The broader U.S. market averages fell more than 3% across the board Friday, following hawkish comments from the Federal Reserve. Information Technology stocks led the way lower last week, while the Energy sector rallied.
At the annual Jackson Hole conference on Friday, Fed chair Jerome Powell suggested that interest rates will likely remain higher for longer. Fed funds futures are pricing in an 85% probability that rates could be 125 to 150 basis points higher by the end of the year.
Elsewhere, the preliminary August U.S. purchasing managers’ index (PMI) data on Tuesday suggested a decline in economic activity this month. The reading of 44.1 in the services sector stood out, as it signaled an economic contraction.
The Week Ahead
Best Buy (NYSE: BBY) and HP (NYSE: HPQ) are scheduled to post quarterly results Tuesday, followed by Broadcom (NASDAQ: AVGO) on Thursday. Investors are also anticipating reports from Crowd-Strike (NASDAQ: CRWD), Okta (NASDAQ: OKTA), and Lululemon (NASDAQ: LULU).
On Wednesday, Bad Bath & Beyond (NASDAQ: BBBY) will hold a business update and strategic conference call after nearing a finance deal with Sixth Street Partners last week. The stock has seen heavy trading volume since the beginning of August.
Trading volume could be relatively light next week, ahead of a holiday weekend.
On the economic front, August consumer confidence will be reported Tuesday. The Institute for Supply Management (ISM) will also post its August data for the manufacturing sector on Thursday.
Friday brings the August employment report. Economists are looking for the addition of 285,000 non-farm payrolls and for the headline unemployment rate to remain at 3.5%.
Given a slowing growth outlook and the prospect of higher interest rates, it could become hard to come by investment gains in 2022. As a result, deciding what and when to buy can be challenging for any investor. However, the fact remains that investments with upside potential and other positive signals are out there if you dig a little deeper. One such Commodity name is worth a closer look and is our Stock of the Week.
Stock of the Week: Teck Resources (TECK)
The company mines for steelmaking coal, copper, zinc, and other commodities. The stock gained nearly 7% last week. It is showing signs that it has the potential to continue this outperformance into the final months of 2022. Here’s why:
We view Teck as a natural hedge to rising inflationary pressures. Its growth was on display last month when management delivered a quarterly revenue increase of 126% from a year ago that topped consensus expectations.
The company said that it is facing higher costs during COVID-19, but still generated record cash flow in the period. As a result, management bought back $572 million of shares in the quarter and paid down $650 million of debt.
Despite the solid results, Teck is currently valued at just 7.9x expected earnings over the next four quarters, which represents a steep discount to the broader market.
In the meantime, the company carries an “Outperform” Smart Score of 10/10 on TipRanks. This data-driven stock score is based on 8 key market factors.
On top of the positive aspects mentioned already, the Smart Score indicates that shares have seen improving sentiment from analysts, hedge funds, and financial bloggers.
FYI: This is just 1 of the 20+ stocks selected for the Smart Investor portfolio, a weekly newsletter that blends big data, and market insights.