Before the bell: U.S. earnings season kicks off

The U.S. earnings season officially begins today. Meanwhile, gold and silver prices are climbing to new record highs.

The S&P 500 (+1.6%) and the Nasdaq (+2.2%) rebounded from Friday’s sell-off as the risk of a full-blown trade war appeared to fade. Geopolitical tensions, however, continue to push precious metals higher. Gold is trading this morning at 4,166 dollar per ounce, while silver has reached its highest level in 45 years. Broadcom (+9.9%) was among the biggest gainers after announcing a chip and networking deal with OpenAI.

In Asia, the Hang Seng Index slipped 0.2%, showing that concerns over U.S.–China tensions haven’t disappeared. Samsung Electronics (-1%) failed to benefit from a strong quarterly report — its best profit in three years. Later today, BlackRock, JPMorgan Chase, Goldman Sachs, and Wells Fargo will release results. LVMH reports after the bell, and Melexis goes ex-dividend.

Invest only in quality

As Pascal said during last weekend’s Spamalot: “There are so many great companies to invest in.” What he meant was: If there are so many quality businesses out there, why waste time on those that are clearly past their prime? That thought came to mind this morning when TomTom reported its results. The company’s glory days are long gone. Since its 2007 peak, shareholders have lost about 95% of their investment — painful for any “buy-and-hold” investor. Back then, TomTom was the market leader in portable GPS devices, until Apple and Google started offering free navigation on smartphones. Sales of standalone GPS units collapsed, and revenue has since fallen by roughly 60%. Today’s results confirm that the company is still struggling to find its way. Revenue fell another 3%, margins are thin, and investor confidence remains low. There is one positive note: with 267 million euro in cash, around 40% of its market cap is covered, and this year TomTom is finally generating positive free cash flow again. A bargain hunter’s opportunity? Maybe. But as Pascal said: “There are so many quality stocks to invest in — why choose TomTom?”

Most oversubscribed IPO in 17 years

One of the nice things about living in Asia is waking up to completely different market news — it pulls you out of your Western bubble. European headlines don’t appear until midday, so curiosity naturally drives you to check what’s happening in Asian trading. This morning, for example, saw the IPO of LG Electronics India on the Bombay Stock Exchange — the most oversubscribed IPO in 17 years in the entire country. The stock opened 50% above its issue price, which doesn’t surprise me. I’m a long-time LG fan and have spent quite a bit with them this year. I bought two LG TVs in the past twelve months — a 65-inch UHD Smart TV in Cyprus for 560 euro when I still lived with my then-partner. The TV was so good that when the relationship ended and I had to leave it behind, I immediately bought the same model in Bulgaria for 520 euro. Once you own an LG, you never want anything else. For investors looking for inspiration, it might be worth taking a look at LG Corp, the parent company listed on the Korean stock exchange. I’m certainly a fan of their products.

Did you know…

that analysts expect a positive start to the U.S. earnings season? Major banks are forecast to show further profit growth, with loan-loss provisions remaining stable compared with last year.

This article was translated from Dutch and was originally published on Spaarvarkens.be.