⚡ Energetic Expectations

Plus, the hottest major commodity this year.

Happy Monday afternoon to everyone on The Street. Here's a snapshot of where markets ended the trading session, plus tomorrow's trade idea delivered to you today.

  • 🟥 | US stocks moved lower on Monday. To kick off the second quarter, the S&P 500 and the Dow dipped less than 1% while the Nasdaq hovered around flat. This minor pullback comes as investors remain cautious about the pace of the Fed’s rate-cutting timeline this year.

  • 📈 | One Notable Gainer: Semtech’s stock surged 7% after the company reported revenue growth of 14.83% over the last 12 months. This caused Piper Sandler to increase its price target from $30 to $40.

  • 📉 | One Notable Decliner: Shares of FedEx fell 3% following news that it’s ending its more than 20-year partnership with the United States Postal Service (USPS). USPS will now be using United Parcel Service (UPS) as its primary cargo provider.

  • ⚡ | Tomorrow's Trade: Energetic Expectations. Scroll down for more.


🟩🟩🟩🟩🟩🟩 Bullish

🟨⬜️⬜️⬜️⬜️⬜️ Bearish

S&P 500 Heatmap. Credit: Finviz

All stocks on US exchanges. Credit: Finviz

Global ADR snapshot. Credit: Finviz


MU (+5%) Micron Technology shares climbed to a record high after BofA analysts raised their price target, saying it’s set to gain amid the AI boom (Investopedia)

CCJ (+8%) Goldman Sachs assigned a $55 price target to uranium producer Cameco, implying a more than 25% upside (The Motley Fool)

MSTR (-4%) Shares of MicroStrategy slipped after an SEC filing shows that executive chairman and 10% owner, Michael Sayler, sold 1,027 shares (YF)

IDCC (-9%) BofA double downgraded InterDigital to Underperform from Buy, noting that there are limited growth opportunities for the company (SA)

UHS (-4%) Universal Health Services shares dropped after its subsidiary Pavilion Behavioral Health was ordered to pay $535 million in a sexual assault suit (BHB)



Bloomberg: Cocoa has been the hottest major commodity this year. Its record-breaking run shows no sign of slowing, and it is reaching new highs almost daily.

MW: According to a report from Realtor.com, it’s now cheaper to rent than to buy a home in all of America’s biggest metropolitan areas.

MW: US economist Thomas Simons stated in a report that most workers don’t fear losing their jobs, and that’s driving the economy.

CNBC: Nearly two-thirds, 63%, of young adults believe the stock market is a great place to build wealth and invest, but many are not participating.

Bloomberg: Wall Street bets on a Trump dollar rally ignore that the dollar, on average, climbs 4.2% with Democrats and slides 1.3% with Republicans.


Back on Top

Following a down year in 2023, oil prices came roaring back in 2024, bringing the entire energy sector up with them. 

The industry was up over 10% in March while US crude rose around 6%. It was the first time this year that the broader sector overtook oil prices. 

At present, energy is outperforming every industry but communication services and tech. It’s also beating the broader market, up 12.5% this year compared to the S&P’s 10.1% gain.

Stock Picks

Morgan Stanley (MS) has identified four energy stocks it’s bullish on following its upgrade of the entire industry to “overweight.” The companies include:

  • ConocoPhillips (COP)

  • Occidental Petroleum (OXY)

  • Devon Energy (DVN)

  • Diamondback Energy (FANG)

Occidental Petroleum has the highest upside relative to the bank’s target price at 12%. Diamondback Energy has seen the most substantial rise in target price, up to $186 from $177.

Trading Cheap

Energy is still trading at a relatively low price: two times lower than its historical valuation compared to the S&P 500. 

In addition, the sector’s free cash flow and shareholder return yields are up to three times higher than the broader market, according to Morgan Stanley analyst Devin McDermott. 

The bank predicts oil demand will increase and supply will decrease as OPEC+ continues production cuts. If the investment bank is correct, investors might have an opportunity to profit from both oil and the energy sector as a whole.

Are you bullish or bearish on the energy sector throughout the rest of 2024?

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CTV: Deloitte’s economic outlook report stated that Canada looks set to dodge a recession despite the ongoing downward pressure from higher interest rates.

Bloomberg: But, but, but Canadian government spending is growing faster than revenue while interest payments are continuing to climb.

Bloomberg: Expect more defaults from senior facilities as about $2.7 billion in senior living municipal debt comes due in the last nine months of this year.

Axios: Workers in unions have a median wealth of $338,482 compared to $199,948 for nonunion workers.

Reuters: The Biden administration plans to announce a 10% cap on yearly rent increases for certain affordable housing units subsidized by the government.

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