NewJersey Resources Corporation (NJR) Stock Forecasts

Summary:

Eight Fundamental Predictions for 2025 Argus Research Company tracks the investment framework from top to bottom, from the domestic economy to the global economy, interest rates, capital markets, sectors, sectors and finally equities; Here are our eight fundamental predictions for 2025. Prediction one. The U.S. economy We expect the U.S. economy to continue to expand in 2024, supported by three factors: busy spending, solid corporate investment, and outpacing the trend During the years when short-term interest rates were at cycle highs, we argued that the economy was just a turn or two away from recession.US GDP now looks healthier. We estimate that the US economy will grow at a rate of 2.6% in 2024, down slightly from 2.9% in 2023, but still above the estimated long-term trend growth rate of 2.0%. In 2025, consumer spending, which accounts for roughly two-thirds of total GDP, will be key, as is currently the case with low unemployment (4.2%), record high stock prices, and falling housing prices could lead to a slowdown. We will be watching unemployment claims closely this year. The latest trend is 200,000 per week. If that data point rises above 300,000 The unemployment rate could reach 5.0%. That’s when fears of a recession will return to Wall Street. We currently have 1.8% GDP growth in 2023, up from 2.0% in 2026 the initial forecast is also close to that long-run average.Forecast 2: Inflation Trends in inflation were more important than GDP trends for the stock market in 2022-2023, but their impact faded slightly in 2024. This is due to the Fed staying ahead of the inflation curve by raising the federal funds rate to 0.0%. from early 2022 to 5.25%-5.50% by year-end 2023, while core PCE inflation 2022 It decreased from 5.5% in March 2018 to 2.8% in the last index. Indeed, the Fed has now started to cut rates to narrow the FF/PCE gap from the current relatively wide 180 basis points (bps).We expect core inflation to slowly ease to 2.0% in 2025 Far from the pipeline, producer prices are actually falling, sticky prices like housing and transportation remain high.Wage growth has slowed recently to 4% on an annualized basis.We believe the Fed will cut its overnight lending rate by another 75 basis points in 2024. dollar/gold/oil We expect the dollar to remain high in 2025. The US dollar index (DXY) is up roughly 4% in 2024, boosted by higher Treasury rates this fall and a pro-growth platform for President-elect Trump; The current level of the US dollar’s valuation is about 20% higher than the average over the past 20 years because the US economy is in better shape than trading partners such as Japan, Europe and even China.That relative strength of the US economy and the US investment demand, including innovative company stocks, could hold the dollar steady in 2025. Gold is near an all-time high, with the current gold price partly reflecting that the perceived safety of heavy assets such as Ukraine and the Middle East.The prospect of further Federal Reserve interest rate cuts is also helping gold, as low interest rates reduce the risk of a global economic downturn and thus a potential decline in gold trades our forecast range in 2025 is $2,800-$2,300, and our average forecast for the year is $2,600 versus an average of $2,450 in 2024. The most important factor in the oil price is the supply-demand equation that appears to favor supply over the next two years the price is $75 per barrel in 2025, down from an average of $78 in 2024 and recent highs of around $120 In 2022. Fourth prediction. yield curve The yield curve, as we expected, returned to its normal upward slope in 2024 after inverting for several quarters in 2022-2023. At the short end of the curve, the Fed has added to its toolkit on interest rates and made progress on reducing its balance sheet.As inflationary trends have moderated, the central bank has already started to cut short-term rates, and we expect further reductions in the first half of the curve in 2025 At the end, aggressive government spending during the 2024 presidential election campaign was restored.Attention to the US debt level. The current figure is 120%. That’s not an immediate issue, as the US dollar remains high, signaling to global investors that America remains the leading economy. But deficit spending could set long-term interest rates in 2025 3.75-4.75% for the 10-year Treasury, so we expect the yield curve to steepen a bit In 2025: Prediction five. Earnings and Valuation Corporate earnings grew at a solid high-single-digit pace in 2022-2023.We recently raised our forecast for S&P 500 earnings from continuing operations to $276 from $265.Our revised forecast models full-year EPS The growth is about 12% compared to 2025 The optimism reflects expected better performance for three sectors that were negative in 2Q24: Energy, Materials and Industrials. Materials and Industrials may turn positive faster, possibly as early as 4Q24 (Materials) and 1Q25 (Industrial) The strongest EPS growth was recorded in Q3.Another sector that is predicted to grow sharply next year is information technology. Utilities forecast to moderate but remain above long-term averages. Other sectors projected to grow above their long-term averages in 2025 include Financials, Healthcare, Consumer Discretionary, and Consumer Staples of our stock/bond barometer, have improved through 2024 (despite rising stocks). In 2023, our barometer signaled that stock prices were more than one standard deviation above normal due to slowing earnings growth, as well as high inflation and interest rates. Currently, however, interest rates have fallen and earnings have improved, so the barometer shows By more traditional valuation measures, the S&P 500’s current forward P/E ratio is roughly 21. In the normal range of 15-24.The two-year forward P/E based on our estimates and the current price level of the S&P 500 is in the range of 4%-7% of the trailing five-year P/E of the S&P 500. yield is 4.1% minus the real 10-year Treasury bond yield (remember that the real yield is nominal (yield minus inflation) is richer than average, but not on par. signal overestimation. The S&P 500 price to gold ounce ratio is now 2.3, in the historical range of 1 to 3. We look for equity valuation multiples to expand modestly in 2025 as rates continue to fall, supporting equity market returns. segments and sectors In terms of market segments, we look for growth to set the pace in 2024 as interest rates decline and EPS growth increases.We expect US equities to continue to outperform global equities based on risk profiles and growth projections; with diluted valuation Small-cap stocks also offer relatively low valuations compared to large-caps, but we recommend overweighting large-caps given the segment’s high growth prospects (particularly outside of IT) and financial strength. Our industry ratings model takes into account industry earnings momentum, price action, valuations and analyst sentiment, among other factors. Based on a model we run quarterly , our current overweight segments are Communication Services