Wells Fargo & Company And Mastercard Rated Trending Stocks Today

The S&P 500 traded slightly down Monday as the benchmark index struggled to continue its upward push to new all-time highs after last week’s overall excellent performance. Meanwhile, the Nasdaq Composite managed to score 0.5% gains on the day as techs trended marginally higher.

Monday’s middling trading day followed a weekend of middling news, after Friday’s job report revealed that unemployment slid down from 6.1% to 5.8% in May. The news was weak enough to keep the Federal Reserve from rolling back its current easy money policies, but strong enough to buoy investor confidence in the markets.  

And corporations celebrated a small, but telling, victory over the weekend as G-7 nations reached agreement to charge a minimum 15% corporate tax on the largest multinational businesses in a step to mitigate corporate shuffling to lower-tax countries. Companies like Facebook and Google
GOOG
breathed a sigh of relief as Biden backed off his push to raise the global corporate tax rate to 21%, with domestic taxes as high as 28%.

­­Q.ai runs daily factor models to get the most up-to-date reading on stocks and ETFs. Our deep-learning algorithms use Artificial Intelligence (AI) technology to provide an in-depth, intelligence-based look at a company – so you don’t have to do the digging yourself.

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Wells Fargo & Company (WFC)

First on today’s trending stock list is Wells Fargo & Company
WFC
, which bumped up 0.3% Monday to $47.11, trading a total volume of 16.64 million shares on the day. The stock is trending slightly above its 22-day price average of $46.54 as prices have stagnated after months of historic rise, with prices currently sitting around 56% gains YTD. Wells Fargo is trading 13.8x forward earnings.

Wells Fargo is trending this week for two primary reasons. The first is a nudge in the right direction from Bank of America
BAC
, which upgraded Wells Fargo to Buy as the company shows promise  “at the start of a multi-year transformation.”

The second appeals more immediately to investors: after months of Fed restrictions on bank dividends, Wells Fargo is set to raise its dividend from the paltry $0.10 per common share set during the pandemic.

Over the last fiscal year, Wells Fargo saw revenue rise 9.3% to $58.3 billion, though it’s fallen from $84.7 billion three years ago. Operating income skyrocketed 216% in the same period to $2.1 billion – again, down from $28.5 billion three years ago – with per-share earnings shooting up 255% to $0.41 compared to $4.28 in the 36-month-ago period. Wells Fargo is sitting at 1.9% ROE against 11.3% in the same time frame.

While Bank of America may be optimistic on Wells Fargo’s future, after months of climbing the charts and struggling to regain a foothold as a trusted institution, our AI is far less so. Wells Fargo rates B in Technicals and Low Volatility Momentum and D in Growth and Quality Value.

Mastercard, Inc (MA)

Next, we have Mastercard, Inc
MA
, which nudged down 0.5% to $364.08 per share on Monday, slipping down from the 22-day price average of just a dollar more. The stock is trading up 2% for the year after making massive strides from 2020’s pandemic low. Currently, Mastercard is trading at a slight-to-moderate overvaluation of 43.5x.

Shares of Mastercard – as with rival Visa
V
– have lagged behind both the S&P 500 index as well as competitors such as American Express
AXP
. Moreover, its share prices pale in comparison to the numerous stocks that have tied rising profits and stock growth to global reopening. Its underperformance may reflect investors uneasiness with the company’s relatively high P/E ratio, lack of confidence in the credit card issuer’s ability to continue to grow, or a combination of these and other factors such as increased digital payments compared to plastic charges.

Mastercard’s revenue grew almost 1% in the last fiscal year and 3.3% in the last three, bringing the company to $15.3 billion compared to $14.95 billion. Operating income fell in the same periods, landing at $8.16 billion against $8.4 billion. Meanwhile, per-share earnings have grown 2.3% and 16.4%, respectively, from $5.60 to $6.37.

After a year of slow revenue growth and high share prices, Mastercard is only expected to see revenue growth around 4.6% over the next twelve months. Currently, it’s rated around average by our AI, with B’s in Low Volatility Momentum and Quality Value, C in Growth, and D in Technicals.

Arlington Asset Investment Corporation (AAIC)

Arlington Asset Investment Corporation
AI
 is the third stock on today’s trending list. The company closed up 3% on Monday to $4.12 per share, holding roughly steady with its price over the last quarter. However, the stock is up almost 9% for the year, and Arlington Asset Investment is trading at almost 27x forward earnings.

Arlington Asset Investments is a mortgage real estate investment trust company (try saying that five times fast) that borrows money and reinvests the proceeds in asset-backed securities. The last significant news on the company came over a month ago, when it reported Q1 earnings that fell in core metrics, although management expressed optimism that progressing global recovery – aided by fiscal stimulus policies and a burgeoning housing market – will positively impact its long-term strategy.

And the company needs a dose of optimism right now. Arlington Asset Investments experienced revenue losses of -$55.1 million compared to -$77.7 million three years ago, with operating income falling from $91 million to $67.7 million in the same period. Per-share earnings plunged to $2 even compared to $3.18, while ROE slipped from 27.8% to 23.6%. 

Arlington Asset Investments may see light at the end of the tunnel – but our AI is appropriately wary of the mortgage real estate investment trust. The company is rated C across the board in Technicals, Growth, Low Volatility Momentum, and Quality Value.

Pfizer, Inc (PFE)

Pfizer, Inc ticked down 0.4% to $38.99 per share on Monday, trading 24 million shares to an even price against the 10-day price average. Pfizer remains up 5.9% YTD, and the company is currently trading at 10.6x forward earnings.

Pfizer – alongside rival Moderna – has remained a leader in the vaccine space since the FDA authorized its Covid-19 vaccine. But despite spectacular Q1 results a month ago that showed increased revenue, adjusted earnings, and 2021 guidance, the share price has barely budged (taking into account its recent drop). While the company’s massive profits in recent quarters have been bolstered by the Covid-19 vaccine, investors may be wary that Pfizer can hold its price or its profits in the post-pandemic future. 

Over the last fiscal year, Pfizer’s revenue has grown over 10.7% to $41.9 billion, reflecting 13.7% growth over $40.8 billion in revenue three years ago. In the same periods, operating income shot up 18.2% and 62.8%, respectively, from $7.4 to $10.1 billion. Per-share earnings rose 15.6% in the last fiscal year, though earnings have fallen over the last three from $1.87 to $1.71. All told, ROE has almost doubled from 5.7% to 11% in the 36-month period.

Pfizer, Inc. is rated positively by Q.ai’s deep-learning algorithm, which grades the biotech and pharmaceutical manufacturer A in Low Volatility Momentum, B in Technicals, C in Growth, and D in Quality Value.

Amdocs Limited (DOX)

Last on our list of trending stocks is Amdocs Limited, which eked out a 0.09% rise Monday to $80.68 with 675k trades on the books. The stock is generally up over the last few weeks, coming in significantly over the 22-day average of $77.48. All told, Amdocs is up 13.75% for the year and is trading at 16x forward earnings.

However, Amdocs’ fortunes may be about to change. The company is currently undergoing legal action, with 8 June marking the last day investors had to file lead plaintiff motion in a class-action lawsuit against Amdocs. The lawsuit is open to investors who purchased shares between 13 December 2016 and 30 March 2021, as the following day Jehoshaphat Research published a damning report on Amdocs’ activities.

Amongst myriad allegations, Amdocs is accused of repeatedly overstating profits; hiding declining profits – thanks in part to the loss of AT&T
T
as a customer – while reporting that North America was “stable”; a pattern of reputable auditors resigning to be replaced by smaller operations; and “window-dressing” balance sheets to hide its borrowing. When the report dropped on 31 March 2021, Amdocs lost $9.19 per share (though it’s since clawed those losses back, and then some).

Before the lawsuit hit, this multinational software and services company for communication, media, and financial service providers saw revenue growth of 1% in the last fiscal year, with 6% growth over the last three, bringing Amdocs’ up from $3.97 billion to $4.17 billion. Reported operating income grew 13.7% over the last three years from $513 million to $595 million, with per-share earnings jumping 106.7% in the 36-month period from $2.47 to $3.71. All told, Amdocs is expected to see revenue growth around 2% in the next twelve months.

Currently, our deep-learning AI rates Amdocs B in Low Volatility Momentum and C in Technicals, Growth, and Quality Value.

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