Needless to say, the stars aligned for stock investors this week as a host of good earnings were met by a much more docile Federal Reserve. Not only did it keep rates steady but promised a very passive forward agenda that looks to be based almost exclusively on incoming data. While there is still a chance the Fed could raise rates this year, given the fall meltdown still fresh in memories, aggressive hikes seem out of the question now.
The massive midweek rally reinforced the bulls, and it makes sense to stay involved in equities now, as the near term looks far more constructive than it did even a month ago. At 24/7 Wall St. we remain bullish on companies that are printing positive numbers for the quarter and giving solid forecasts.
In a series of new research notes, Deutsche Bank raised its price targets on stocks of four top companies that posted outstanding results and had positive forward guidance. All are rated Buy and make good sense for growth accounts with a reasonable investment time frame.
The huge social media leader’s stock has been incredibly volatile recently, but it posted outstanding results for the quarter. Facebook Inc. (NASDAQ: FB) is the largest social network with over 2.0 billion monthly active users and over 1.4 billion daily active users. The company generates revenue from advertising and from payments, with over 95% of revenue from advertising. It generates close to 50% of revenues in the United States and Canada and is expanding rapidly in international markets.
The company’s solutions also include Instagram, a mobile application that enables people to take photos or videos, customize them with filter effects, and share them with friends and followers in a photo feed or send them directly to friends; Messenger, a messaging application for mobile and web on various platforms and devices, which enable people to reach others instantly, as well as enable businesses to engage with customers; and WhatsApp Messenger, a mobile messaging application.
Deutsche Bank loved the results and noted this:
Facebook reported strong 4Q upside and a pivot towards a “back to normal” focus on innovation, concentrating on projects that “can have a major improvements on people’s lives”. Mark Zuckerberg listed several key product areas, most notably eCommerce/shopping products on Instagram. Despite repeated calls for “deceleration” throughout the call (seven times by our count) and limited estimate changes, we feel better about the ad outlook and see the innovation pivot creating product catalysts for the balance of the year. One concern the company highlighted, however, was targeting risks associated with potential privacy rules from platforms like iOS, Android, and/or browsers. This is particularly noteworthy post the Facebook Research App given Apple’s move to invalidate Facebook’s root certificates across internal test apps, rendering them unopenable to FB employees.
The Deutsche Bank price target was raised to $200 from $195, and the Wall Street consensus price target is $184.67. The shares closed trading on Thursday at $166.69, up almost 11% on the day.
Royal Caribbean Cruises
This company looks solid as many people continue to take expensive cruises. Royal Caribbean Cruises Ltd. (NYSE: RCL) is the world’s second largest cruise company. It owns and operates three cruise brands: Royal Caribbean International, Celebrity Cruises and Azamara Club Cruises, and it holds a 50% stake in TUI Cruises, a 49% stake in Pullmantur Cruises and a 66% stake in Silversea. In total, the company operates 59 ships with 535 destinations across all seven continents.
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