Time New York: Mon 18 Feb 20:41 pm  |  Save 15% on H&R Block Online


Fortuitous News for SNAP, and Trump???s 1st Year


Wednesday, November 8, 2017

Just as late-market traders on Wall Street left work satisfied they’d sold Snap Inc. SNAP stock following disappointing Q3 sales results in the app company’s latest report, Chinese messaging giant WeChat — or at least its partner, Chinese tech holding company Tencent TCEHY — was reported to have purchased 145.8 million shares, or 12% of Snap. This sent SNAP shares up from a nadir yesterday afternoon around -21% to roughly -10.5% this morning.

Tencent had already been a rumored suitor for a buyout of the beleaguered Snap, once the company began selling off after a relatively strong IPO honeymoon. Shares peaked this past March at $29.44, but now lag beneath $14 per share, for an overall tumble in value more than 38%. Many analysts recognized that SNAP shares would reach fair value at some point along its slide; at this juncture, it would seem Tencent sees a good buy. And with a far larger target market in China than in the U.S., perhaps this does indeed set the table for a Snap buyout by the Chinese major at some point in the future.

Trump’s 1st Year: A Reflection

Futures today are unchanged following the one-year bull market since President Trump’s surprise electoral victory exactly one year ago today. Since then, we’ve seen roughly 30% growth in the Dow and Nasdaq, which now routinely set new all-time highs, and an S&P 500 index up more than 20%. Much of this strength is on the back of strong and steady jobs growth, healthy quarterly earnings, and other economic metrics.

Mergers and acquisitions activity is up the most for any first year of an administration, with $1.2 trillion in value encompassing about 12,000 deals for the year. And despite several missteps by the president and others on his behalf, volatility has sunk back to where it was about a year ago, when political analysts were certain Trump’s opponent Hillary Clinton would win the election.

Many analysts also bake in a tax cut/reform policy providing another strong tailwind to U.S. equities, but this is requisite on Congress actually passing a tax package — something that looks every day like less of a slam-dunk. Some say that although the overall economy is sound, failure by Congress to pass new tax legislation — primarily for corporations, whose nominal tax rate is currently 35% — would amount to a market sell-off to some degree.

The Dow is currently enjoying another 6-day rally ahead of today’s opening bell, the 4th such rally in just the past 2 months. Much of this activity is directly related to the promise of big corporate tax cuts. But as we’ve seen another strong quarter of earnings results, the remainder of positive sentiment is indeed connected to realities within the domestic — and global — trading markets.

Energy stocks also rush to the forefront of late, on questions about a shakeup among royals in Saudi Arabia, the world’s biggest oil producer, as well as the Saudi-led OPEC agreement to dial back daily oil production, which has helped demand. ExxonMobil XOM is currently a Zacks Rank #1 (Strong Buy), and British petroleum giant BP BP in a Zacks Rank #2 (Buy).

Mark Vickery
Senior Editor

Questions or comments about this article and/or its author? Click here>>

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 – Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7% and +90.2%, respectively.

???And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 – Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

To read this article on Zacks.com click here.

Zacks Investment Research

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
<-- You can share this post with your network,
or give us your opinion and leave a comment.
Be sure to check our RSS feeds for updates.