Earnings Surprises and Share Buy-backs Hold Promise for May

Excerpt from Louis Navellier's Marketmail - 5/7/2019

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It is starting to get bumpy, but I was encouraged by wave after wave of strong sales and earnings announcements last week. So far, the S&P 500’s annualized earnings are 5.6% above estimates.

We had an incredible April, which is a seasonally strong month that benefits from pension funding and the fact that some of the best earnings surprises tend to be released in April. However, in May, earnings surprises tend to be not quite as strong, so the overall market could get bumpy in the upcoming week. 

Last May was incredible, however, fueled by wave after wave of stock buy-backs. Specifically, companies suspend stock buy-backs in this “quiet period” (during earnings announcement season), but immediately after their first-quarter results are announced, they are free to commence more stock buy-backs. Since there were $227 billion in stock buy-backs in the first quarter and bond yields have since fallen, I expect stock buy-back activity to pick up in the second quarter, so May could be a great month, just like last year.

Speaking of buy-backs, Apple confirmed on Tuesday that it is boosting its stock buy-back program by $75 billion. Big multinational companies like Apple can issue debt at ultralow interest rates to buy back more shares. With rates so low, it appears that the second-quarter buy-back frenzy may be stronger than in 2018! 

Navellier & Associates owns AAPL in some managed accounts but not in our sub-advised mutual fund. Louis Navellier and his family own AAPL in personal accounts.

In This Issue of Marketmail (Click Here to Read)

Bryan Perry sees some “green shoots” of growth emerging in Europe and elsewhere around the globe, with a potential for high yields in selected European banks. Gary Alexander focuses on the misuse of economic growth statistics during the election cycle: Beware of bias, even by the “best and brightest.” Ivan Martchev sees the charts and the fundamentals pointing to a Dow heading for 30,000 (and the S&P to 3,250), perhaps this year. Jason Bodner follows the phenomenal growth story of semiconductors and software within the tech sector, while I cover the upbeat economic scorecard and the Fed’s latest meeting.

Income Mail: Economic Green Shoots in Europe Sparking Optimism

     By Bryan Perry

Fat Dividend Yields from European Bank Stocks Come with Elevated Risks

Growth Mail: Happy Birthday, Karl Marx…Now, Please Just Die!

     By Gary Alexander

How the Best and Brightest “Lie with Statistics”

Global Mail: The Dow Chart says It’s Going to 30,000

     By Ivan Martchev

Why the Fundamentals Support the Technical View

Sector Spotlight: Finding the Truth Amid the Noise

     By Jason Bodner

Semiconductors and Software Lead the Tech Charge

A Look Ahead: A Powerful Jobs Report Lifts the Market on Friday

     By Louis Navellier

The Fed (as Expected) Left Interest Rates Alone