![]() This dynamic can be painful for investors in the near term, but it may also set up an attractive entry opportunity for those looking to position for eventual brighter days. Historically, smaller cap companies tend to lag the broader market in performance ahead of a recession, but they often outperform during the recovery phase. Fed has since continued their hawkish tone, and market views around economic growth have shifted, leading to underperformance as fears of a potential recession grow. Small and mid-cap companies kicked off 2023 with impressive performance, benefiting from optimism around the potential for a pause in rate hikes and the possibility of a soft economic landing. Recession Fears Weighed on Small- and Mid-Caps Not intended as a recommendation to buy or to sell any of the securities mentioned herein. Index performance is not illustrative of fund performance. ![]() Past performance is no guarantee of future results. Top Contributors and Detractors from Moat Index - April 2023 On the reverse side, detractors to Moat Index April performance landed primarily within the Technology and Consumer Cyclical sectors. Other top contributors in April include medical-device company Medtronic (MDT) and leading U.S. To learn more about Meta Platforms and how Morningstar views the company, check out our premiere episode of The Moat Show with Ali Mogharabi, who goes in depth on META’s economic moat, valuation, and what may come next for the company. While the share price of this wide-moat firm has increased more than 135% from its lows in November 2022, we believe it remains undervalued. We have increased our revenue projections and continue to expect margin expansion beginning in 2024, pushing our fair value estimate up to $278 per share from $260. ![]() Meta’s first-quarter results confirmed our views on Reels monetization, ad conversion improvement, margin potential, and an unharmed network effect moat source. Morningstar Analyst Comments | by Ali Mogharabi April 27, 2023 Below are Ali’s comments on META following the earnings release. ![]() Even after its impressive performance so far this year, Morningstar believes that there could still be some room for the stock to run. With its first quarter earnings beat and optimistic guidance, META was up over 13% in April and was the top contributor to performance in the Moat Index during the month as well as year-to-date. However, the long-term view and conviction of Morningstar senior equity analyst Ali Mogharabi led to a perceived valuation opportunity that the Moat Index has been able to capture. Many investors lost faith in the company, and the stock tumbled over 60% that year. (META) was severely punished in 2022, as CEO Mark Zuckerberg’s moonshot metaverse plan was not panning out and the Federal Reserve was just beginning its historically steep rate hike cycle. From Punished to Prosperous: Meta Platforms Indexes are unmanaged and are not securities in which an investment can be made. Fund performance current to the most recent month end is available by visiting or by calling 800.826.2333. Index performance is not illustrative of Fund performance. Year-to-date, however, both Moat Indexes remain ahead of their benchmarks through the end of April. The Moat Index was up 1.01% while the SMID Moat Index was down 1.39%. ![]() The Morningstar Wide Moat Focus Index (the “Moat Index”) and the Morningstar US Small-Mid Cap Moat Focus Index (the “SMID Moat Index”) both performed in line with their respective areas of the market this month. The S&P SmallCap 600 Index and the S&P MidCap 400 Index returned -2.78% and -0.78 in April, respectively. However, small- and mid-cap companies fared worse as the potential for a recession continued to weigh on the segment. The benchmark S&P 500 Index was up slightly with a 1.56% return during the month. Investors appeared to be awaiting the kick-off to an important earnings season and the latest guidance from the Federal Reserve’s early May policy meeting. equities as a whole moving mostly sideways. April was a subdued month-at least relative to the volatility seen in March given the banking crisis-with U.S. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |