Finance
The case for a 'Magnificent 7' resurgence: Morning Brief
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The broadening of the stock market rally has become a crucial theme during the second half of 2024.
Amid the start of rate cuts — and economic data that’s showed the US economy remains in better shape than initially feared — the recent push to new record highs has largely been about companies not named Apple (AAPL), Alphabet (GOOGL, GOOG), Microsoft (MSFT), Amazon (AMZN), Meta (META), Tesla (TSLA), or Nvidia (NVDA).
But the debate over whether the market’s next leg higher will be led by just a few large tech companies — as was the case in 2023 and the early part of 2024 — continues to roll on among investors.
In a note on Friday, data from FactSet showed that earnings for the 493 companies in the S&P 500 outside the “Magnificent Seven” are expected to grow by an average of more than 13% over the next five quarters. Conversely, the Magnificent Seven are expected to see earnings grow by an average of nearly 19% over the same time period.
Notably, this represents a pickup in growth for the 493 from 2024 and a notch lower for the Magnificent Seven. This more positive trend in the 493 is one of the reasons strategists have called for a continued broadening out of the rally. But as our chart below shows, the difference in trend growth is a narrowing race.
And some believe Big Tech could still be the winner.
“The Mag 7 are still expected to post superior (and presumably more reliable) earnings growth than the rest of the index,” DataTrek co-founder Nicholas Colas said.
Colas noted that this data suggests tech “should begin to play catchup into the end of the year,” as the tech-heavy Nasdaq 100 (^NDX) has underperformed the S&P 500 over the past month and throughout 2024.
“Going forward, the path to outperformance will be assessing whether Big Tech or the rest of the S&P 500 will exhibit better earnings momentum,” Colas wrote. “If one believes that US GDP growth can be +3% in 2025, then the S&P 493 is likely the better bet. Our own view is that growth will be more modest, giving the edge to Big Tech.”
Part of the tech revival may already be playing out. Nvidia has soared to a fresh record high over the past month, its first since June. Apple stock closed at a record high of $235 per share on Friday and added to those gains on Monday. Netflix (NFLX), the first of the large tech giants to report earnings, saw a massive rally in its stock to a fresh record high after another impressive round of earnings.
That move in the streaming giant is perhaps the most illuminating when considering the case for Big Tech to lead the market. Even Netflix, which had already seen its stock rise more than 50% on the year before earnings, managed to surprise Wall Street to the upside.
Perhaps this serves as an early reminder that while growth in tech is “expected” to slow from its rapid pace over the past year, that doesn’t mean there can’t be upside surprises — or that it still can’t outperform. You don’t need to look beyond the past 18 months of many tech earnings reports coming in better than expected for the empirical evidence.
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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Harley-Davidson’s new CEO wants to transform how people think about the iconic motorcycle brand, so the company is trying something different.
This week, Harley announced a new strategy that focuses on lower-priced bikes, rather than relying on older, more affluent customers to buy its higher-margin touring models.
“Back to the Bricks builds on our core strengths and competitive advantages, harnessing the passion of our riders to deliver profitable growth for the Company and both our dealers and shareholders,” Harley CEO Artie Starrs said this week. “As we drive towards this new phase of growth, we remain committed to the craftsmanship and dedication that define our brand.”
Entry-level Harley-Davidsons cost about $13,000, while the higher-end Adventure Touring models average about $23,250, and the Premium Range &CVO models cost about $38,500, according to Reuters.
Harley’s new strategy targets a core profit of over $350 million from its motorcycle business by 2027 and over $150 million in cost reductions.
To kick off the new strategy, Harley is introducing Sprint, a new entry-level model powered by a smaller 440cc engine, later in the year.
What is Harley-Davidson’s “Back to the Bricks” strategy?
Harley’s new strategy relies on more than just pushing buyers toward cheaper vehicles to increase volume. The 123-year-old company has a set of five pillars on which it is building its future.
Harley-Davidson “Back to the Bricks” 5-point plan
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Deep appreciation of Harley-Davidson’s competitive advantages and legacy: The Company’s iconic brand, diversified and powerful revenue channels, and best-in-class dealer network provide a powerful foundation for growth.
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Renewed commitment to exclusive dealer network to drive enterprise profitability: Harley-Davidson’s dealers are a competitive advantage. The Company is planning actions to enable dealers to double profitability in 2026 and then double it again by 2029.
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Immediate actions to recapture share in areas where Harley-Davidson has right to win: Harley-Davidson has strong legacy equity in existing markets including new motorcycles, used motorcycles, Parts & Accessories, and Apparel & Licensing. The Company’s new strategy is focused on positioning the Company to regain share and drive meaningful volume growth in categories where it benefits from credibility, scale, and deep rider connection.
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Strong financial position with a path to stronger free cash flow and EBITDA margin: Cost and restructuring actions already underway support a path to stronger free cash flow and EBITDA margin over time.
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Bolstered management team with balance of fresh perspectives and institutional knowledge: Harley-Davidson has made a number of leadership appointments that support the Company as it leverages its innate strengths.
Written by Jitendra Parashar at The Motley Fool Canada
Dividend investing can be one of the simplest ways to build long-term wealth while creating a steady stream of passive income. But in my opinion, a good dividend stock is about much more than just a high yield. Beyond dividend yield, investors should also look for companies with durable businesses, reliable cash flows, and a history of rewarding shareholders consistently over time.
That’s exactly why many investors turn to financial stocks. Banks and asset managers often generate recurring earnings through lending, investing, and wealth management activities, allowing them to support stable dividend payments even during uncertain market conditions.
Two Canadian financial stocks that stand out right now are AGF Management (TSX:AGF.B) and Toronto-Dominion Bank (TSX:TD). Both companies offer attractive dividends backed by solid financial performance and long-term growth strategies. In this article, I’ll explain why these two financial stocks could be worth considering for income-focused investors right now.
AGF Management stock continues to reward shareholders
AGF Management is a Toronto-based asset manager with businesses across investments, private markets, and wealth management. Through these divisions, the company offers equity, fixed income, alternative, and multi-asset investment strategies to retail, institutional, and private wealth clients.
Following a 59% rally over the last 12 months, AGF stock currently trades at $16.67 per share with a market cap of roughly $1.1 billion. At current levels, the stock offers a quarterly dividend yield of 3.3%.
One reason behind AGF’s strong recent performance is its increasingly diversified business model. The company has expanded its investment capabilities and broadened its geographic reach, helping it perform well across varying market environments.
In the first quarter of its fiscal 2026 (ended in February), AGF posted free cash flow of $36 million, up 14% year over year (YoY), driven mainly by higher management, advisory, and administration fees. These fees climbed to $92.5 million as demand for the company’s investment offerings strengthened.
AGF has also been focusing on expanding its alternative investment business and introducing new investment products. With strong cash generation and growing demand for alternative investments, AGF Management looks well-positioned to continue rewarding investors over the long term.
TD Bank stock remains a dependable dividend giant
Toronto-Dominion Bank, or TD Bank, is one of North America’s largest banks, serving millions of customers through its Canadian banking, U.S. retail banking, wealth management and insurance, and wholesale banking operations.
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