The Prudent Speculator Weekly Commentary is expertly curated every week as a valuable resource for stock market news, investing tips, business insights, and economic trends as it relates to value stock investing. In this week’s Market Commentary, we discuss Dividends, Economic News, Federal Reserve and more Stock News. We also include a short preview of our specific stock picks for the week, the entire list is available only to our community of loyal subscribers.
Executive Summary
Week – V-Shaped Bull Market Rally from Post-Liberation-Day Lows Gained Steam
Volatility – The Longer the Hold, the Less the Chance of Loss
Value of Dividends – Higher Returns and Lower Risk
EPS – Corporate Profit Growth in 2025 and 2026 Remains the Expectation
Econ News – Better-than-Expected Numbers but Growth Still the Forecast
Wall of Worry – Always Something to Fret About, but Long-Term Trend has been Higher
Sentiment – After 25%+ Rebound, AAII Finally Registers More Bull than Bears
Fed – Unemployment Low, But Rate Cuts Expected This Year and Next
Valuations – Attractive Metrics for Value Stocks
Stock News – Comments on ORCL, HPE, JNPR, Banks, GBX & ELV
Week – V-Shaped Bull Market Rally from Post-Liberation-Day Lows Gained Steam
Now that was our kind of week! The undervalued, often dividend-paying stocks that we have long championed enjoyed a superb four trading days, continuing the stellar rebound from the intraday Bear Market lows of April 7,
and pushing the gains from the closing lows of April 8 to more than 25%.
Volatility – The Longer the Hold, the Less the Chance of Loss
Obviously, there was no guarantee that that second week of April would mark a major market bottom, but investors again have been reminded that despite 27 official Bear Markets (20% decline on a closing basis) and several unofficial ones (like this year’s) over the last near-century, the long-term trend in equities has been higher,
as handsome long-term returns are available to those who remain disciplined and patient,
Value of Dividends – Higher Returns and Lower Risk
with Value Stocks and Dividend Payers leading the way.
And speaking of Dividend Payers, it was nice to see one of your Editor’s favorite journalists, Spencer Jakab, singing their praises last week,
citing the historical propensity for higher returns,
and lower volatility (standard volatility), which many think of as risk.
EPS – Corporate Profit Growth in 2025 and 2026 Remains the Expectation
We also note that those seeking income from their portfolio should like the fact that dividend payouts historically have risen over time, at a pace that has eclipsed the rate of inflation,
as Corporate America has managed to turn in terrific long-term profit growth, even as there have been a few short-lived earnings contractions along the way,
Econ News – Better-than-Expected Numbers but Growth Still the Forecast
as the U.S. economy has grown over time, on both a real (inflation-adjusted) and, especially, a nominal (actual) basis.
True, Q1 saw a real earnings contraction of 0.5%, but nominal growth was 0.8%…and profits and stock prices are measured in nominal dollars, while the current projection for Q2 real GDP growth from the Atlanta Fed is a healthy 2.6%,
and the ISM Manufacturing index for June edged up to 49.0, better than the consensus estimate of 48.8, with the keepers of the metric stating, “A Manufacturing PMI® above 42.3 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the June Manufacturing PMI® indicates the overall economy grew for the 62nd straight month after contracting in April 2020. The past relationship between the Manufacturing PMI® and the overall economy indicates that the June reading (49 percent) corresponds to a change of plus-1.9 percent in real gross domestic product (GDP) on an annualized basis.”
The Institute for Supply Management’s reading on the state of the larger services sector in June also topped forecasts, with ISM saying, “A Services PMI® above 48.6 percent, over time, generally indicates an expansion of the overall economy. Therefore, the June Services PMI® indicates the overall economy is expanding for the 61st straight month…The past relationship between the Services PMI® and the overall economy indicates that the Services PMI® for June (50.8 percent) corresponds to a 0.7-percentage point increase in real gross domestic product (GDP) on an annualized basis.”
Adding to the relatively upbeat statistics for the economy were greater-than-predicted job openings for May,
lower-than-expected initial claims for unemployment benefits in the most recent week,
and higher-than-projected nonfarm payrolls last month.
Wall of Worry – Always Something to Fret About, but Long-Term Trend has been Higher
No doubt, anything can happen as we move forward, and we are always braced for downside volatility, with more tough talk on tariffs over the holiday weekend sending the equity futures south for the opening of trading in the new week, even as stocks have performed fine since the launch of the Trump 45 Trade War in 2018,
with equities overcoming plenty of bad news since the turn of the century,
and over the last eight-plus decades.
Sentiment – After 25%+ Rebound, AAII Finally Registers More Bull than Bears
given the contrarian nature of the AAII Bull-Bear Survey, though the data on subsequent returns indicate that while we should be greedy when other are fearful, we should just be a bit less greedy when others are optimistic.
We also respect that there is plenty of consternation about what the Federal Reserve will do on monetary policy, but the unemployment rate is low by historical standards,
and market history shows that stocks have performed well whether the Fed is tightening or easing,
but the betting odds suggest that Jerome H. Powell & Co. will cut the current 4.5% upper target for the Fed Funds rate,
by fifty basis points before year end and by more than 100 basis points over the next year.
Valuations – Attractive Metrics for Value Stocks
All things equal, lower interest rates would add to the attractiveness of Value stocks in general,
and our broadly diversified portfolios of what we believe are undervalued stocks in particular.
Stock News – Updates Bank stocks, plus 5 additional stocks across 3 different sectors
Keeping in mind that all stocks are rated as a “Buy” until such time as they are a “Sell,” a listing of all current recommendations is available for download via the following link:
https://theprudentspeculator.com/dashboard/. We also offer the reminder that any sales we make for our newsletter strategies are announced via our
Sales Alerts. Jason Clark, Chris Quigley and Zack Tart take a look at earnings reports and other market-moving news of note out last week for more than a few of our recommendations.
Kovitz Investment Group Partners, LLC (“Kovitz”) is an investment adviser registered with the Securities and Exchange Commission. This report should only be considered as a tool in any investment decision and should not be used by itself to make investment decisions. Opinions expressed are only our current opinions or our opinions on the posting date. Any graphs, data, or information in this publication are considered reliably sourced, but no representation is made that it is accurate or complete and should not be relied upon as such. This information is subject to change without notice at any time, based on market and other conditions. Past performance is not indicative of future results, which may vary.
Value of Dividends, Economic Updates, Federal Reserve and more Stock News
The Prudent Speculator Weekly Commentary is expertly curated every week as a valuable resource for stock market news, investing tips, business insights, and economic trends as it relates to value stock investing. In this week’s Market Commentary, we discuss Dividends, Economic News, Federal Reserve and more Stock News. We also include a short preview of our specific stock picks for the week, the entire list is available only to our community of loyal subscribers.
Executive Summary
Week – V-Shaped Bull Market Rally from Post-Liberation-Day Lows Gained Steam
Volatility – The Longer the Hold, the Less the Chance of Loss
Value of Dividends – Higher Returns and Lower Risk
EPS – Corporate Profit Growth in 2025 and 2026 Remains the Expectation
Econ News – Better-than-Expected Numbers but Growth Still the Forecast
Wall of Worry – Always Something to Fret About, but Long-Term Trend has been Higher
Sentiment – After 25%+ Rebound, AAII Finally Registers More Bull than Bears
Fed – Unemployment Low, But Rate Cuts Expected This Year and Next
Valuations – Attractive Metrics for Value Stocks
Stock News – Comments on ORCL, HPE, JNPR, Banks, GBX & ELV
Week – V-Shaped Bull Market Rally from Post-Liberation-Day Lows Gained Steam
Now that was our kind of week! The undervalued, often dividend-paying stocks that we have long championed enjoyed a superb four trading days, continuing the stellar rebound from the intraday Bear Market lows of April 7,
and pushing the gains from the closing lows of April 8 to more than 25%.
Volatility – The Longer the Hold, the Less the Chance of Loss
Obviously, there was no guarantee that that second week of April would mark a major market bottom, but investors again have been reminded that despite 27 official Bear Markets (20% decline on a closing basis) and several unofficial ones (like this year’s) over the last near-century, the long-term trend in equities has been higher,
as handsome long-term returns are available to those who remain disciplined and patient,
Value of Dividends – Higher Returns and Lower Risk
with Value Stocks and Dividend Payers leading the way.
And speaking of Dividend Payers, it was nice to see one of your Editor’s favorite journalists, Spencer Jakab, singing their praises last week,
citing the historical propensity for higher returns,
and lower volatility (standard volatility), which many think of as risk.
EPS – Corporate Profit Growth in 2025 and 2026 Remains the Expectation
We also note that those seeking income from their portfolio should like the fact that dividend payouts historically have risen over time, at a pace that has eclipsed the rate of inflation,
as Corporate America has managed to turn in terrific long-term profit growth, even as there have been a few short-lived earnings contractions along the way,
Econ News – Better-than-Expected Numbers but Growth Still the Forecast
as the U.S. economy has grown over time, on both a real (inflation-adjusted) and, especially, a nominal (actual) basis.
True, Q1 saw a real earnings contraction of 0.5%, but nominal growth was 0.8%…and profits and stock prices are measured in nominal dollars, while the current projection for Q2 real GDP growth from the Atlanta Fed is a healthy 2.6%,
and the ISM Manufacturing index for June edged up to 49.0, better than the consensus estimate of 48.8, with the keepers of the metric stating, “A Manufacturing PMI® above 42.3 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the June Manufacturing PMI® indicates the overall economy grew for the 62nd straight month after contracting in April 2020. The past relationship between the Manufacturing PMI® and the overall economy indicates that the June reading (49 percent) corresponds to a change of plus-1.9 percent in real gross domestic product (GDP) on an annualized basis.”
The Institute for Supply Management’s reading on the state of the larger services sector in June also topped forecasts, with ISM saying, “A Services PMI® above 48.6 percent, over time, generally indicates an expansion of the overall economy. Therefore, the June Services PMI® indicates the overall economy is expanding for the 61st straight month…The past relationship between the Services PMI® and the overall economy indicates that the Services PMI® for June (50.8 percent) corresponds to a 0.7-percentage point increase in real gross domestic product (GDP) on an annualized basis.”
Adding to the relatively upbeat statistics for the economy were greater-than-predicted job openings for May,
lower-than-expected initial claims for unemployment benefits in the most recent week,
and higher-than-projected nonfarm payrolls last month.
Wall of Worry – Always Something to Fret About, but Long-Term Trend has been Higher
No doubt, anything can happen as we move forward, and we are always braced for downside volatility, with more tough talk on tariffs over the holiday weekend sending the equity futures south for the opening of trading in the new week, even as stocks have performed fine since the launch of the Trump 45 Trade War in 2018,
with equities overcoming plenty of bad news since the turn of the century,
and over the last eight-plus decades.
Sentiment – After 25%+ Rebound, AAII Finally Registers More Bull than Bears
given the contrarian nature of the AAII Bull-Bear Survey, though the data on subsequent returns indicate that while we should be greedy when other are fearful, we should just be a bit less greedy when others are optimistic.
We also respect that there is plenty of consternation about what the Federal Reserve will do on monetary policy, but the unemployment rate is low by historical standards,
and market history shows that stocks have performed well whether the Fed is tightening or easing,
but the betting odds suggest that Jerome H. Powell & Co. will cut the current 4.5% upper target for the Fed Funds rate,
by fifty basis points before year end and by more than 100 basis points over the next year.
Valuations – Attractive Metrics for Value Stocks
All things equal, lower interest rates would add to the attractiveness of Value stocks in general,
and our broadly diversified portfolios of what we believe are undervalued stocks in particular.
Stock News – Updates Bank stocks, plus 5 additional stocks across 3 different sectors
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