Can the Small Cap Rally Last?

Earn While You Learn! ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ [EARN WHILE YOU LEARN! JOIN OUR FREE LIVE TRADING SESSION!]( Hello investor, Why next week will be a high-stake one Next week is going to be big-time for Wall Street. Investors sold off their Big Tech shares in favor of smaller-cap stocks in the last few days. The decline of these tech shares dragged down the overall market. Next week, many megacap tech companies will report their earnings, and they’ll reveal if investors were wise for selling these shares. It’ll also have implications for the medium-term market trend. What if tech companies continue to report strong earnings? It might turn the market around. - “Next week is important for the near-term trajectory of the stock earnings, with many megacap tech companies reporting,” said Glen Smith at GDS Wealth Management. - “If we were to see the powerful combination of strong tech earnings and softening inflation, that could reverse the market’s recent weakness and spark a new leg higher.” Glen Smith at GDS Wealth Management (Photo: Bloomberg) On Tuesday, Tesla and Alphabet will be the first group of the Magnificent Seven to report their results. Microsoft, Meta, Amazon, and Apple will release their earnings results in the week after. Nvidia’s report will be out in late August. However, Wall Street is unlikely to zero in tech earnings as much as before. Analysts expect their growth rates to slow down for the quarter. Companies outside the Magnificent Seven are expected to show the first year-on-year growth in at least five quarters. So, investors will try to decide if it’ll be enough to cover the Magnificent Seven’s slowing growth rates. - “The stock market is experiencing a long overdue rotation,” said Glen Smith, chief investment officer at GDS Wealth Management. “Investors are taking money out of big tech stocks which have performed so well and moving that money into other areas of the market.” What’s more, investors will receive the latest reading of the Federal Reserve’s preferred inflation data — the Personal Consumption Expenditures Price Index (PCE) — when it is released on Friday. This inflation reading will be more difficult to analyze than the previous ones. The reason is simple — a quick deflation can actually be a bad thing. It signals a falling demand. That’s not what investors want to see because they’re worried about a potential economic slowdown. So, they will want to see a modest slowdown in inflation. This will be key to keeping the rally alive for small-cap stocks. - “Economic data has softened and this supports the case for easier monetary policy to come,” said Cayla Seder at State Street. “While lower rates are a good thing for small caps who are hurt more by higher rates, we aren’t convinced this signals a major turning point yet.” A Potential Takeover Play That Could Yield a Quick Return Today’s Stock Pick: ZimVie (ZIMV) Tooth can be a wonderful business to be in. The reason is simple — everybody has teeth! ZimVie is a pure play in the dental space, and there are multiple reasons why it is an attractive stock to own right now. There are 8 million U.S. patients seeking treatment for tooth loss annually. The last word is key — annually. Since they just lost a tooth or two, they will need to replace them. However, only 25% receive tooth replacement. This offers a robust opportunity for ZimVie to expand its market by offering tooth replacements to more patients. (Source: ZimVie) ZimVie offers premium implants, restorative implant solutions, biomaterials solutions, and digital dentistry technologies. Implants are straightforward, as they are the product that inserts inside a patient’s gum, holding the synthetic tooth. (Source: ZimVie) Biomaterials include bone graft substitutes, membranes, and tissue regenerative products. (Source: ZimVie) Finally, its digital dentistry business offers different technologies to help dentists plan, design, and execute procedures. (Source: ZimVie) Recently, ZimVie sold its spine business for $375 million to become a pure-play dental company. As a result, the company has a clear focus to maintain (and grow) its leadership position in the $8 billion implant, digital solutions, and biomaterials market. Its digital offerings can be the big growth catalyst in the years ahead. The company estimates that only about 20% of dental implant cases are performed using the complete digital workflow. And there’s no reason not to go digital. Those dental practices that adopt ZimVie’s digital workflow solutions end up performing more implant cases than those that don’t. To maintain its leadership in the market, ZimVie built a training center to educate clinicians about the field of implantology. It has a fully-integrated digital workflow with 3D printing and RealGUIDE software. As a result, those clinicians who were trained at the Institute may be more likely to purchase ZimVie’s products because they were trained for these products. (Source: ZimVie) What’s more, the company expects to improve margins by reducing corporate overhead, IT, and legal costs and automating manufacturing operations. Meaning? There could be extra EPS growth down the road. (Source: ZimVie) Wall Street expects ZimVie to grow its EPS by 25% next year, so this is a good growth company to bet on. (Source: Yahoo Finance) Bottom line: ZimVie was in the news recently due to a rumor that Osstem submitted a final bid to buy ZimVie. It offers an upside that the company could be bought at a higher valuation than its market cap. If not, the stock is still trading at a good value, considering its projected 20%+ EPS growth. [EARN WHILE YOU LEARN! JOIN OUR FREE LIVE TRADING SESSION!](       © All Rights Reserved, Trade Alliance [Unsubscribe]( | [Manage Preferences](