The days of individual price movements in the financial market are long gone, as one asset class such as stocks, bonds or commodities used to move independently without much pressure from others. However, the last few decades have changed everything, especially as more participants join the stock market and data becomes available almost instantly in the hands of investors.
Knowing this, investors need to pay attention to different price movements across asset classes to determine where the next wave of volatility (and opportunity) might be. That’s why the current decline in bond prices, with an inverse rise in bond yields, could signal to investors what other asset classes or specific stocks might do in the coming months, if not quarters.
To follow this theme, investors can refer to iShares 20+ Year Treasury ETF NASDAQ: TLTwhich was created to track price movements in the overall market for long-term Treasury bonds. The implications of a potential fall in the ETF index, especially around the $87 per share mark, will become apparent for technology companies such as Intel Company NASDAQ: INTK or energy stocks, e.g. Occidental Petroleum Co. New York Stock Exchange: OXYbut especially for discounted shares Celsius Holdings Inc. NASDAQ: CELH.
Why bonds may rise soon
Simply put, their yields rise when bond prices fall. This usually means the market is calling for, or at least expecting, inflation scenarios to return to the overall US economy. However, price behavior in domestic markets such as iShares Russell 2000 ETF NYSEARCA: IWM or Regional Bank ETF SPDR S&P NYSEARCA:KRE would show otherwise.
Such price action would mean that bonds may be wrong in their high yield assumptions, so their prices will soon have to bottom and correct yields, starting a bullish rally in the coming months. Given this growth and lower bond yields, the stocks on today’s list will make a lot of sense for investors to hold in their portfolios.
Intel Stock Bottom Case
Intel today
(As of December 31, 2024 at 5:45 pm ET)
- 52 week range
- US$18.51
▼
$50.30
- Dividend yield
- 2.49%
- Target price
- $30.04
With Intel shares now trading at low 40% of their 52-week high, there is reason to believe that lower yields and interest rates could make the stock a potential buy today. This is especially true since the government allocates a large portion of its budget to Intel under the Chips and Science Act, meaning Intel could take the lead in domestic semiconductor production.
That’s why Wall Street analysts have now set a consensus price target of $30 per share, implying 50% upside from today’s price. The bonds send a signal that inflation may not be the outcome here and that an easier financing environment may instead be the reality.
Unsurprisingly, State Street decided to increase their Intel shares by 2.8% through November 2024, bringing their net position to a maximum of $4.6 billion or 4.6% ownership of the company. This is an optimistic signal to investors that they should consider adding Intel stock to their portfolios.
Celsius shares need a boost
Celsius today
(As of 12/31/2024 5:50 PM ET)
- 52 week range
- $25.23
▼
$99.62
- P/E ratio
- 36.58
- Target price
- $50.28
After falling in price from PepsiCo Inc. NASDAQ: PEP And Coca-Cola Company. NYSE: K.O.Celsius shares traded just 26% from their 52-week high. However, lower bond yields will have two implications for the company’s user base.
First, if inflation isn’t really an issue, then people will be able to spend money more freely on discretionary items like energy drinks. Second, lower credit card rates will be just another tailwind on this larger theme. With that in mind, investors won’t see the $50.3 per share price target currently set for Celsius stock.
Achieving this goal would require net growth of up to 91% from today’s prices, which would make Celsius stock one of the best risk/reward shares in the industry.
Warren Buffett: Right Again with Occidental Petroleum
Occidental Petroleum today
Occidental Petroleum
(As of December 31, 2024 at 5:45 pm ET)
- 52 week range
- $45.17
▼
$71.18
- Dividend yield
- 1.78%
- P/E ratio
- 12.87
- Target price
- $62.10
Lower bond yields lead to increased business activity and trading as funding rates and liquidity become more abundant. This may explain why Warren Buffett decided to buy up to 29% of Occidental Petroleum, knowing that energy stocks tend to do well in such an environment.
But Buffett wasn’t the only one expressing his bullish outlook on the company. Mizuho analysts now see the stock trading at $70 per share in line with its December 2024 price target, implying a net upside of as much as 42% from where the stock is trading today.
In addition to Buffett being a bull, there is $2.9 billion of net institutional capital that has flowed into Occidental Petroleum shares over the past 12 months, showing investors another bullish indicator to watch for this stock in the coming months and quarters .
You might want to hear this before you consider Intel.
MarketBeat tracks Wall Street’s top-rated and best-performing analysts daily and the stocks they recommend to their clients. MarketBeat identified five stocks that top analysts are quietly whispering to their clients to buy now, before the broader market takes hold… and Intel wasn’t on the list.
While Intel currently has an Analyst Rating of Underweight, the top-rated analysts consider these five stocks to be Strong Buys.
View five stocks here
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