August Pick: Barclays (LSE:BARC)
Barclays is one of the tier one banks that makes up the global financial system. The share price is down a modest 8.4% over the past year, compounded slightly in the near term by the issues related to selling structured products in the US.
This spiraling cost could be close to a billion by the time everything is said and done, and this reflects the main risk to our view that Barclays could outperform. On the proviso that this was a one-time issue, we feel happy to move forward.
One reason why it’s our pick right now is due to the helpful rates environment globally. The US Fed hiked by 75bps last week, with the Bank of England expected to follow suit on Thursday. Higher rates mean higher net interest margins for the banks, as the difference between what it can charge on liabilities versus pay on deposits increases.
Even with a troubled economic outlook, having consumers hoard savings and take out new loans will also be good for business for H2 and beyond.
August Pick: ComSovereign Corp (NASDAQ:COMS)
ComSovereign (COMS) is a micro cap stock that I have been adding on dips. The market cap is only $12.7M. The company designs, develops, markets, and sells technologically-advanced telecom solutions for network operators, mobile device carriers, governmental units, and other enterprises worldwide.
The stock has had several overnights gaps to above $0.25 (current price is $0.15), as well as many after hour price increases, although these have not held before open.
The volume is increasing as more traders become interested in this stock. For me, it is one to buy low and sell high, the same story with all of these micro caps.
This is a high risk, high reward play, so a smaller position size is better for trade management.
August Pick: Costco (NASDAQ:COST)
July was more constructive for Equity markets but I still believe the rest of 2022 will be uncertain with plenty of downside risk, as inflation remains elevated and further rate hikes are expected. Therefore, I prefer to play it safe with another Consumer Staples favourite, Costco. The company is the third largest retailer in the world, operating a membership only wholesale offering that covers food, hardware, electronics, and much more.
COST is only down 5% year-to-date, significantly outperforming the NASDAQ, which is down nearly 20% in the same period.
Analyst Recommendations – the latest Bloomberg survey of Equity Research Analysts showed that 71% have issued a “BUY” rating and 29% have a “HOLD” rating on the stock. None of the surveyed analysts have issued a “SELL” recommendation.
Financials – the latest earnings continued to show a positive story despite the difficult economic environment. Revenue was up 16% year-on-year, whilst Net Income was up 11%.
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