What stocks to buy after the strong jobs report for January?

on Feb 4, 2022
  • The U.S. added 467K jobs in January, more than thrice as much as economists had predicted.
  • Saira Malik sees companies with pricing power as good investment for the current environment.
  • She particularly likes Amazon that raised prices for its Prime subscription service last night.

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The U.S. added 467,000 jobs in January, more than thrice as much as economists had predicted, reported the Bureau of Labour Statistics on Friday.

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Saira Malik’s remarks on CNBC’s ‘Squawk Box’

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According to Nuveen’s Saira Malik, the strong jobs report could see the U.S. Federal Reserve get even more aggressive with quantitative tightening. She expects companies with pricing power to perform well in such an environment. On CNBC’s “Squawk Box”, Malik said:

You need to find companies that can raise prices and beat higher inflation trends. We’re seeing 4.0% earning surprises in the fourth quarter; less of that is coming from margins, more from revenues and pricing. We can’t rely on margins going forward because of cost pressures.

Expectations were for employment to contract in January since a record 7.8 million people missed time from work due to Omicron. The unemployment rate in Friday’s report came in at 4.0% – a 10 basis points increase.

Malik likes Amazon at current valuation

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The chief investment officer agrees that higher rates would be a headwind for the mega-cap technology names but is convinced that ones with pricing power, like Amazon.com Inc (NASDAQ: AMZN), will still come through.

A great example of pricing power is Amazon, which raised Prime membership prices and went up in the aftermarket. It’s still barely retracing what it’s lost YTD, so still has a good valuation in terms of its ability to expand going forward. But you’ll have to be more selective in tech now.

From February 18th, Amazon Prime will cost $139 versus $119 at present. The tech titan on Thursday said its Q4 profit topped Street estimates by a massive margin. Shares are up more than 15% this morning.

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