With the beginning of the fourth quarter of the year, and after the interest rate reduction by the US Federal Bank, the investment bank HSBC suggests reassessing the existing investment opportunities. The bank notes that the S&P 500 index has risen for five consecutive months, and that the majority of the increases come from large companies in the fields of technology, retail , the banks and pharmaceuticals. HSBC’s chief equity strategist, Nicole Inoue, believes that it is necessary to look beyond these areas and that reasonably priced stocks can be found.
In a letter to the bank’s clients, Inoue stated that the three leading indices on Wall Street – the S&P 500, the Dow Jones and the Nasdaq – rose during the month of September, and are yielding a positive return at a double-digit rate since the beginning of the year. However, HSBC warns against over-reliance on the strong performance of Large Cap companies, and they recommend that investors diversify their investments and also look for shares that are priced more reasonably.
Inoue expects the trend of lowering the Fed interest rate to continue: in her estimation, six reductions of 0.25% will be made. This outline will influence investment strategies and open up new opportunities in sectors that are currently undervalued. “When we move to a lower interest rate environment, and when growth looks relatively stable, we believe there are opportunities to expand exposure for investors,” she notes.
According to Inoy, the dominance of the large companies in the indices is significant, and they represent the lion’s share of the returns since the beginning of the year. This highlights the need for diversification and finding additional value. At the same time, she warns against investing in small stocks; According to her, historically, small stocks underperform during periods of Fed interest rate cuts, so she recommends not increasing exposure to this area.
HSBC also mentions that the market is dynamic and has uncertainty, among other things due to geopolitical events that can affect the performance of specific shares. Therefore, they also recommend carefully examining the investments so that they match the investment goals of each investor.
Which stocks are recommended now, according to HSBC? Among the stocks recommended by the bank are the car manufacturer General Motors, the pharmaceutical company Pfizer, the Goldman Sachs bank and the airline company Delta Airlines.
HSBC’s recommended stocks:
■ General Motors
Market value: 51.3 billion dollars
Return since the beginning of the year: 28.2%
Analyst consensus: According to the Wall Street Journal, 16 analysts are positive about the stock General Motors 10 neutral and three negative. The average witness price is 19.6% higher than the current price.
According to HSBC, General Motors is showing convincing growth rates, and it surpassed market forecasts in the last quarter, thanks to a 60% increase in electric vehicle sales compared to the same period last year.
■ Pfizer
Market value: 162 billion dollars
Return since the beginning of the year: 3.7%
Analyst consensus: According to the Wall Street Journal, most analysts are neutral about the stock Pfizer – 14 out of 25. The rest are positive. The average target price per share is $33.05, 15.6% higher than the price in New York.
HSBC notes that despite the weak return of the stock since the beginning of the year, recently there has been a more positive trend towards Pfizer.
■ Goldman Sachs
Market value: 156 billion dollars
Return since the beginning of the year: 30.8%
Analyst consensus: According to Wall Street Journal data, 16 analysts are positive towards the stock Goldman Sachs 8 neutral and no analyst recommends selling. The average target price per share is 7% higher than the price in New York.
■ Delta Airlines
Market value: 31.8 billion dollars
Return since the beginning of the year: 23.4%
Analyst consensus: According to Wall Street Journal data, a clear majority of analysts recommend the stock delta In positive recommendations – 20 out of 22, and the remaining 2 are neutral. The average target price per share is 23.3% higher than the current price.
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