The weak start for stock markets in the second quarter suggests that investors should exercise caution. Avoid companies that posted weak results.
On Tuesday, LKQ (LKQ), which provides alternative and specialty parts for the automotive repair market, posted revenue of $3.7 billion (+10.6%). Markets did not like the cut in organic revenue growth expected for the full year of 2024. In addition, diluted EPS will fall.
In the steel production sector, both Nucor (NUE) and Cleveland Cliffs (CLF) fell yesterday. NUE stock lost 8.9% after posting a 6.5% drop in revenue. Earnings will fall in Q2. The steel mills segment will underperform since average selling prices will fall, offset slightly by higher volumes.
CLF stock lost 11% after posting disappointing earnings and revenue. The firm will buyback $1.5 billion in shares.
MSCI lost 13.4% on Tuesday. The firm posted expenses rising by 22.7% Y/Y to $340.6 million. Expect MSCI to cut costs, lifting profits. For now, avoid MSCI stock.
In the technology sector, the jury is still out on the Magnificent 7 and artificial intelligence chip suppliers. While Microsoft (MSFT) and Amazon (AMZN) demonstrate growth, shareholders expect Apple (AAPL) to post weaker sales. This is due primarily to weak demand in China.
