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Stimulus Check Money is Still Available…But You Must File a Tax Return to Get It

Remember all the excitement last March when a third round of stimulus checks was announced? An extra $1,400 in your pocket, plus $1,400 more for each dependent, was a big deal and made a huge difference for millions of Americans. But the thrill quickly turned to frustration and disappointment for people who didn’t get a payment (including a “plus up” payment) or didn’t get the full amount. If that’s you, there’s some good news. You may still be able to claim the third stimulus check money you deserve…but you’ll have to file a 2021 tax return to get it.

  • SEE MORE 2021 Tax Returns: What’s New on the 1040 Form This Year

Some people were stiffed because they simply weren’t eligible for a third stimulus check. However, others were left out or given less than they were entitled to for various other reasons that won’t prevent them from getting paid this year. For example, if you didn’t get a third stimulus check because you didn’t file a 2019 or 2020 tax return, you can still claim a payment when you file a 2021 tax return. If you had a baby in 2021, you can get the extra $1,400-per-dependent for the child that was missing from last year’s third stimulus check payment. You could also be entitled to stimulus check money when you file your 2021 tax return if you experienced other recent changes to your family (e.g., you got married or divorced) or financial situation (e.g., you lost your job).

But, once again, you need to file a 2021 tax return to get the money the IRS owes you. That’s true even if you’re not required to file a tax return this year. For most people, tax returns are due by April 18 this year. So, you still have plenty of time, but why wait – the sooner you file your return, the sooner you’ll get your stimulus check payment. We also recommend filing electronically and requesting any refund via direct deposit. That’s always the best way to get your refund quickly, but it’s especially important this year since the IRS is still backed up with millions of paper returns it couldn’t get to last year. If your income is $73,000 or less, you can even e-file your federal return for free.

Recovery Rebate Tax Credit

So, how do you get the third stimulus check money you’re owed by filing your 2021 tax return? On Line 30 of your 2021 return (1040 Form), you’ll see the recovery rebate tax credit. This is where you stake your claim to the stimulus check funds you didn’t get last year.

  • SEE MORE What Are the Income Tax Brackets for 2021 vs. 2022?

Third stimulus checks were merely advance payments of the recovery rebate credit. As a result, your credit for the 2021 tax year will be reduced by the total amount of your third stimulus check (if you got one). Most Americans received the full credit in advance, so their 2021 recovery rebate credit will be zero. But if you didn’t receive a third stimulus check or got less than what you should have (use our Third Stimulus Check Calculator to see how much you should have received), then you can claim the difference between the credit amount you’re allowed and what you actually received in advance as a tax credit on your 2021 return. The credit will reduce your tax bill, and for many people trigger a tax refund or boost the refund otherwise due.

To determine what, if anything, to report on Line 30, first complete the Recovery Rebate Credit Worksheet in the Form 1040 instructions. (There’s no need to complete the worksheet if you received a full third stimulus check.) You’ll notice that the worksheet requires information from other parts of your 2021 tax return. That’s where the recovery rebate credit differs from the third stimulus checks that were sent last year – those payments were based on information from either your 2019 or 2020 tax return. And that can make a big difference if your family or financial situation changed last year. Here are just two of many possible examples:

Example 1: Ann is single with no dependents and reported a federal adjusted gross income (AGI) of $77,000 on her 2020 tax return. Since her AGI was over the $75,000 phase-out threshold for single filers, her third stimulus check was reduced from $1,400 to $840. However, Ann was laid off for part of 2021. As a result, she reports only $60,000 of federal AGI on her 2021 tax return. Since that amount is well below the phase-out threshold, her 2021 recovery rebate credit before taking her third stimulus check into account is $1,400 (i.e., it’s not reduced). Therefore, Ann can claim a total recovery rebate credit of $560 on Line 30 of her 2021 Form 1040 ($1,400 – $840 = $560).

  • SEE MORE Child Tax Credit FAQs for Your 2021 Tax Return

Example 2: Josh and Samantha are married and file joint tax returns. They had their first baby in 2021. Their combined federal AGI on their 2020 tax return was $100,000, which was below the stimulus check phase-out threshold for joint filers. Since they reported no dependents on their 2020 return, they received a combined third stimulus check of $2,800. On their 2021 tax return, Josh and Samantha once again report a federal AGI of $100,000, but they also now claim one dependent. As a result, their 2021 recovery rebate credit before taking their third stimulus check into account is $4,200 (i.e., $1,400 each for Josh, Samantha, and the baby). Therefore, Josh and Samantha can claim a total recovery rebate credit of $1,400 on Line 30 of their 2021 Form 1040 ($4,200 – $2,800 = $1,400).

There are a number of other scenarios that can trigger a recovery rebate credit on your 2021 return. So, if you didn’t receive the full third stimulus check amount last year, make sure you complete the worksheet to see if you qualify for a credit. For more on this valuable credit, see What’s the Recovery Rebate Credit?

IRS Letter 6475, Notice 1444-C and Online Accounts

You’ll need to know the total amount of your third stimulus check payment and any “plus up” payments actually paid to claim the recovery rebate tax credit on your 2021 tax return. You can get this information from a few different sources. First, you should have received Notice 1444-C from the IRS shortly after receiving your third stimulus payment. If you received a joint payment with your spouse, the notice shows the total amount of the payment. If you’re married but file separate 2021 tax returns, each spouse must enter half of the payment amount shown on Notice 1444-C. People who received a plus-up payment should have received a separate Notice 1444-C after your payment was sent. Save Notice 1444-C with your other tax records.

  • SEE MORE “Above-the-Line” Deductions for Your 2021 Tax Return

The IRS is also mailed Letter 6475 in January. This letter confirms the total amount of the third stimulus check and any plus-up payments you received for the 2021 tax year. Again, if you received a joint payment with your spouse, the letter shows the total amount of payments. If you file separate 2021 tax returns, each spouse must enter half of the amount shown on Letter 6475. Save this letter, too.

You can also get the necessary information through an IRS online account. Your third stimulus check payments can be found on the Tax Records tab/page under the “Economic Impact Payment Information” section. If you and your spouse received a joint payment, each of you will need to sign into your own online account to retrieve your separate amounts (online accounts only show your portion of the payment). Also, any plus up payments you received won’t be shown separately – it will be included in the total amount.

  • SEE MORE “Tax Preparers Near Me”? There’s a Better Way to Find a Tax Professional

Self-Employed? Watch Out for These IRS Audit Red Flags

Being in business for yourself can be exciting, lucrative – and a great way to draw the attention of the IRS’s audit division. Short on personnel and funding, the IRS has audited significantly less than 1% of all individual returns in recent years. But if you file a Schedule C to report profit or loss from a business, your odds of drawing additional IRS scrutiny go up.

Schedule C is a treasure trove of tax deductions for self-employed people. And it’s also a gold mine for IRS agents, who know from experience that self-employed people sometimes claim excessive deductions and don’t report all their income. The IRS looks at both higher-grossing sole proprietorships and smaller ones. Special scrutiny is given to cash-intensive businesses (taxis, car washes, bars, hair salons, restaurants and the like), people with freelance service gigs through the sharing economy (think of Uber and Grubhub), and small-business owners whose Schedule C’s report a substantial net loss (especially if those losses offset in whole or in part other income reported on the return, such as wages or investment income).If you want to avoid the wrath of IRS auditors, take a look at these 11 filing scenarios that could attract unwanted IRS attention. Doing so now could save you a lot of time and money down the road.

  • SEE MORE Most-Overlooked Tax Deductions and Credits for the Self-Employed

Alphabet Stock Split: A Win for Retail Investors … And the Dow?

Google parent Alphabet (GOOGL, $2,752.88) briefly added more than $180 billion in market value at the opening bell Wednesday after the search giant easily topped fourth-quarter estimates … and delivered on many investors’ longtime wishes by announcing a 20-for-1 stock split. 

An Alphabet stock split would not only make its A-class GOOGL shares and C-class GOOG shares more accessible to retail investors, but also perhaps open the door for inclusion into the elite Dow Jones Industrial Average one day.

Alphabet announced both the stock split and its quarterly results late Tuesday, resulting in a jump in GOOGL stock of as much as 10% in the first few minutes of Wednesday’s session. That’s the biggest opening gap-up on earnings for its shares since April 2008, when they popped 19.1%, according to data from Bespoke Investment Group.

  • SEE MORE The 22 Best Stocks to Buy for 2022

As good as Alphabet’s quarterly results were – it earned $30.69 per share on $75.3 billion in revenues, topping respective estimates for $27.34 per share on $72.3 billion – Wednesday’s price action was likely driven every bit as much by news of its proposed share split. 

The Alphabet Stock Split Explained

The communication services behemoth intends to issue 20 shares for each share held of its Class A, Class B and Class C stock (subject to shareholder approval, of course) after the close of business on July 15.

Now, stock splits are meaningless on a fundamental basis. A company’s operations and prospects remain the same. In this particular case, the Google stock split is the equivalent of making change: Shareholders hand Alphabet a $20 bill and get 20 one-dollar bills in return.

But markets love splits all the same, and that seems to be the case yet again with Alphabet’s share split. 

And, to be fair, there are some technical reasons why this 20-for-1 split could give GOOGL stock a tailwind.

Alphabet closed Tuesday’s trade around $2,750 per share. Post-split, that comes to about $138 per share. Although brokerages already offer customers the option of buying and selling fractional shares for free, the split should theoretically make GOOGL more popular with retail investors currently put off by the four-figure share price.

Looking farther out, it also makes Alphabet available for inclusion in the Dow Jones Industrial Average.

Google in the Dow? Maybe, But …

The blue-chip barometer isn’t built like the other two major indexes, and that’s what makes Alphabet’s stock split so important.

The S&P 500 and Nasdaq Composite are weighted by market capitalization: the stock price multiplied by the number of shares outstanding. The Dow, however, is weighted by price. (If that seems weird, just know that the original 12 stock Dow was created in 1896 by Charles Dow, and the guy had to calculate the average every day by hand.)

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One issue with the Dow’s price-weighted construction is that it shuts out any stock trading at GOOGL’s current lofty level. At $2,700 a share, Alphabet’s stock would skew the average into meaninglessness.

UnitedHealth Group (UNH, $468.41), at roughly $475 a share, holds the greatest weight in the average today. Adding Alphabet at $3,000 would turn the Dow into the “Google and 29 Other Stocks Average.”

Also know that it’s up to the Dow’s editors at S&P Dow Jones Indices on whether to add it to the average. That’s not a simple decision. Alphabet is a member of the market’s communication services sector. The Dow has two components from that sector already: Verizon (VZ, $53.20) and Walt Disney (DIS, $144.49). 

Does one of those stocks then get the boot? VZ is the only telecom in the blue-chip average. DIS is the only media and entertainment conglomerate. The editors construct the Dow to reflect the broader economy. Shouldn’t the Dow have a telco and a media giant?

And then there’s the weighting problem again. If Alphabet (at around $140) replaced Verizon (more than $50), the communications sector’s weight in the Dow would rise significantly.

The editors aren’t bound by some rule that requires them to swap stocks within sectors. International Business Machines (IBM, $135.53) hasn’t impressed anyone for going on a decade now. Pulling Big Blue and replacing it with Google might not be a bad idea. Their respective share prices would be roughly in line with each other after Alphabet’s stock split.

Still, by strict definition, such a move would lift the communications sector’s weight in the average at the expense of the tech sector. It’s something the Dow editors would have to think about.

A Small Impact on the Market

Lastly, it’s important to know that getting tapped for the Dow is largely symbolic. 

When a stock is included in the S&P 500, its shares rise because a total of $13.5 trillion is indexed or benchmarked to the most widely used gauge of U.S. equity performance. Passive funds tracking the S&P 500 must own all of its components, weighted by market value. There’s no way around it.

The Dow Jones Industrial Average, by comparison, is a dud in this regard. True, the blue-chip barometer can’t be beat for brand familiarity. When regular folks talk about what the market’s been up to lately, they usually mean the Dow.

But where the S&P 500 leads tens of trillions of dollars by the nose, only $36.6 billion is indexed or benchmarked to the Dow. Mega-cap stock GOOGL, by itself, is worth roughly 53 times all the money tracking and chasing the industrial average.

Sure, it would be neat if Alphabet became a Dow stock, and perhaps fitting too. But that’s all speculative.

What we do know about the Alphabet stock split is that it should bring in legions of retail investors, possibly adding a tailwind – for a time – to the share price. Volume would increase … but then so too would volatility.

So be careful what you wish for.

  • SEE MORE Hedge Funds’ 25 Top Blue-Chip Stocks to Buy Now

Stock Market Today: Stocks Ride Facebook’s Coattails Deep Into the Red

This week’s relief rally came to an abrupt stop Thursday as a few high-profile earnings reports cratered investor confidence and weighed on the major indexes.

Front and center was Facebook parent Meta Platforms (FB, -26.4%), which suffered its largest one-day price decline following a fourth-quarter faceplant reported last night.

  • SEE MORE The 22 Best Stocks to Buy for 2022

Revenue of $33.7 billion beat Street expectations, but earnings of $3.67 per share missed by a wide margin. The company’s first-quarter sales guidance of $27 billion to $29 billion was also shy of analysts’ forecasts. Apple’s (AAPL) iOS privacy changes are responsible for some of FB’s woes, but it has other troubles as well.

“The revenue and expense outlook reflects a shift in content to lower monetization Reels from Newsfeed, a rebuild in targeting capabilities (that will be more AI-based), TikTok competition, and big – and now public – investments in Metaverse,” say BofA Securities analysts, who maintained their Buy rating in anticipation of an easier second half of 2022.

Streaming music provider Spotify (SPOT, -16.8%) likewise tumbled as better-than-expected quarterly earnings and revenue were overshadowed by weak Q1 user-growth guidance. Meanwhile, industrial conglomerate Honeywell (HON, -7.6%) posted strong Q4 results but disappointed traders with its current-quarter sales forecast.

Fears of a dour January jobs report (due Friday) also weighed on stocks.

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“Expectations are for another slowdown, with about 175,000 jobs added, down from 199,000 in December,” says Brad McMillan, chief investment officer for independent broker-dealer Commonwealth Financial Network. “With everything that is going on, especially the number of people who have the Omicron variant and are presumably not at work, that would be a great result. Unfortunately, the real number is likely to be well below that and will probably be negative – maybe significantly so.”

  • SEE MORE The 12 Best Vanguard Funds for 2022

“But while the damage would be real, it would be a medical issue – a short-term consequence of the Omicron wave – rather than a sign of economic weakness. As the medical situation changes, so will the employment impact. … As such, a terrible jobs report in January will not derail either the labor market or the economy. More, we can also expect a very strong bounce back in February.”

Still, near-term fears clearly dominated Thursday’s session. The Nasdaq Composite fell 3.7%, to 13,878, while the S&P 500 dropped 2.4% to 4,477 and the Dow Jones Industrial Average declined 1.5% to 35,111.

YCharts

There was better news after the bell, however. E-commerce giant Amazon.com (AMZN) surged 13% after announcing its fourth-quarter results. AMZN said revenue jumped 9% year-over-year to $137.4 billion, while adjusted earnings per share arrived at $27.75 per share – nearly double the year-ago figure. Amazon also said it was raising its annual Amazon Prime membership price by almost 17% to $139; that’s the first price hike for Prime memberships since 2018.

Social media companies Snap (SNAP, +33% after hours) and Pinterest (PINS, +18%) also surged in the evening after they reported Street-beating earnings and quarterly user growth.

Other news in the stock market today:

  • The small-cap Russell 2000 dropped 1.9% to 1,991.
  • A massive winter storm barreling across the central portion of the country helped send U.S. crude oil futures up 2.3% to $90.72 per barrel – their first settlement north of the $90 per-barrel mark since October 2014.
  • Gold futures gave back 0.3% to finish at $1,804.10, snapping a three-day winning streak.
  • Bitcoin struggled again, retreating 3.3% to $36,366.38. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.) 
  • T-Mobile US (TMUS) was a rare splash of green in today’s trading. The telecommunications stock jumped 10.2% after the company posted higher-than-expected fourth-quarter adjusted earnings of 34 cents per share and said free cash flow more than doubled year-over-year to $1.1 billion – which helped offset lower-than-anticipated quarterly revenue of $20.8 billion. “TMUS reported a solid quarter and management’s 2022 guidance alleviated concerns with shutting down legacy Sprint,” Oppenheimer analyst Timothy Horan says. “Momentum from 2021 will position TMUS for a strong year of growth in 2022. High speed internet service will be a key sector with promising growth potential.” The analyst maintained an Outperform rating on the stock, which is the equivalent of a Buy.

How to Profit From Transformational Trends

It’s easy to forget that investing is a long-term proposition when the short term is so painful. Investors in growth stocks sure have the fresh bruises to prove it.

  • SEE MORE 11 Hot Upcoming IPOs to Watch For in 2022

Facebook, a consensus front-runner of the metaverse, has lost a quarter of its value this week. PayPal (PYPL), which spearheaded the revolution into digital payments, is off 28% in just four days.

However, as Kiplinger contributor Jeff Reeves explains, “the most profitable investing strategies often don’t involve reacting in real-time to short-term disruptions. Sometimes simply getting in on the ground floor of a long-term trend, and then buying and holding for years or even decades, can drive tremendous returns.”

No one knows where Facebook, PayPal and other recently battered growth plays will go from here. What we do know is that any investment in disruptive trends should be measured in years – not days or weeks.

One way to steady your hand as you try to take advantage of sweeping technological, lifestyle and other changes is to diversify your holdings. This lessens the risk that any single stock will wreck your portfolio and make you lose sight of your long-term goals.

These seven megatrend-focused stock ETFs offer such diversification – as well as the potential for outperformance – by riding powerful, secular themes.

  • SEE MORE 2022’s Best Mutual Funds in 401(k) Retirement Plans

UBS: 15 Top Growth Investing Ideas

Growth investing came to a crashing halt in the early going of 2022, but investors shouldn’t give up on beaten down stocks with high upside just yet, says the team at UBS Research Management.

Working in coordination with the firm’s strategists and analysts, the UBS team came up with a list of 15 growth stocks they say look more attractive than ever amid the market’s weak start to the year. 

  • SEE MORE The 22 Best Stocks to Buy for 2022

The researchers screened the market for Buy-rated stocks forecast to increase operating earnings at compound annual growth rates of at least 10% through 2024. At the same time, they looked for cheap stocks, or shares trading at discounts to their own five-year averages. Lastly, they stuck to names with high upside, based on analysts’ price targets. 

Adherents of growth investing looking for bargain names promising lots of upside should take note of the stocks UBS found. Among the highlights:

  • Envestnet (ENV, $73.83) kicked off the new year with a thud. Nevertheless, UBS – and much of the rest of the Street – says ENV remains an outstanding idea for a growth investing portfolio. Envestnet’s flagship product is an advisory platform that integrates services and software used by financial advisors in the wealth management segment. Bullish analysts like Envestnet’s ability to both scale and squeeze more sales out of its user base.
  • Power- and hand-toolmaker Stanley Black & Decker (SWK, $176.14) has something adherents of growth investing don’t often find in a stock: A deeply compelling valuation. SWK stock trades at just 14.6 times analysts’ 2022 earnings per share (EPS) estimate, per S&P Global Market Intelligence. UBS analyst Markus Mittermaier notes that puts SWK’s valuation at a near-record low vs. the S&P 500 – and that, in turn, spells outperformance ahead.
  • In addition to being one of UBS’s top growth investing ideas for high upside, Terex (TEX, $43.09) also makes the list of best industrial stocks to buy for 2022. Best known for its aerial work platforms (AWP) segment and materials processing (MP) segment, Terex also makes equipment such as concrete mixer trucks. As such, the bull case stands on the $1.2 billion Infrastructure Investment and Jobs Act, as well as already robust backlogs in the company’s AWP and MP businesses. 

Share prices as of Feb. 1. UBS’s implied upside is based on stock prices and price targets as of Jan. 21.

Have a look at the table below to see all 15 of UBS Research Management’s growth investing stock picks to buy now: 

Courtesy of UBS Global Research as of Jan. 21

  • SEE MORE 9 Great Growth ETFs for 2022 and Beyond

If January Predicts the Rest of the Year, Investors Could Be Hurting

The month of January 2022 is over, and it wasn’t a pretty one for investors. The Standard & Poor’s 500 closed at 4516, down 251 points, or 5.3%, for the month. Now, for some more potential bad news: If you believe a popular stock barometer, the market pain might just be getting started.

That’s because two patterns in January have historically predicted the direction of the stock market for the rest of the year with a high degree of accuracy, according to the Stock Trader’s Almanac.

The January Barometer

What is known as the January barometer indicates that as the S&P 500 goes in January, so goes the year.

  • SEE MORE Could the Stock Market Crash for Real? Here’s How to Prepare

If the S&P 500 has positive returns in January, the overwhelming amount of time the market will end up with positive returns of 5% or more for the year. And if the S&P 500 has a negative return in January, the overwhelming amount of time the market will end up with negative returns of 5% or more for the year.

Going back to 1950 through the end of 2021 the January barometer has registered major errors in only 12 years out of the 72 years in this period. This gives it an 83.33% accuracy rate.

For those 12 years there were three where January was positive and the S&P 500 ended the year negative, and there were nine years where January was negative and the S&P 500 ended positive.

In 52 of the other 60 years if January was up the S&P 500 ended the year decisively positive, and if January was down the S&P ended the year decisively in negative territory.

In the remaining eight years the S&P 500 ended the year flat. Which means it was less than 5% above or below where it started the year. Put another way, the January barometer didn’t predict a meaningful loss or gain for those eight years.

If we eliminate these eight flat years, we would then have the January barometer correctly predicting the direction of the stock market in 52 out of the last 72 years which would be a 72.2% accuracy rate.

Negative Januaries Spell Trouble

Negative Januaries have been harbingers of trouble ahead. There have been 29 of them since 1950.

While nine resulted in decisively positive returns for the year (meaning returns of better than 5%), in 100% of the down Januaries they were followed by a new or continuing bear market, a 10% correction or a flat year.

Down Januaries were also followed by substantial declines sometime later in the same year averaging -13%. This is not good news for advocates of the January effect.

January’s First Five Days

The other pattern to watch is January’s first five days. In 47 out of the last 72 years, during the first five trading days of January the S&P 500 was up. This was then followed by full-year gains in 39 of the 47 years.

This means over this time period, 82.98% of the time when the market was up during the first five days of the year, it ended the year with a positive return.

Unfortunately, that wasn’t the case in January 2022. The S&P finished the first five trading days of the year down – although not dramatically – by almost 90 points, or 1.9%. 

  • SEE MORE The 60/40 Portfolio Is Dead. Long Live 33/33/33.

Judging by history, it’s tougher to tell what that might mean for the rest of the year, because in the other 25 years where the first five days in January were negative, the results were much less predictable. In 14 of these 25 years the S&P 500 ended with a gain, and in 11 of the 25 years it ended the year with a loss.

This means only 44% of the time was the market negative for the year (11 out of 25 years) when the first five days were negative, giving it only a 44% accuracy rate.

The average gain across all 25 years was roughly 1% a year as compared to the 13.7% average gain per year across the 47 periods where the first five days in January were up.

The Bottom Line

To summarize, since 1950 the direction of the S&P 500 in January, known as the January barometer, has accurately predicted the direction of the stock market for the year 72.2% of the time.

And when the return on the S&P 500 during the first five days of January has been positive, the stock market has had a positive return for the year roughly 83% of the time.

There are certainly pundits who consider these trends to simply be dumb luck, almost like voodoo economics. Others take these two trends very seriously.

While I wouldn’t bet my entire 401(k) plan on it, if you think these two January statistical trends are more than just dumb luck, you might consider using this information, along with other relevant data, in making modest tweaks to your level of stock exposure.

And if nothing else, keep your fingers crossed that the market in 2022 defies these two trends and ends the year higher.  

  • SEE MORE As You Approach Retirement, C.A.N. You Handle a Market Downturn?

Alphabet (GOOGL) an Analyst Favorite Ahead of Q4 Earnings

The earnings calendar is jam-packed for a second straight week, with more than 20% of S&P 500 companies set to report. Among them is Google parent Alphabet (GOOGL, $2,630.45), which will unveil its fourth-quarter earnings report after Tuesday’s close.

Similar to other mega-cap stocks, GOOGL has had a rough start to 2022, down around 10% for the year-to-date. Still, Alphabet remains a long-term outperformer on the charts, with shares up about 43% over the past 12 months.

Analysts see even bigger long-term gains for GOOGL stock too. The average price target among those following Alphabet that are tracked by S&P Global Market Intelligence is $3,365.86, representing implied upside of almost 28% over the next 12 months or so.

  • SEE MORE The 22 Best Stocks to Buy for 2022

Plus, of the 47 analysts following GOOGL, 31 say it’s a Strong Buy and 15 call it a Buy. This compares to just one who has a Hold rating on the stock, with not a single Sell or Strong Sell to be found.

Truist Securities analyst Youssef Squali is one of those with a Buy rating on Alphabet. “GOOGL remains one of our favorite names going into the fourth-quarter earnings season as we believe it will show sustained signs of recovery especially in Search and YouTube, on the back of slightly easier year-over-year comps,” he says. 

The analyst is targeting top-line growth of 25% over Q4 2020, and expects to see broad-based improvement across all digital marketing channels following another strong holiday season.

UBS analyst Lloyd Walmsley is also expecting strong Q4 results from GOOGL. Walmsley points to the research firm’s fourth-quarter ad checks, which suggest Google was a prime beneficiary of the reallocation of social media budgets.

  • SEE MORE The 12 Best Tech Stocks to Buy for 2022

“Google Search and YouTube sounded the best out of all the ad platforms in our checks, with a number of advertisers indicating that they are seeing demand for the platforms and improvements being made across both,” he writes. 

The analyst has a Buy rating on GOOGL ahead of earnings. He believes it’s the “safest name to own [among online ad companies] into earnings season,” but warns that it’s also a crowded play.

As for Alphabet’s upcoming report, analysts, on average, are looking for a 26.8% year-over-year (YoY) spike in revenues to fuel a 22.5% jump in earnings per share (EPS) to $27.32.

PayPal Stock Struggles Ahead of Earnings

PayPal (PYPL, $160.84) will report its fourth-quarter earnings after Feb. 1 close. Shares are trading at their lowest level since June following the recent stock market crash. 

Oppenheimer analyst Dominick Gabriele thinks any additional weakness in the payments processor could create a buying opportunity. “[I]n a big market selloff or further correction below the current ~$160 stock price level, we would slowly build a position throughout the first half of 2022,” he says. The analyst has an Outperform rating on PYPL, which is the equivalent of a Buy.

And there are certainly near-term risks to PayPal. “We see a combination of slowdown in e-commerce/penetration of e-commerce to total retail sales, worries of lower-multiple super app business revenue contribution, and a headwind of eBay for reasons of recent underperformance,” Gabriele writes. 

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Many of these same concerns were voiced by PYPL when it offered up lower-than-expected Q4 guidance back in November. Specifically, John Rainer, chief financial officer of PayPal, pointed to headwinds from eBay’s payments migrations, as well as “retail supply chain and labor market concerns” as reasons why the company took a cautious stance for the three-month period.

PayPal forecast fourth-quarter earnings of $1.12 per share on a revenue range of $6.85 billion to $6.95 billion. This is roughly in line with analysts’ consensus estimates for earnings of $1.12 per share (+3.7% YoY) on revenue of $6.86 billion (+12.2% YoY).

Analyst: Ford Motor Well-Positioned to Navigate “Chip and Ship” Issues

Ford Motor (F, $19.28) will report its fourth-quarter earnings after Thursday’s close. Analysts, on average, expect earnings to surge 32.4% YoY to 45 cents per share. Revenues are projected to rise to $35.5 billion, a more modest 6.9% improvement over the year-ago figure.

Analysts will also be looking for updates to any “chip and ship” issues for the automaker. “We do see the chip issue continuing to run through 2022,” said John Lawler, Ford’s chief financial officer, in the company’s third-quarter earnings call. 

As for the “ship” part of the equation, “[P]erhaps our biggest job, in my opinion, is to break the constraints we have in manufacturing and our supply chain so we can get these products out to these customers,” CEO Jim Farley said in that same call. 

Still, CFRA Research analyst Garrett Nelson (Buy) believes Ford is the most well-positioned among traditional automakers to handle these challenges. “While the company’s language has been cautious, we believe that primarily reflects management’s desire to underpromise and overdeliver,” Nelson adds.

Karee Venema was long F as of this writing.

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