Market outlook amidst headwinds as of 30th April 2022

A number of headwinds are leaving investors uncertain of what the future brings in the markets. This earnings season was not very exciting and the gross domestic product was with minus 1.4%, well below analysts’ estimates of a plus of 1%. The Fed announced to increase the pace of increasing interest rates.

The Nasdaq finds itself at 23% below its high and with that officially in a bear market. We believe some values are great purchases at the moment, although of course in the current situation between the war in Ukraine, some commodity prices sky rocketing, increased energy prices and increased interest rates, the markets may not have seen their lows yet.

Amazon (AMZN)  fell to a 52-week low as Q1 was below street expectations although  revenues were at  $116.44 billion and with that only minimally below average expectations of $116.52. Yet, high energy prices are expected to have a negative impact on the Q2 results.

Images courtesy of: Seeking Alpha

Alibaba (BABA) could have seen its market low as China’s President Xi Jinping expressed the government’s commitment for their economic growth target and to support a healthy growth of internet platform companies. This is a highly significant and important statement for the sector and the reason why quite some analysts give Alibaba a buy rating after months of being a beaten-up stock.

Images courtesy of: Seeking Alpha

PayPal (PYPL) dropped its guidance for the financial year 2022 this week and its share price dropped again to a new low, although the company expects growth in accounts and in net revenues this year. Current share prices could recover heavily as the stock of this global payment company was severely beaten over the past months losing 51% year to date.

All the above said, we at Jores Investment Fund, we are highly convinced of our investment strategy which combines a very broadly diversified mix of stocks, from different sectors over different countries. We invest in:

  • Companies with a high gross profit margin.
  • Companies whose net profit is close to free cash flow, thus avoiding imaginary accounting.
  • Companies with a proven brand in the market, for decades or centuries if possible.
  • Companies with added value, differentiation or network effect for technology companies.
  • Companies that pay dividends for many years and that are uniform over time, in order to demonstrate that even in difficult times they are able to generate cash.
  • Companies with the right amount of debt to be able to face new projects and to be constantly updated.
  • Companies with a low volatility history, they are safe when the market goes up and when the market goes down, they go down less (parachute effect, or bonds on steroids).
  • Companies with high volume, so that their price is not easily manipulated.
  • Large companies, because the market has supported and validated their business model.
  • Long-lived companies……. the market and time have validated their business model.
  • Low volatility companies……. the market does not dare to «manipulate» the value of these companies.
  • Predictable companies……..the market provides a very stable profit margin over time.
  • Companies that are not negatively affected by technology………always supported by technology or independent of technology.

*We are not providing financial advice in any of our articles. Our articles are at no point a suggestion to invest in particular companies and their stocks. Any investment comes with a risk and should be considered on a personal and individualized level. If you wish to receive personalized advice, please contact us on jores@jores.es or call or WhatsApp us on: +34 620 801 405.

Sources:

https://seekingalpha.com/article/4504817-amazon-earnings-you-were-warned
https://seekingalpha.com/article/4505069-paypal-epic-recovery-ahead
https://seekingalpha.com/article/4505332-alibaba-and-chinese-tech-stocks-come-out-of-hiding-now-its-time-to-buy
https://edition.cnn.com/2022/04/29/investing/dow-stock-market-today/index.html