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AI Models Rank Netflix Stock “Top Buy” Following Recent Losses

The Dow and S&P ended higher last week while the tech-heavy Nasdaq NDAQ  ended lower in contrast. Pressure on tech stocks was finally apparent after what seemed like a forever-rally. The developments around the COVID-19 vaccine along with a stimulus package have been instrumental in driving the markets higher. Economic data gave no clear indication with a revival in the housing sector amidst lower consumer confidence. Retails sales have also inched towards its pre-COVID levels, but expectations are lower going forward with a resurgence in the virus around the country. Share-specific moves were observed as corporate earnings were declared with a significant number of companies beating the estimates, along with some that missed estimates and guidance. These companies have shown resilience to the pandemic and continue to be under the radar of investors. Our deep learning algorithms using Artificial Intelligence (“AI”) technology have rated some Unusual Movers this week.

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Netflix, Inc (NFLX)

There was one “Top Buy” rated stock this week in Netflix, Inc NFLX . Netflix Inc is down 10.16% for the week as earnings missed and the guidance for the year dampened investor spirits. The stock closed with a volume of 24,991,528 vs its 10-day volume average of 13,400,198.7. The stock is up 52.36% of the year and the financials of the company has been growing consistently over the past years. There was a significant improvement in ROE from 17.9% three years ago to 29.1% in the last year. Revenue is expected to grow by a healthy rate of 8.58% over the next 12 months and the stock is trading with a forward 12M P/E of 65.53. A “Top Buy” rating based on the financial health and future prospects makes it an attractive stock to invest in.

Air Products and Chemicals Inc (APD), The Progressive Corporation (PGR), Maxim Integrated Products, Inc (MXIM), Analog Devices, Inc (ADI)

Four companies make the list of “Attractive” stocks namely Air Products and Chemicals, Inc APD , The Progressive Corporation PGR , Maxim Integrated Products, Inc (MXIM), Analog Devices, Inc ADI .  Air Products and Chemicals, Inc., The Progressive Corporation, and Maxim Integrated Products, Inc. have given positive returns of 7.62%, 8.51%, and 9.28% respectively for the week, in line with YTD growth in the stock price of 26.65%, 25.29%, and 15.77%. Analog Devices, operating in the semiconductor industry is down by 6.22% for the week and is trading flat at -0.64% for the year.

Air Products and Chemicals, Maxim Integrated Products, Inc. and Analog Devices closed with volumes of 1,961,504, 2,935,644, and 2,709,205 against their 10-day volume average of 1,843,367.5, 6,088,334.1, and 3,982,387.7 respectively. As for the financials, these companies have been growing at a steady rate with revenues of The Progressive Corporation, an insurance company, growing by 51.2% over the last three fiscal years. The share is also available at a reasonable valuation with a Forward 12M P/E of 15.91. These firms have attractive ROEs with the figures in last fiscal being 16%, 31.9%, 43.8%, and 11.9%. 

Hanesbrands, Inc (HBI), Henry Schein, Inc (HSIC), Xylem, Inc (XYL)

Three companies have been shortlisted that have been rated as “Unattractive” by AI systems. All three stocks have been performing well in the last week with returns of 22.66%, 17.16%, and 11.64% against a sub-par performance of -3.04%, 0.37%, and -5.11% for the year respectively. Hanesbrands, Inc HBI , a company into the apparel business closed with volume 6,906,488 vs its 10-day volume average of 10,370,257.0. The company has an attractive valuation with a Forward 12M P/E of 14.95 but financials do not portray a very bright future with revenue growing by 3.46% over the last three years. Henry Schein, Inc HSIC , a company offering healthcare products and services and Xylem, Inc XYL , a company offering engineered products and solutions for the water and wastewater applications are costlier with forward 12M P/E of 31.89 and 34.58. While the 3-year growth rates remain higher when compared to Hanesbrands Inc., it is still at a pretty average level of 13.18% and 9.09%. All these companies have projected yearly revenues that are considerably lower than their 2019 levels and this could be a factor that could put pressure on the stock prices.

Mohawk Industries, Inc (MHK), Norwegian Cruise Line Holdings Ltd (NCLH)

We have two “Top Short” stocks as rated by our AI systems. These companies are Mohawk Industries, Inc MHK and Norwegian Cruise Line Holdings Ltd NCLH . Mohawk operates in the home furnishing space and is up by 11.37% for the week as volumes surged to 1,435,069 vs its 10-day volume average of 3,311,572.0. The stock is down by 42.45% for the year. Norwegian Cruise Line Holdings Ltd., operating as a cruise company in North America, Europe, the Asia-Pacific, and internationally is down 6.89% for the week against a sharp drop in price by 73.86% for the year.  The stock closed with a volume of 75,880,746 vs its 10-day volume average of 46,523,272.0. Given the sectors in which the two companies operate, we could see further selling pressure. In terms of valuation, Mohawk is available at a Forward 12M P/E of 18.38 but with earnings under pressure, we can assume this figure to increase. Norwegian Cruise Line Holdings Ltd is expected to see a sharp drop in revenues due to the impact of the pandemic on cruise travel. Based on these factors a “Top Short” rating seems reasonable for these two companies.

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