A gift from trump. How to make money in the U.S. market in 2018
The shares of these companies should include in the portfolio right now since the ideas associated with tax reform, is likely to be wagered for the first two quarters of this year. Partly this factor is already considered in quotations. This is evidenced by the growth of quotations to Target (TGT) and Nordstrom (JWN) on average by 17% over the past two months and rise in price of securities Macy’s 46% during the same period.
Traditional retailers still inferior to Amazon (AMZN), the pace of business growth, therefore, to talk about their long-term prospects difficult.
Most promising in this sector looks like Walmart (WMT) — with the development of Internet-direction he is quite able to compete with Amazon. About 75% of its revenue Walmart receives in the United States, so three-quarters of its pre-tax profit will increase by 45%. In this regard, we projected revenues of the trading network in 2018 in the amount of $512 billion, and pretax profit at $billion 21,22
In this situation, the retailer will save on taxes $2.5 billion that will allow it to increase capital expenditures for the development of online trading to $7-7. 5 billion is the promotion of the Internet platform will allow the company to boost revenue growth that we saw last year.
While online sales form a small part of the turnover of the entire Corporation, but the transformation of the business, Walmart has the potential to count on the fact that this direction may eventually become a leading. Target price on shares of Walmart until the end of 2018 — $121 per share.
The major players in the U.S. market AT&T (T) and Verizon (VZ) have a similar structure of sales: the Corporation generates in the U.S. 94% and 100% of its revenue, respectively. A more promising idea is the purchase of AT&T stock company ahead of its main competitor turnover by 28%. This means that its net profit may grow stronger. However, this is not the only plus of the company. Another benefit she will receive through the strategic merger with Time Warner (TWX).
This will allow AT&T to go the way of Netflix, a company that compares favorably with other creators of entertainment content, as it has direct access to the audience through its own streaming service. This allows Netflix to gather and analyze vast amounts of information to offer viewers only interesting product.
The synergy between AT&T and Time Warner lies in the analysis of big data, which will allow AT&T to compete not only with Netflix but also with Disney for a share in the entertainment media market. Regulators are configured in relation to this transaction negatively, but in the case of the successful conclusion of the impact will be enormous, even despite the risks. Target price for AT&T $50 per share until the end of 2018.
The financial sector has great chances to become the growth leader in 2018 and to overtake on this indicator of the technology sector. A breakthrough in the financial industry will help to make favourable market conditions. After the adoption of the tax reform, the American banks will have more free money that will positively affect their creditworthiness.
Getting more profits, the company wants to reinvest part of the funds to attract more credit resources for the development and expansion of its business. The issuing volume of corporate loans will rise, rise and interest rates on them. We expect that in 2018 the fed will raise rates three times – to the level of 2.25%. This will allow financial corporations to increase its turnover to $110 billion.
In addition, with the arrival of Jerome Powell to head the Federal reserve is expected to the deregulation of the financial sector, making the banks ‘ capital will increase. The law on the minimum capital does not require approval in Congress, so the process of adoption can begin immediately after change of the head of the regulator. The result of EPS banks may increase by 5-10%.
Also in January, 2018 will come into force changes in the estimates of Bank debt burden (advance approach). The new calculation method will take into account such safe assets like U.S. Treasury bonds and deposits with the fed. However, the actual effect can be seen only after the first quarter. Most likely, it will translate into higher Bank profits per share to 10%. Thus, the entire financial sector will be a good investment. Target industry exchange traded Fund Financial Select Sector SPDR Fund (XLF) — $35, which means the potential profitability of almost 30% from current levels.