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Weekly Market Update: Gains Ahead of Key Economic Reports

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U.S. stocks were mixed during an abbreviated trading session Friday, as the S&P 500 (SPX) ended the holiday-shortened week about 1.5% higher. Our stock of the week is a Defense name.

U.S. stocks were mixed during an abbreviated trading session Friday, as the S&P 500 (SPX) ended the holiday-shortened week about 1.5% higher.

Wednesday’s FOMC minutes confirmed speculation that the Fed is likely to slow the pace of future interest rate hikes.

Elsewhere, the preliminary November U.S. purchasing managers’ index (PMI) data suggested that both the manufacturing and services sectors are contracting.

Looking ahead, Salesforce.com (CRM) and Intuit (INTU) headline the earnings calendar, as we enter the final month of 2022.

On the economic front, consumer confidence will be reported Tuesday, followed by the PCE price index on Thursday. The latter is the key inflation gauge of the Federal Reserve.

Friday brings the November jobs data. The U.S. economy is expected to have added 200,000 non-farm payrolls for the month, with the headline unemployment rate to remain at 3.7%.

Given the reality of a slowing growth outlook and the prospect of higher interest rates, it could become hard to come by investment gains heading into 2023. 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 Aerospace/Defense name is worth a closer look and is our Stock of the Week.

Stock of the Week: General Dynamics (GD)

The company is a global defense contractor and also makes Gulfstream jets. The majority of its business is generated from steady government contracts.

The stock gained 2% last week and is showing signs that it has the potential to continue this relative outperformance as the calendar changes to 2023.

Here’s why:

General Dynamics appears to be firing on all cylinders, as evidenced by the better-than-expected results that management reported last month.

The company earned $3.26 a share in the third quarter, as revenue increased 4.5% from a year ago, to $10 billion. Management said that Aerospace, Combat and Marine demand drove upside in the period.

The book-to-bill ratio was 1.1 to 1, suggesting General Dynamics is in a solid position heading into 2023.

The stock is attractive valued at current levels, trading at 19x expected profit over the next four quarters. This represents a discount to both the Defense industry and 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, financial bloggers and individual investors.

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.

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