Stock Takes: Which companies are crushing the US non-recession?

Jamie Dimon, JPMorgan Chase & Co chief executive and the world's longest-standing bank executive, has seen its share price rise almost 17 per cent year to date. He is pictured here in 2012. Photo / Getty Images

American banking stocks have shrugged off market fears of more failures, with proof they’re profiting off higher interest rates in a nowhere-to-be-seen recession boosting their valuations by between 10 and 15 per cent in recent weeks - but other companies may struggle to impress investors as easily.

The seemingly unbreakable United States economy is holding up due to continually spending consumers and low unemployment, starting this earnings season with optimism, Fisher Funds senior portfolio manager Sam Dickie told the Herald’s Stock Takes podcast.

However, the bar to impress the market may now increase, especially when mega-cap technology stocks come to report their finances later this week.

“Any stock that’s run hard does have a higher bar.”

For example, Netflix shares fell when its revenue slightly missed expectations last week, he said.

“Investors want a decent revenue story, rather than just a cost-cutting story. You can’t shrink your way to greatness. That was enough six months ago, but it’s not now.”

Netflix reported strong subscriber growth in the second quarter, but its revenue result missed the mark with investors. Photo / Comparitech

Broadly, US company earnings could prove to be resilient this season before the pandemic economic stimulus washed out of the system - what Dickie called the “Covid over-earning, unwind wave”.

“It’s got a real long sting in the tail.”

The final part of this wave would see companies earning more money from recently hiked prices on their products and services, he said.

“Every company on earth pretty much raised prices, [by] the most they’d raised them in years in some cases.”

However, not all companies could hold those higher prices, he said.

“We’re starting to see those prices get cut.

“But as it stands, for this quarter, earnings seem to be pretty robust.”

Hear Dickie explain the results of this US company earnings season in today’s episode of Stock Takes.

Stock Takes is available on iHeartRadio, Spotify, Apple Podcasts, or wherever you get your podcasts. New episodes come out every Wednesday and are brought to you with support from Fisher Funds.