Investors looked for safety in bonds and commodities as the S&P 500 fell 1.1% during the holiday-shortened trading week. Technology stocks led the way lower, while Real Estate names bucked the trend.
The push into bonds sent the yield on the U.S. 30-year Treasury bond to a record low of 1.89% this week. The spot price of gold touched a seven-year high.
The number of coronavirus cases continued to rise across the globe this week, including in the U.S., as more travelers returned from China with the disease.
On the Brighter Side
Even though stocks took a holiday this week, the current earnings season suggests the U.S. economy continues to grow.
Of the 437 S&P 500 companies that have posted earnings so far this quarter, 71% have exceeded profit estimates. This is above the historical average of 65% and aggregate fourth-quarter earnings are expected to increase 3.2% from the previous year.
Investors are also confident that the Fed is in their corner. Following the release of the minutes from the latest FOMC meeting on Wednesday, the futures market is pricing in a 73% chance of an interest rate cut by July.
The Week Ahead
Home Depot (HD) and Salesforce (CRM) kick off the earnings parade on Tuesday, followed by Lowe’s (LOW) and Marriott (MAR) on Wednesday. A total of 41 companies from the S&P 500 will post quarterly results next week.
On the economic front, Thursday offers a look at January durable goods orders, as well as the first revision to fourth-quarter GDP growth.
We know that deciding what and when to buy can be challenging for any investor, especially with new risks emerging on a regular basis.
However, the fact remains that attractive investments are out there if you’re willing to dig a little deeper.
One such Real Estate name that just posted a strong quarter, is worth a closer look and is our Stock of the Week.
Stock of the Week: VICI Properties (VICI)
The real estate investment trust (REIT) has 22 entertainment properties, casinos, and hotels, including Caesars Palace.
The stock gained fractionally this week, while the broader market declined. The company is a direct beneficiary of lower interest rates and we believe this positive momentum can continue throughout 2020.
Here’s why:
On Thursday management posted quarterly results that exceeded the consensus analyst estimates. VICI earned $0.37 a share in the fourth quarter, as revenue increased 5% from the previous year to $237.5 million.
2019 was a big year for the company; management announced $4.9 billion of acquisitions and raised $2.6 billion of equity. These deals help set up VICI to deliver an expected 13.3% average profit growth over the next two years.
Analysts See Upside Plus Yield
The stock has returned 38% over the past year, but Wall Street still sees further upside potential. All eight analysts tracked by TipRanks rate the company a Buy and the average price target of $30.50 represents 8.4% upside potential.
The company has increased its dividend three times in six quarters and currently pays $0.2975 a share (4.2% yield). Management is also working toward securing an investment-grade debt rating for the company.
In addition, it’s worth noting that VICI carries a Smart Score of 8/10 on TipRanks. This proprietary score utilizes Big Data to rank stocks based on 8 key factors that have historically been a precursor of future outperformance.
On top of the positive aspects mentioned already, the Smart Score indicates that the company has improving sentiment from insiders and financial bloggers.
Wishing you a world of investment success!
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