based oil market expert Ibrahim al-Ghitani told AFP. The unexpected decision by the organization's members sent barrel prices jumping by 8 percent on Monday as demand for the black gold continues to rise, buoyed by the reopening Chinese economy.
"Most of the cuts will be made by countries that produce at or above the quotas" set, implying "real reductions in supply" and a tightening of the market, DNB analysts noted.
The indices ended Tuesday and Wednesday's sessions mostly in the red, dragged down by recent economic data. The ISM index, which calculates activity in the U.S. services sector, slowed to 51.2% in March from 55.1% the previous month and 54.3% expected by analysts. Then, the U.S. trade deficit also slowed, with a drop in exports, but also a decline in imports.
"The bottom line is that this decline in both exports and imports reflects a slowdown in global trade," said Patrick O'Hare of Briefing.com.
So here is the average for the week for the three major indexes in the U.S. on Thursday at the close.
And here is the average of the TSX in Canada for the last 4 days.
Pratte Portfolio Management is a firm registered with the Autorité des marchés financiers (AMF) and the Ontario Securities Commission (OSC).
This newsletter is intended to provide general market and security information and is not intended to address your specific needs. The views (including recommendations, if any) expressed in this newsletter are those of the author only and do not necessarily represent those of Pratte Asset Management and do not constitute investment advice for your specific needs.
The information contained in this report is derived from sources believed to be reliable, but the accuracy and completeness of this information can not be guaranteed and, in providing the information, the author and Pratte Portfolio Management assume no liability whatsoever. This information was current as of the date indicated in this bulletin, and neither the author nor Pratte Portfolio Management assumes any obligation to update it or to report any new developments with respect to this information. This report is intended for distribution in jurisdictions where the author and Pratte Portfolio Management are registered for trading in securities. Any distribution or diffusion of this report in another territory is forbidden. The author, Pratte Portfolio Management, its affiliates and their respective directors, officers and employees, and the companies with which they are associated may, from time to time, hold securities referred to in this report.
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