Software is eating the world, and virtually no business is left untouched by it. Companies bringing it to life have been rewarded with explosive earnings growth, and the upward trend shows no signs of stopping - over the past six months, the industry has posted a gain of 9.1% while the S&P 500 was flat.
Value investing has created more billionaires than any other strategy, like Warren Buffett, who built his fortune by purchasing wonderful businesses at reasonable prices. But these hidden gems are few and far between - many stocks that appear cheap often stay that way because they face structural issues.
Value investing has created more billionaires than any other strategy, like Warren Buffett, who built his fortune by purchasing wonderful businesses at reasonable prices. But these hidden gems are few and far between - many stocks that appear cheap often stay that way because they face structural issues.
Most consumer discretionary businesses succeed or fail based on the broader economy. This sensitive demand profile can cause the industry to stumble when macro uncertainty enters the fray, and over the past six months, its returns were flat. This performance was similar to the S&P 500.
Let’s dig into the relative performance of Frontdoor (NASDAQ:FTDR) and its peers as we unravel the now-completed Q4 specialized consumer services earnings season.
Stocks trading between $10 and $50 can be particularly interesting as they frequently represent businesses that have survived their early challenges. However, investors should remain vigilant as some may still have unproven business models, leaving them vulnerable to the ebbs and flows of the broader market.
Let’s dig into the relative performance of Mattel (NASDAQ:MAT) and its peers as we unravel the now-completed Q4 toys and electronics earnings season.
Many small-cap stocks have limited Wall Street coverage, giving savvy investors the chance to act before everyone else catches on. But the flip side is that these businesses have increased downside risk because they lack the scale and staying power of their larger competitors.
Industrials businesses quietly power the physical things we depend on, from cars and homes to e-commerce infrastructure. But they are at the whim of volatile macroeconomic factors that influence capital spending (like interest rates), and the market seems convinced that demand will slow. Due to this bearish outlook, the industry has tumbled by 2.2% over the past six months. This drop was discouraging since the S&P 500 held steady.
Growth is oxygen. But when it evaporates, the consequences can be extreme - ask anyone who bought Cisco in the Dot-Com Bubble (Nvidia?) or newer investors who lived through the 2020 to 2022 COVID cycle.