Bank of America Corp. reported earnings early Monday morning. The bank beat earnings expectations, and showed the ever-important net interest margin expansion investors were looking for, as the Federal Reserve has indeed hiked interest rates. Like JPMorgan Chase & Co. and Wells Fargo & Co. WFC , the earnings results were strong. But the Federal Reserve just began hiking rates and will continue to do so. It’s possible we’ll see loan demand decrease in the coming quarters, a reason to be cautious about piling into bank stocks.
TheStreet’s Jim Cramer and his Action Alerts Plus team has a near-term trading strategy on Nvidia Corp. NVDA . Nvidia is priced to perfection, with a price-to-earnings ratio of 35. Cramer thinks Nvidia will miss estimates on its November quarter. “Nvidia is going to miss the quarter,” Cramer said at his Saturday teach-in event. The AAP team sold its entire position in Nvidia, and if the stock drops enough after earnings, they’ll buy it back. Nvidia has a long growth runway ahead.
Netflix, Inc. NFLX reports earnings Tuesday. Netflix is also priced for perfection, at a 150 PE ratio. The stock is down 15% since its July quarter, in which it missed estimates and slashed guidance. The bar may be set lower for Netflix’s October quarter, but the stock is still pricey. Rising competition in streaming, especially from Amazon.com, Inc. AMZN , could be an impediment to growth.
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