Looking for stocks to buy; here are five hot stocks to watch
Summary: US earnings season is about to get underway, and Australia’s financial year reporting just wrapped up, so let's cover five hot stocks to watch. General Mills is the best performing US stock this week in the S&P500 after the Wheat price gained 24% in the month. Pilbara Minerals, is one of this week's best performers in the ASX after selling its lithium for a record price this week to China. Whitehaven Coal is another to watch, as it's benefiting from surging coal demand and prices, with its shares trading at brand new record highs in anticipation of another record profit. Lastly, we cover why Tesla and Apple are two of the most traded stocks at Saxo in September.
- General Mills is the biggest wheat exporter in the US
- Its shares have been outperforming the market and are of the best performers in the US this year, up 22%
- Its shares are picking up momentum as the Wheat (WHEATDEC22) price has gained 24% in a month
- So what’s moving Wheat higher into a technical uptrend?
- South America wheat supply has been impacted by frost and rain,
- US supply is expected to fall due to dry conditions and drought in the US
- Heavy rains are headed for Australia for the third year in a row amid La Nina
- And lastly – with Russia mobilizing troops against Ukraine, this adds to supply concerns for Wheat, on concerns Ukraine’s export terminal could be shut once more.
- So General Mills is a stock to watch, as the wheat price rises, it boost its cashflow and share price growth.
- Pilbara Minerals is Australia biggest exporter of lithium
- Its shares have gained almost 50% this year as the lithium price tripled in the last year, fueled by electric vehicle demand
- Pilbara Minerals auctioned off its lithium spodumene concentrate (or partly processed lithium) for a record price of AUD$7,708 with the shipment to go to China
- So who is buying Pilbara’s lithium? Two of Pilbara’s most known customers include China’s Genfeng and the car maker Great Wall.
- So what’s next?
- Well if the lithium price continues to rally amid the lack of supply and rising demand, Pilbara’s shares could stay elevated supported by expectations that higher cashflow and earnings growth are ahead.
- The International Energy Agency (IEA) forecast lithium demand to grow more than 40 times over the next two decades
- Pilbara operates on a Price to Earnings (PE) ratio of 25 times forward earnings estimates, which is comparatively cheaper than its peers. So Pilbara could be a stock to watch.
- Whitehaven is Australia's biggest exporter of coal and the best performing stock in the global share market this year, among large companies
- Its shares are up 250%
- Last financial year Whitehaven's earnings rose 1,500% boosted by the coal price soaring to new record highs
- So what's next?
- The coal price is surging amid a lack of coal supply and rising demand
- Demand for coal has been increasing as the world searches for cheap access to emergency energy
- Regions like India are experiencing a heat waves, while Australia has been hit by its coldest winter on record.
- The coal futures price, which is an indication of the future price of coal, is also continuing to move further higher into new record highs, simply telling us, that the spot coal price is likely to move higher yet again, as the world is facing a lack of energy reserves, and forward demand is also increasing.
- Peak coal demand season is December and January, so we expect the coal price to move higher as demand increases from coals biggest consumers (India and China) amid their winter.
- Tesla is one of most traded stocks at Saxo globally this month
- Across the world, Tesla electric vehicles are one of the most bought electric vehicles
- Its shares have had a bumpy ride this year, as the company’s been plagued by higher raw materials and commodity costs
- Although Tesla shares rallied up 50% from than their May low, there are now concerns some of those gains could fade, as the lithium price is back at record highs
- However on the positive side for Tesla;
- Tesla is increasing some of its costs, such as increasing the price of supercharger station use in Europe
- And Tesla is controlling other costs where possible, by looking to make in-house battery cells
- As for new revenue streams; the Cybertruck’s production is set for mid-2023
- Across Europe, Tesla is aiming to increase sales. For instance in Germany it wants to double sales growth, compared to last year, after opening new stores
- And in the US, across the entire electric vehicle market, all EV sales are expected to rise after the United States introduces new climate law and tax credits. Bloomberg estimates total EV industry sales will make up 52% of total car sales by 2030. That’s a huge jump compared to the 5% last year. And Tesla will be capturing some of this growth
- Tesla trades at a Price to Earnings (PE) ratio of 109 times forward earnings estimates, which make it looks expensive compared to Ford’s PE of 7 times.
- Given commodity prices are likely to continue to rise, and Bloomberg estimates suggest Tesla’s margins could be flat this year, before picking up in 2023, you might expect Tesla's shares be pressured before potentially rebounding later next year.
- Apple is the one of the most traded stocks at Saxo globally this month
- Its shares have also had a bumpy ride, but its innovation should support the company’s shares growing in value over the long term
- Interestedly, Apple’s iPhone sales generate half of the group’s total revenue, and last quarter, total revenue stood at about $41 billion
- Apple's launch of its new iPhone, including its most expensive model yet, the iPhone 14 Pro model should also help next quarterly earnings.
- Well iPhone 14 shipments are said to account 60-65% of orders, which is up from the previously estimated range of 55-60%. This means Apple could have a positive outlook when they release their next quarterly earnings in late October.
- Apples new watch and air pods should also bolster Apples outlook
- And going forward, Apple's customer retention is set to expand as it moves to a new subscription model.
- Apple estimates 98% of its customers want to upgrade their phone each year.
- So that’s a reason to perhaps consider Apple for the long term
To find out more about the these companies or other opportunities, head to Saxo's Platform.
Q4 Outlook 2022: Winter is coming
- Winter is coming to the financial markets as central banks are tightening their grip. How spring will look is still a question.
European energy crisis: it will get worse before it gets betterThe winter in Europe will be tough, but whether the result is political chaos or sustainable, innovative solutions is still undecided.
A difficult and volatile quarter awaitsAs the year draws to an end, commodities continue to be at centre stage of the world with growth pockets political uncertainty.
The bright side: crises drive innovationThe positive spin on crises is that they come with solutions. It is worrisome that deglobalisation may be a response to this crisis.
Green transformation in China: renewable energy and beyondGoing green, China needs to span numerous energy sources to ensure stability, as every source comes with a challenge.
Asia: Intermittent solutions, but a faster renewable adoption curveAsian energy supply is being squeezed. This and the adoption of renewables may change the investment sentiment in the region.
FX: A Fed thaw needed to deliver a sustained USD turn lowerThe US Dollar can keep momentum when the Federal Reserve continues to tighten, leaving the rest to play to their drum.
Autumn can become ugly for equities and bond holders. Comfort for Dollar longsTechnical analysis suggests that equities could face a tough Q4 as could fixed income. US Dollar positions could provide some upside.
The next stock market sector to watch, with stocks going nuclearAs the world scrambles to find affordable, sustainable energy, nuclear is getting attention from politicians and investors alike.
The crypto space is getting cold when the hype disappearsCryptocurrencies face a winter of their own as retail investors and governments are asking tough questions.