In hisDaily Market Notes report to investors, while commenting on double-digit earnings growth, Louis Navellier wrote:
Suspected Peaks
A stunning week of volatility leaves investors fearing we’ve entered a Bear Market.
Thursday was the worst market correction in 2 years. The only sector which dodged the bullet was energy as crude oil and natural gas rose on the risk of a ban on Russian imports.
Q1 2022 hedge fund letters, conferences and more
Interest rates are rising with the 10-year US Treasury now 3.08%. Hopes remained that the jobs number today would provide support. It came in better than forecasted, even showing a slight softening in wage inflation, with a concerning drop in labor participation. Futures bounced temporarily on the release, but it didn't last long.
We are now in a period of suspected "peaks": Are we seeing peak inflation? Peak wage growth? Peak home prices? Peak travel and concert bookings? Even peak energy prices? Uncertainty is moving money to the sidelines.
P/E Under Pressure
While GDP is still expected to be positive as are overall earnings, P/E multiples are clearly under pressure and the willingness of investors to pay for sales growth without earnings has faded rapidly. Earnings disappointments are being punished brutally.
The silver lining here is that when such broad-based sell-offs take place, quality names that are part of multiple ETFs which are being sold down can become real bargains. Companies with solid earnings, bulletproof balance sheets, and a dividend should be the least to fall and the first to recover once we find the new equilibrium. These companies will also be the most likely to announce new increases in share buyback programs.
Beat With Double Digit
As we approach intraday lows for the year, keep plenty of powder dry and build a list of quality company opportunities to add when the bottom comes. Companies with double-digit earnings growth remain the only way to "beat" current inflation expectations, when to step in remains uncertain.
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