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Bank Of America Says These 5 Stocks Could Benefit From Rising Power Demand

Bank of America is predicting a big jump in electrical demand—with some power companies better-positioned to capitalize than others.

The bank said the utilities it sees as benefiting the most from regional growth are DBA Sempra (SRE), Pinnacle West Capital (PNW), TXNM Energy (TXNM), Entergy (ETR), and Northwestern Energy Group (NWE). The analysts have buy ratings on all five stocks.

BofA analysts wrote in a note to clients that after two decades of stagnant electricity demand expansion, “there is now evidence that demand growth has returned, driven by the re-shoring of industry, the development of data and crypto mining centers and the electrification of buildings, transportation, and infrastructure.”

By 2035, they estimate, there will be a need for an incremental 100 gigawatts of effective capacity, with the high-end scenario of 300 GW.

The analysts said that they have targeted those five companies because the regions they cover—  Texas, the Southwest, the Northwest, and the 14 states in the Southwest Power Pool—are likely to have the greatest growth rates. Shares of all five are higher year-to-date.

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Adobe Stock: Is It Still Worth Buying In 2024?

The analysis of Adobe Inc., including an overview of its business, past performance (sales, profit margins, etc.), and price-related indicators (P/E, P/B ratios, intrinsic value, etc).

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Homes Are Changing Hands At Historically Low Rates. Here's Why

Homes in the U.S. are being bought and sold at the lowest rate in decades, according to a report from the real-estate brokerage Redfin Corp. (RDFN). 

Only 2.5% (or 25 of every 1000) of U.S. homes changed hands in the first eight months of 2024, the lowest rate in at least 30 years, the report found. By comparison, the firm noted that the "pandemic buying frenzy" in 2021 saw 40 of every 1,000 homes change hands. 

A big reason why is higher mortgage rates. Redfin noted that more than 75% of homeowners currently have a mortgage rate of 5% or less, which makes them hesitant to buy a new house at current rates. Rates went as high as 7.52% in April and, while they've come down since, they're still in the low-6% range. 

There are also fewer houses on the market than before the pandemic. In turn, home prices have reached all-time highs, the report said. That combination has many would-be buyers on the sidelines until a downward market trend. 

Phoenix and Newark, N.J., had the nation's highest-turnover metropolitan areas, Redfin found. Meanwhile, California had seven of the 10 lowest-turnover metro areas. 

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Coinbase Global, MicroStrategy Stocks Drop On Crypto Price Pullback

Shares of crypto-related companies Coinbase Global (COIN) and MicroStrategy (MSTR) fell Monday following a bitcoin price pullback after a surge this month.

The stocks retreated along with the prices of bitcoin, ether, and most other major cryptocurrencies on the last day of what has been historically the worst month for them. noted that even with Monday's declines, bitcoin should end the month with a 7% gain. It reported that since 2013, bitcoin has had an average loss of 3.6% in September and a 23% jump in October.

The news site also pointed to data from European alternative investment company CoinShares showing digital asset funds had $1.2 billion in inflows last week, the most since the week ending July 19. CoinShares said that the inflows were driven by expectations of further Federal Reserve interest-rate cuts after the central bank slashed them by 50 basis points (bps) two weeks ago. 

Markus Thielen, founder of digital asset management research firm 10K Research, told that bitcoin appears to be overbought in the short term, and that current signals have turned bearish.

Shares of Coinbase Global fell 5.5% in late-morning trading Monday but are up 4% this year. MicroStrategy shares slipped about 2% but have nearly tripled in 2024.

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What You Need To Know About Super Micro Computer's 10-for-1 Stock Split

Server maker Super Micro Computer (SMCI) announced a 10-for-1 stock split last month that will take effect after the closing bell on Monday.

Here's what you need to know about the split.

Shareholders will receive nine new Super Micro Computer shares for every one they already own. Their overall stake in the company won’t change, but the stock will subsequently trade for 10% of its previous price. 

In other words, if Super Micro Computer shares were trading at $1,000 before the split, an investor holding one share before the split would hold 10 shares priced at $100 each after the split. (Companies can also hold reverse splits, as some have done lately.)

Super Micro Computer shares skyrocketed early in 2024 to a high of nearly $1,200 due to surging demand for artificial intelligence infrastructure. They traded closer to $600 when the split was announced, and closed Friday at about $419.74.

The shares have lost nearly half their value over the past three months, thanks in part to disappointing recent results. Even so, the stock is still roughly 49% higher year-to-date. 

The move would be the latest split by a high-flying tech stock, with Broadcom (AVGO) and Nvidia (NVDA) having already split their shares 10-for-1 this year.

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3 Big Financial Worries For Americans Ahead Of The Presidential Election

As the U.S. presidential election approaches, a majority of American investors are worried about how it could affect their personal finances.

The most recent MassMutual Consumer Spending & Saving Index report showed that 86% of those surveyed were concerned about the impact of the presidential election on their “day-to-day finances.” About a quarter of respondents said that personal finances are the most important factor in deciding who to vote for in November's contest between Republican candidate Donald Trump and Democrat Kamala Harris.

Most of the worries, according to other surveys and financial advisors, revolve around what a new administration could mean for retirement plans, stock market performance and tax policy.

"For those feeling concerned about the election, I’d encourage them to talk with their advisor to ensure their financial plan is built to last, regardless of who’s in office,” said Ayako Yoshioka, a Portfolio Consulting Director at Wealth Enhancement.

A recent survey by Wealth Enhancement showed that 80% of respondents expect the election to affect their retirement plans in some way.

Some investors are also worried about how the outcome of this election could influence how much they can rely on programs such as Social Security and Medicare and what the incoming administration would do about high prices.

Even though inflation has come down, prices of many goods and services remain elevated. Roughly half of all people surveyed said that high inflation derailed their plans for retirement, delaying it by 8.5 years on average.

Financial advisors fielding questions from their anxious clients are telling them that some turbulence may be expected.“While there is technically some type of uncertainty involved with elections, it's relatively short-lived,”  said Megan Gorman, Managing Partner at Chequers Financial Management, adding that advisors can help investors “tune out the noise and stay focused on long-term goals.”

Markets may temporarily react to big news, election outcomes included. Nearly a quarter of respondents in the Wealth Enhancement survey worried about how stock markets would fare after the elections and what it would mean for their portfolios.

Jamie Bosse, a Kansas-based CFP at CGN Advisors, notes that despite volatility in election years, the majority of the past presidential election years have generally yielded positive market returns.

“We’ve had 24 election years [since 1927]. And out of those 24, only four of those election years had negative [annual] market returns,” Bosse said. The four years with negative returns—1932, 1940, 2000, and 2008—included the Great Depression in 1932 and the Great Recession in 2008. 

In fact, according to a T. Rowe Price analysis for data going back to 1927, there's not much difference in the average annual returns for the S&P 500—a barometer index for U.S. stocks—for election years (11%) compared to non-election years (11.6%).

"We believe that investment decisions should be based on longer‑term fundamentals, not near‑term political outcomes,” researchers wrote in the T. Rowe Price analysis. “Trying to time the market based on short‑term dynamics, political or otherwise, is extraordinarily difficult.”

Both Bosse and Gorman have had clients ask them about the future president’s tax policies. And with good reason.

The Tax Cuts and Jobs Act (TCJA) is a 2017 law that lowered income tax brackets, increased the standard deduction, and raised the estate tax exemption, among other things. The law is set to expire December 31, 2025, and if Congress doesn’t act, it could make taxes even more complicated for some people. 

Gorman's high-net-worth clients are particularly concerned with TCJA provisions related to the state and local tax (SALT) deduction cap and the increased estate tax exemption. 

Catherine Valega, a Boston-based CFP at Green Bee Advisory, said she’s been talking to clients about considering a Roth IRA conversion before income tax brackets potentially change.

In this strategy, you move your pre-tax retirement money from a traditional IRA into a post-tax Roth account. You may have to pay income tax at the time you convert, but the money would grow and withdrawals would be tax free. Such a conversion can prove to be a tax efficient if you expect to face higher taxes in the future.

“Conversions are important to think about,” Valega said, adding that investors should think about questions such as: Do we do them this year? Can we squeeze them in next year? What do our tax budgets look like?

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