The markets have extrapolated from one version to another. Here are low-priced stocks that generate long-term returns, these fund managers say

Wow, that was a shock:

U.S. consumer price growth slowed to 0% in July, the Labor Department reported Wednesday. Underlying price growth slowed to 0.3%, which was lower than expected. Over the past 12 months, prices have gained 8.5%, also below expectations.

The soft reading appears to justify the 13% rally in the S&P 500 SPX,
+1.65%
from its mid-June lows.

In a recent letter to investors, Jason Gilbert and Elliot Turner of RGA Investment Advisors advise against trading from one data point to another.

“The average market participant’s lead times are reduced from years to days. People isolate the most recent data point and extrapolate ad finitum. To some extent, this kind of over-extrapolation has been in place since the start of the COVID crash, but today we are at a time when extending duration is the most important way to inevitably reap strong returns. long term,” they say. .

Fund managers have identified a few stocks that the market has thrown out the window, the best known being Facebook parent company Meta Platforms META,
+5.04%.
Excluding investments from Reality Labs, the top properties of Facebook, Instagram and WhatsApp would see their revenue increase by 23%.

“That would reduce the company’s P/E by about 2.5 turns. Realistically, there is no indication that Mark Zuckerberg would completely stop these investments; however, we believe Zuckerberg is realistic about his stock price and could very well postpone much of the investment until core earnings reaccelerate,” they said. Even with Reality Labs, the stock is too cheap to ignore, they say.

Some lesser-known companies they discuss include orthodontic player Align Technology ALGN,
+2.69%
and biotechnology instrument manufacturers Cytek Biosciences CTKB,
+2.14%
and MaxCyte MXCT,
+3.47%.
But they point out that of their top 17 US positions, 13 are the Russell 1000 RLV Value Index,
+1.56%
constituents, and of this group, 8 others appear in the growth index. Besides Meta, dual growth and value components include Alphabet GOOGL,
+2.20%,
PayPalPYPL,
+2.60%,
Regeneron Pharmaceuticals REGN,
+1.14%
and YEAR OF THE YEAR,
+1.14%.

“In our careers, there has not been a period when you can acquire so much growth at such great prices. That is both the problem and the opportunity. The problem is that at very near term, market timeframes are shrinking and as growth estimates for these companies come to naught, few buyers want to step in; but, the opportunity is for those who can look forward to a day when the economy avoids or outruns a recession, the dual forces of growth and value compounding on each other will lead to particularly favorable outcomes,” say Gilbert and Turner.

The market

US Equity Futures ES00,
+1.79%

NQ00,
+2.37%
rallied after the CPI report, with the Dow YM00 contract,
+1.59%
moving over 400 points higher. The 10-year Treasury yield TMUBMUSD10Y,
2.714%
fell to 2.72%.

The buzz

Elon Musk sold Tesla TSLA for nearly $7 billion,
+1.18%
stock on uncertainty over whether it will be forced to buy Twitter TWTR,
+2.85%.
Tesla shares rose 2% in premarket trading, while Twitter added 3%.

Wednesday’s earnings schedule includes Fox media group FOX,
+4.27%,
and after closing, Walt Disney DIS,
+2.25%.

Coinbase Global COIN,
+4.96%
fell 6% in premarket trading after the cryptocurrency exchange reported a worse-than-expected loss of $1.09 billion. In a series of tweets, FTX CEO Sam Bankman-Freed said Coinbase’s results implicated a company with annualized “net real” revenue of around $2.5 billion but costs of nearly $5 billion. .5 billion dollars. He added that the recent Coinbase job cuts could change the spending picture and that there would be significant upside in a broader cryptocurrency recovery.

Ad Technology Company Trade Desk TTD,
+32.95%
rose 16% after its sales and forecast beat expectations. Roblox RBLX,
-6.48%
shares fell 14% after reporting a drop in bookings for the second straight quarter.

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Best Tickers

Here are the most active stock tickers on MarketWatch as of 6 a.m. Eastern Time.

Teleprinter

Security name

TSLA,
+1.18%

You’re here

CMA,
-3.30%

AMC Entertainment

EMG,
-2.89%

GameStop

BBBY,
-8.78%

Bed bath and beyond

BROKER,
-15.34%

Worldwide magic empire

TWTR,
+2.85%

Twitter

NIO,
+2.01%

Nio

PIECE OF MONEY,
+4.96%

Coinbase Global

AAPL,
+2.01%

Apple

NVDA,
+2.36%

Nvidia

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Nearly 4,000 beagles are in need of homes after being rescued from a breeder in Virginia.

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