TOP 3 stocks of August 2023

Another wave of coronavirus might be approaching. Is this a chance for Pfizer?

The coronavirus is still here, and especially in the US it is gaining momentum again. The country is currently thought to have around 1 million infected, even including the First Lady. So in the US, they are urging the population to consider getting another dose of the vaccine. This brings us to Pfizer, one of the “winners” of the coronavirus pandemic. However, only a brief look at the current state of Pfizer’s shares puts its glory days into perspective. That’s because Pfizer shares have fallen by more than 30% since the beginning of the year. Meanwhile, the stock markets are experiencing one of the best periods in history. Pfizer shares are currently even at the same level they were at the beginning of 2021, before the mass production of the vaccine. Thanks to that, the stock then climbed to $60 by the end of 2021, an all-time high. What's behind such a drop in Pfizer? And could there be hidden value?

_{Pfizer shares on the MT4 platform on the H4 timeframe}

The decline in Pfizer stock can be attributed to two factors. The first is the significant drop in demand for coronavirus vaccines - this cash cow is almost milked. Revenues for the second quarter even fell by more than 50% year-on-year. Sales of vaccines fell by 83% year-on-year and Paxlovid by 98%. The products had sales of just USD 1.6 billion, compared with USD 17 billion a year ago. If this keeps up, Pfizer expects to cut costs.

But does this mean that Pfizer is in for further declines? This company is much more than just a covid vaccine maker, but thanks to covid-related earnings, Pfizer is sitting on a huge pile of spare cash. These can help with further drug development and company acquisitions. Recently, Pfizer has already bought Seagen and Biohaven. With a P/E ratio below 10 and a dividend of nearly 5%, this could be an interesting component to a long-term portfolio. With another coronavirus onset, the rest of the year might not be as tragic for Pfizer as the first 9 months.

However, if you are considering Pfizer, you need to add a second factor that is causing the stock to fall so much. Unfortunately, Pfizer's non-coronavirus-related products have been relatively weak-performing. The company has focused heavily on vaccines and has missed the train a bit elsewhere. In the field of obesity drugs in particular, it is being dominated by Novo Nordisk, which has even become Europe's largest company. In contrast, its shares have added 40% since the start of the year. Moreover, Pfizer recently ended the development of a pill for diabetes patients with a setback. However, the US FDA has recently approved several Pfizer drugs, so it is not all negative news at the moment.

Moreover, the company also confirmed its profit outlook for this year, so the dividend should not be in jeopardy. Thus, Pfizer is currently rather paying for its success from the past years, but the current market reaction may be somewhat overdone. Thus, Pfizer stock may be an interesting component of a long-term portfolio and a tool for speculation during earnings season. After all, we have become accustomed to high volatility in pharmaceutical companies.

Is PayPal doomed?

Another company that is far past its 2021 peak is PayPal. During its greatest glory, the stock was even over $300; now it's worth just over $60. Since the beginning of the year, despite a huge rally in tech stocks, PayPal has weakened 15%. For this company, however, the question is rather whether its business is profitable and, moreover, whether it even has a future? Will PayPal be completely useless in a few years? The payments environment is highly competitive and new services are constantly being developed. Apple Pay being among the most popular ones as it has brought together Apple products and well-known card issuers. PayPal is thus seen as a bit of a redundant middleman that may not have a place in the market in a few years. However, the company is betting heavily on cryptocurrencies. We'll see if it pays off.
 

^{PayPal shares on the MT4 platform on the H4 timeframe}
 

PayPal too has paid for its success from the coronavirus period. In the days of quarantines, people were reliant on online payments, and thanks to very active shopping, PayPal's revenue grew from $17.8 billion in 2019 to $25 billion two years later. However, with the fall of the coronavirus cases and the gradual loosening, PayPal's shares have also fallen and are currently even at their lowest since 2017. The outlook, however, does not speak very positively. While revenue was up 7% year-on-year and total payment volume was up 11%, operating margins disappointed significantly, coming in at just 21.4%. The market was expecting at least 22%. In the current quarter, sales are then expected to grow by 8%. With the rise in interest rates, a slight decline in the purchasing activity of the still resilient US consumers is expected, which is not positive for PayPal.

Cryptocurrencies may be PayPal's salvation, but they are rather under pressure this year. PayPal's portfolio includes the very popular Venmo payment app, which already offers virtually similar services to Coinbase, for example. Users can thus buy and sell cryptocurrencies. In addition, PayPal has introduced its own stablecoin called PayPal USD, which will be backed by dollar deposits and bonds. This is a further deepening of the company's involvement in the world of cryptocurrencies. However, this is unlikely to be some sort of gamechanger. However, even PayPal stock could benefit from a potential surge in interest in cryptocurrencies following the approval of the first bitcoin ETF. Currently, however, the stock is more suited for speculation in either direction. PayPal could move tens of percent higher and lower.

Is Apple running out of breath?

The complete opposite story so far this year has been happening on the chart of Apple stock. Since the beginning of the year, Apple has been riding a wave of euphoria among technology stocks and have added over 50%. Company has even reached an all-time high, with its capitalisation exceeding a staggering $3 trillion. However, what makes it all the more interesting is the fact that Apple has not presented any dazzling economic results or been officially involved in the development of artificial intelligence, around which there has been huge hype for several months. This raises the traditional question: are Apple shares currently overpriced? Moreover, next week Apple is expected to unveil new iPhones that will be key for the next few quarters. It is their sales that may send Apple back above $200 or significantly lower.
 

_{Apple shares on the MT4 platform on the D1 timeframe}

The company's revenues are huge, regularly hitting nearly $100 billion each quarter, a huge number for a manufacturing company, making it the largest company in the world. However, revenue growth is a bit of a problem for Apple, in the last 3 quarters each time Apple's revenue has declined year over year. The last one was just a percentage point, but for a company with such a large capitalization, the long decline in sales is alarming. iPhone sales also fell in 2Q, falling short of market expectations and finishing 2% below last year's number. However, sales of iPads, smartwatches and headphones also declined. To some extent, the sales declines can be attributed to consumer expectations for new product introductions. Sales for the current quarter should not be miraculous either - they are expected to be at a similar level to the previous one and about 1% lower than a year ago.

Apple has at least held on to revenue growth from the services section for a long time. These were up 8% year-on-year, and overall margins also beat expectations. In addition, the company is reportedly working on its own AI chatbot, an app similar to the popular ChatGPT. While Apple has so far stood aside from AI and has not commented much on the situation regarding the sector, according to unconfirmed reports, it is also active in the field. Its shares have thus also partly ridden the AI wave this year. Thus, Apple could have room for further growth thanks to artificial intelligence. Vision Pro googles are also due to arrive next year. While this could be a new sector for Apple, the market is not expecting any big miracles yet. The main growth for the company will come from services, which are still on the rise. Sales of iPhones in particular will be key - if they disappoint, a sell-off scenario is more likely.