Large Cap Stocks – Observation

Here’s how the large-cap end of the market doing.

Should one buy Nokia as it gaps up?

Nokia stock has done so many false starts that it’s hard to believe that this time it might be for real. The stock is up 11% now near 5.96 on news that the company will raise full-year outlook and it has done extremely well during the last quarter. The company has a market cap of $30 billion and expected to do sales of $24 billion for the year. As 5G is gaining momentum, Nokia is expected to do well. Outside China, both Nokia and Ericsson seem to be winning orders. The company will announce earnings on July 29, 2021. 

One should keep a close eye on the stock and look to add near 5.8. 

Nobody loves US-based stocks

One fascinating data point…all the stocks that have gained 3% or more in the stock universe (market cap between $10 bn – $90 billion) belong to companies based outside the US.

Pepsi breaks out to a new high on strong earnings

Pepsi Q2 Earnings:

EPS: $1.72 [Estimate: $1.53]
Revenues rose 20.5% to $19.22 billion
Beverages revenue in North America: +24%

— Deepak Singh (@smarket) July 13, 2021

Pepsi is not a volatile stock and hence even if it has broken out, it’s hard to recommend because the upside is limited. Having said that, Pepsi should deliver 15% returns over the next 12 months (including dividends).

The market breadth continues to be sluggish and poor

There are 900 stocks that have a market cap of more than $10 billion. Out of that universe, only 38 stocks trade with 2% gains today, while 96 stocks trading with 2% or more losses. Rest doing nothing. It’s hard to find any great opportunity in this market.

Structurally Buy and Hold stock: CLF

CLF continues to be a hold

Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purposes. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers