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Recent bank woes and rising interest rates have many wondering what will happen next.
Experts say more market volatility may be in the forecast.

Recent bank woes and rising interest rates have prompted higher levels of economic uncertainty. When it comes to the markets, that means more volatility may be in the forecast.
Volatility happens when the value of an investment “fluctuates wildly in a short period of time,” according to the Financial Industry Regulatory Authority.

“In the months ahead, volatility may come and go,” Vanguard global chief economist Joe Davis said last week.
“And for all of us, I think it’s important to remember to focus on what we can control,” he said.
By staying invested in the markets, investors have a better chance of success when it comes to achieving their long-term goals, Davis said.

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However, the trick is stomaching the market drops to benefit from the gains that inevitably follow. Data from J.P. Morgan Asset Management shows that the market’s worst days tend to be closely followed by the best days.
There are a few things to keep in mind that can help you stick through market turbulence, advisors say.

“Staying the course is the play, because we can’t predict what’s going to happen this year, next year or in a decade from now,” Douglas Boneparth, president and founder of Bone Fide Wealth, a wealth management firm based in New York City, told CNBC.com in a February interview. Boneparth is also a member of CNBC’s Financial Advisor Council.
Here are four strategies that may help.

1. Match your risk to your goals

After dramatic market swings — from strong rallies in 2020 and 2021 to record declines in 2022 — many investors want to know, “When do things balance themselves out?” Boneparth said.
However, it would be best to instead focus on what is in your control: assessing the amount of risk you are willing to take and matching that to your investment time horizon, he said.
“These are the key pieces of information that will drive the investment decisions that we make,” Boneparth said.
If you are approaching retirement soon — from five years to as soon as next year — it may be time to reconsider your allocations, according to Stacy Francis, a certified financial planner and president and CEO of Francis Financial in New York.
“It’s a great opportunity to take a breath, have your portfolio rebound, and reevaluate after this time of real volatility to see, ‘Is this the right mixture of stocks and bonds for me for the long term?'” said Francis, who is also a member of the CNBC Financial Advisor Council.

2. Remember the most important part is staying invested

After you’ve identified the correct strategy for you, “The most important part of investing is to stay invested,” according to Boneparth.
That means having discipline and consistently putting money in the market, he said, while avoiding the impulse to sell based on short-term news.
“It’s important to remember that by staying invested, you’re playing the game of compounding your returns,” Boneparth said. “That’s how you grow your wealth.”
One thing to avoid: timing the market, which is “usually a fool’s errand,” he said.

3. Have cash set aside for emergencies

Investment exposure inevitably means taking on risk. Having cash separately set aside for emergencies can help make you better able to weather market losses — and know you’ll still be able to pay your bills.
Aim to have at least three to six months’ expenses set aside in an account you can easily access.
“It’s the first line of defense of recovering from a job loss and finding employment again,” Boneparth said.
Francis also advises clients to strive to have an emergency fund with three to six months’ expenses, she said.
Only once investors have their target emergency savings and have maxed out their retirement accounts should they consider investing their excess cash, Francis said. You should have at least five to 10 years before you will need the money, and your investments should include a well-diversified portfolio of stocks and bonds.

4. Stay humble

Even if you think you have a winning strategy, the market may still prove you wrong.
It’s a humbling experience, Boneparth said. But even some of the best portfolio managers on Wall Street can’t consistently beat the market, he said.
“As retail investors, what can we do? We can focus on the things that we can control,” Boneparth said.
That may include either a passive investing approach or a consistent investing approach, he said.
“One of these two things is usually going to pay off over the long term,” Boneparth said. More

A new Urban Institute study found that 73% of adults with medical debt owe hospitals at least some of it.
Of those who owed hospitals, 26% had a tab of $5,000 or more, compared with 6% among those who owed only non-hospital providers.
Even with health insurance, owing is not uncommon: 63% of adults with past-due medical debt incurred it when they were insured, the research found.

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Among the millions of Americans with past-due medical debt, there’s a decent chance they owe $1,000 or more, new research suggests.
While 39% of that cohort said they owe less than $1,000, the remainder (61%) owe more, including 21% who owe at least $5,000, according to the Urban Institute report, which is based on mid-2022 survey data.

“Medical debt, unlike a mortgage or car loan and things like that, we don’t really choose,” said Berneta Haynes, a staff attorney and medical debt expert for the National Consumer Law Center.
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“We don’t choose when we get sick … so medical debt comes as a bit of a surprise,” Haynes said.

The largest bills are mostly owed to hospitals

The Urban Institute study found that 73% of adults with medical debt owe hospitals at least some of it. Additionally, most of patients’ largest bills were owed to hospitals: About a quarter, 26%, had a tab of $5,000 or more, compared with 6% among those who owed only non-hospital providers (i.e., a  doctor or dentist).
“There are probably a number of explanations for the difference,” said Michael Karpman, author of the study.

“When people go to the hospital, they tend to face more higher-cost procedures, they may have greater health challenges, and there’s a lot of unpredictability about the charges and out-of-pocket costs that they’ll be facing, ” said Karpman, a principal research associate in the institute’s Health Policy Center.

Even among insured individuals, owing is not uncommon. Almost two-thirds, or 63%, of adults with past-due medical debt incurred it when they had insurance, the research found. Another 21% incurred it when the patients had no coverage and 16% had the debt occur during a time period in which they initially had coverage but then lost it or vice versa.

An estimated 100 million adults have medical debt

Overall, an estimated 41% of people — or about 100 million adults — face medical debt, ranging from under $500 to $10,000 or more, according to a report from the Kaiser Family Foundation. 
The reasons for such debt going unpaid vary from person to person. The two main causes, said Haynes, is having a chronic health condition or being uninsured — or, often, both.

Deductibles may be unaffordable for some patients

Additionally, many health-care plans have deductibles that are high enough to pose affordability challenges for some patients. Deductibles are the amount you pay out of pocket before your insurance plan begins covering your care (although you may still be required to pay a copay or coinsurance).

For example, if the patient has a deductible of $1,000 and is billed that amount all at once due to, say, a surgery or hospital stay that costs at least that much, it may be more than they have in savings, various research shows. For example, more than half of households would struggle to pay an unexpected $1,000 bill, according to a 2022 Bankrate survey.
“Having to pay a $1,000 deductible is out of the range of reality for a lot of folks and can lead to risky decisions, such as putting it on a credit card or taking out a medical credit card,” Haynes said.
The average deductible in 2022 among employer-sponsored health plans was $1,763, according to the Kaiser Family Foundation.
Other contributors to unpaid medical debt are short-term health plans and health-sharing ministries, according to the American Hospital Association. Those plans generally come with lower premiums but are not required to cover certain services and preexisting conditions, or limit out-of-pocket costs.

No Surprises Act is reducing unexpected bills

One of the biggest causes of unexpected large medical bills historically was out-of-network providers being involved in your care — often at a hospital — without you realizing it. Then the bill would come and you’d discover that your insurance didn’t fully cover those charges, if at all.
However, there are signs that the No Surprises Act has reduced many instances of unexpected, outsized bills. That legislation, which took effect in 2022, generally stops you from being billed at the out-of-network rate (although consumers should still be on the lookout for such charges due to billing mistakes).

Check whether you qualify for free or reduced care

If you are hit with a large medical bill from a hospital, be aware that many have financial assistance programs. While not all for-profit hospitals offer one, nonprofit facilities are required to have them, Haynes said.
Check the back of your bill to see if there’s information on a financial assistance program, she said. Or you can usually find it in the billing section of a hospital’s website.
Often, hospitals use 250% of the federal poverty level as the cutoff when determining a patient’s eligibility for free care or a reduced cost, the Urban Institute research notes.
The federal poverty level depends on the number of people in a household and is adjusted annually. In 2023, for a family of four, that amount is $30,000. So 250% of that is $75,000.

Some medical debt is dropping off credit reports

Separately, be aware that the three big credit-reporting companies — Equifax, Experian and TransUnion — made some changes last year to how they are handling past-due health-care bills.
As of last July, once you’ve paid off any medical debt that shows up on your credit report, it will be removed (previously, it could remain on your record for seven years). Additionally, consumers also now get a year, up from six months, before unpaid medical debt appears on credit reports once it goes to a collection agency.
The credit firms also said that in the first half of this year they will stop including any medical debt under $500 on credit reports. They are still on track to do that, according to a spokesman for the Consumer Data Industry Association.

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A credit crunch is a significant tightening of lending standards among banks. Loans are harder to get and become more costly.
The banking crisis triggered by the failures of Silicon Valley Bank and Signature Bank will likely lead small and midsize institutions to prioritize having a healthy balance sheet.
The prospect of recession led banks to cool lending even prior to recent woes.
Consumers should take steps to boost their credit score now.

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The recent banking crisis has fueled concern of a “credit crunch” and the resulting negative impact on households, businesses and the U.S. economy.
But what is a credit crunch and how might you prepare?

Loans would be tougher to get

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During a credit crunch, banks significantly tighten their lending standards.
Loans become tougher to get. Banks that offer them might do so with more onerous terms like high interest rates or other restrictions — making such financing more costly.
Overall, it becomes harder, for example, for households to buy cars and homes or fix their roofs, and for businesses to hire, expand and open new stores or factories. A cooling in bank lending flows down to the economy’s bottom line, making a recession more likely.
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“Credit is the mother’s milk of economic activity,” said Mark Zandi, chief economist at Moody’s Analytics.

“I’d be surprised if we don’t see a pretty significant tightening of credit in the near term, among small and midsize banks,” he added.
Of course, there must be a happy medium in a well-functioning economy, Zandi said.

Lending standards that are too loose can be damaging, too. During the financial crisis, for example, subprime mortgages issued en masse by banks triggered a housing crisis that ultimately cascaded into a deep recession.

Banks may prioritize a healthier balance sheet

A credit crunch seems likely given banking woes that have unfurled over the past two weeks.
Silicon Valley Bank and Signature Bank failed when depositors rushed to withdraw their money and the banks were unable to meet the cash demand.
Banks don’t keep all customers’ cash on hand. They make money off those deposits by investing some of the funds or lending it (and receiving interest payments).
Among SVB’s problems was an investment in long-term U.S. Treasury bonds. SVB locked up billions of dollars in these bonds, which lost money as the Federal Reserve started raising interest rates aggressively last year to combat high inflation.

Read more of CNBC’s coverage of the bank crisis

What this all means: To avoid a similar fate, many banks will likely prioritize shoring up their balance sheets to weather a potential bank run, experts said.
Banks might crimp lending in order to have more cash on hand to meet customer redemptions, for example. Also, if bank customers withdraw funds, a bank might then have a smaller stockpile from which to make loans.
“You’re going to see a credit crunch happening in the U.S., and that’s starting to get priced into the market in a dramatic way,” Mike Novogratz, CEO of Galaxy Digital, an investment management firm, said in an interview with CNBC’s “Squawk Box” last week.
A severe credit crunch isn’t a foregone conclusion, though.
The extent of the banking contagion remains unclear, Zandi said. The nation’s largest banks are also unlikely to significantly change their lending behavior, he added.

Banks had already been clamping down

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Banks had been reducing the flow of credit to businesses and households even prior to the recent mayhem.
In the fourth quarter, banks reported tightening their standards for credit cards, home equity lines of credit, auto loans and other consumer loans, according to the Federal Reserve’s latest Senior Loan Officer Opinion Survey. They reported increasing the minimum credit scores required to secure such loans, for example.
A significant share also tightened standards for commercial and industrial lending to businesses, the survey said.
“I think many banks would naturally be looking to potentially [tighten standards] given worries about a recession, even without these banking issues that have come to the fore recently,” said Christine Benz, director of personal finance at Morningstar.

How to prepare for a credit crunch

There are some steps consumers can take now to prepare for a possible credit crunch.
If you have a looming credit need, make sure your creditworthiness is “as attractive as can possibly be the case,” Benz said.
That might include ensuring you pay credit card bills and other debt payments in full and on time each month; reducing your credit utilization rate; or requesting a credit report and disputing any errors.
Businesses with loans that are nearing the end of their term should try to figure out how to refinance the loan or roll it over “sooner rather than later,” Zandi said.
Consumers should also shore up their “personal balance sheet” in case tighter credit were to trigger an economic downturn, Benz said. Ensure you have the cash on hand in an emergency reserve to weather potential joblessness, for example, she said.

Those reserves might be stored in an emergency cash fund, for example. A secondary line of reserves might come from setting up a home equity line of credit now and having it on standby in the event of job loss, Benz said.
Having three to six months of reserves to cover household essentials is a good starting point, she said. Older working adults and those in more specialized career paths may need more — closer to a years’ worth — since it might take longer to replace a lost job, Benz added.
Consumers should be aware that banks often retain the right to reduce the credit limit on existing HELOCs, said Allan Roth, a certified financial planner and accountant based in Colorado Springs, Colo.
Bank customers should also try to keep their savings at any one bank within the Federal Deposit Insurance Corporation limit of $250,000 per depositer, per ownership category, Roth said. The federal government backstopped uninsured deposits at SVB and Signature Bank, but that won’t necessarily be the case for future bank failures.

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Recent bank failures have caused a crisis of confidence in the financial sector, but Americans are still grappling with stubborn inflation.
The Federal Reserve is now expected to hike rates by one-quarter of a percentage point at this week’s policy meeting.
Here’s where consumers stand one year into rate increases.

Rate hikes, one year later

For its part, the Fed has already hiked its benchmark fund rate eight times over the last year to its current level of between 4.5% and 4.75%.
The federal funds rate, which is set by the central bank, is the interest rate at which banks borrow and lend to one another overnight. But Fed rates also influence consumers’ borrowing costs, either directly or indirectly, including their credit card, mortgage and auto loan rates.  

Average credit card rates now top 20%

Since most credit cards have a variable interest rate, there’s a direct connection to the Fed’s benchmark. As the federal funds rate rises, the prime rate does, too, and credit card rates follow suit.
After a prolonged period of rate hikes, the average credit card rate is now over 20%, on average — an all-time high — up from 16.34% one year ago.
At the same time, households are increasingly leaning on credit to afford basic necessities, which makes it even harder for the growing number of borrowers who carry a balance from month to month.

Mortgage rates now average 6.66%

Although 15-year and 30-year mortgage rates are fixed, and tied to Treasury yields and the economy, anyone shopping for a new home has lost considerable purchasing power, partly because of inflation and the Fed’s policy moves.
The average rate for a 30-year, fixed-rate mortgage currently sits at 6.66%, up from 4.40% when the Fed started raising rates last March.

Adjustable-rate mortgages, or ARMs, and home equity lines of credit, or HELOCs, are pegged to the prime rate. As the federal funds rate rises, the prime rate does, as well, and these rates follow suit. Most ARMs adjust once a year, but a HELOC adjusts right away. Already, the average rate for a HELOC is up to 7.76% from 3.96% a year ago.

Auto loan rates rose to around 6.48%

Even though auto loans are fixed, payments are getting bigger because the price for all cars is rising along with the interest rates on new loans.
The average interest rate on a five-year new car loan is now 6.48%, up from 4% one year ago.

Federal student loans are already at 4.99%

Federal student loan rates are also fixed, so most borrowers aren’t immediately affected by rate hikes. The interest rate on federal student loans taken out for the 2022-23 academic year already rose to 4.99%, up from 3.73% last year, but any loans disbursed after July 1 will likely be even higher.
For now, anyone with existing federal education debt will benefit from rates at 0% until the payment pause ends, which the Education Department expects to happen sometime this year.
Private student loans tend to have a variable rate tied to the Libor, prime or Treasury bill rates — and that means that, as the Fed raises rates, those borrowers will also pay more in interest. How much more, however, will vary with the benchmark.

Deposit rates at banks can reach 5.02%

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While the Fed has no direct influence on deposit rates, the rates tend to be correlated to changes in the target federal funds rate. The savings account rates at some of the largest retail banks, which were near rock-bottom during most of the Covid pandemic, are currently up to 0.35%, on average.
Thanks, in part, to lower overhead expenses, top-yielding online savings account rates are as high as 5.02%, much higher than last year’s 0.75%, according to Bankrate.
Although most savers don’t need to worry about the security of their cash at the bank, since no depositor has lost FDIC-insured funds due to a bank failure, any money earning less than the rate of inflation still loses purchasing power over time.
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Planning for who makes decisions and who gets what when you die is “a gift” for your family, says a financial advisor.
While many people think estate planning is only for the wealthy, experts say that’s not the case.
Here are some key things to think about when you give thought to your own end-of-life plans.

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Contemplating your own death may not be on the list of things you’re eager to do.
Yet for your family or other loved ones who would find themselves trying to sort out your affairs while also dealing with the emotional fallout from losing you, your having a so-called estate plan is important, experts say. And this is the case whether you are wealthy or not.

“When you get your things in order, it’s a gift you’re giving your family,” said certified financial planner Lisa Kirchenbauer, founder and president of Omega Wealth Management in Arlington, Virginia. 
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In simple terms, your estate plan spells out who you want making decisions and who will inherit what you own. “Estate” simply refers to possessions and other assets.
Experts say most estate plans don’t need to be complicated. But to make sure your wishes are carried out, they do need to be done correctly — which may make it worth consulting with a local attorney who specializes in estate planning.
Here are five key things to know if you start thinking about how you’d craft an estate plan.

1. A will may not cover all your bases

“If your ex-spouse is listed on the beneficiary designation, your ex-spouse will get the money regardless of what your will says,” said CFP Stephen Maggard, an advisor with Abacus Planning Group in Columbia, South Carolina.
Be aware that many 401(k) plans require your current spouse to be the beneficiary unless they legally agree otherwise. 
Regular bank accounts, too, can have beneficiaries listed on a payable-on-death form, which your bank can supply. Same goes for brokerage accounts.

If your ex-spouse is listed on the beneficiary designation, your ex-spouse will get the money regardless of what your will says.

Stephen Maggard
Advisor with Abacus Planning Group

If no beneficiary is listed on these various accounts or the named person has already died (and there is no contingent beneficiary listed), the assets automatically go into probate.
That’s the process by which all of your debt is paid off and the remaining assets that are subject to probate — which includes those that pass through the will — are distributed to heirs. This can last several months to a year or more, depending on state laws and the complexity of your estate.

2. You’ll need to carefully pick your will’s executor, other key roles

When you create a will, you name an executor to carry out your wishes and handle your estate. It can be a big job.
Things such as liquidating or closing accounts, ensuring your assets go to the proper beneficiaries, paying any debts not discharged (i.e., taxes owed) and even selling your home could be among the duties overseen by the executor.
This means that you need to make sure whoever you name is up for the job — and that they are amenable to taking it on.

Additionally, an estate plan should include other end-of-life documents, including a living will. This outlines the health care you want and don’t want if you become unable to communicate those desires yourself.
You also can assign powers of attorney to trusted individuals so they can make decisions on your behalf if you become incapacitated at some point. Often, the person who is given this responsibility for decisions related to your health care is different from whom you would name to handle your financial affairs.
Just be sure to name alternatives.
“It’s super important to have backup people in all roles in the estate plan … in case someone cannot serve,” said CFP Jennifer Bush, a financial planner with MainStreet Financial Planning in San Jose, California.

3. Some assets get a ‘step-up in basis’

If you have assets such as stocks, bonds or real estate (i.e., a house) and are considering gifting them to children or other heirs while you’re alive, it might make more sense to wait.
When these assets are sold, any increase from the so-called cost basis (the value when the asset was acquired) and the sale price is subject to capital gains taxes.

However, upon your death, your heirs who inherit those assets get a “step-up in basis.” In other words, the market value of the asset at your death becomes the cost basis for the heir — which generally means any appreciation prior to that is untaxed. And when the heir sells the asset, any gains (or losses) are based on the new cost basis.
On the other hand, if you were to gift such appreciated assets to heirs before your death, they’d assume your original cost basis — which could translate into an outsized tax bill when the assets are sold.
“We find ourselves often recommending that clients give adult children cash instead,” Maggard said.

4. You may want to consider setting up a trust

If you want your kids to receive money but don’t want to give a young adult — or one prone to poor money management or other concerning behaviors — unfettered access to a sudden windfall, you can consider creating a trust to be the beneficiary of a particular asset.

A trust holds assets on behalf of your beneficiary or beneficiaries, and is a legal entity dictated by the documents creating it.
If you go that route, the assets are left to the trust instead of directly to your heirs. They can only receive money according to how (or when) you’ve stipulated in the trust documents.

5. You’ll need to revisit your estate plan

Anytime you have a major life change — such as birth of a child or divorce — it’s important to review your estate plan.
You’ll want to confirm that your named executor (or trustee, if you set up a trust) is still an appropriate choice. Additionally, check all listed beneficiaries on your financial accounts to make sure no updates are needed.
Additionally, If you move to a new state, be sure to check whether you need to update any part of your plan so it follows that state’s laws.

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A line of shoppers wait to enter BJ’s Wholesale Club market at the Palisades Center shopping mall during the coronavirus outbreak in West Nyack, New York, March 14, 2020.
Mike Segar | Reuters

Concerns about a bank crisis have added to the woes of investors, who were already burdened with stubbornly high inflation and fears of an economic slowdown.
Given the ongoing uncertainty, turning to stock market experts to pick attractive stocks for the long term could be a good decision.

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Here are five compelling stocks chosen by Wall Street’s top analysts, according to TipRanks, a platform that ranks analysts based on their track records.

Allegro MicroSystems

Allegro Microsystems (ALGM) develops sensing and power semiconductor solutions for motion control and energy-efficient systems. On Tuesday, the company held its inaugural analyst day to provide insights into its strategy and technology.  
Needham analyst Quinn Bolton noted that at the event, management focused on the rapidly growing opportunities across two “secular megatrends” – electrification (mainly e-mobility) and industrial automation. Allegro expects to flourish in these two key markets and to deliver low-double-digit percentage revenue growth from fiscal 2023 to 2028.
Bolton thinks that his margin estimates for fiscal 2024 and 2025 seem conservative, given Allegro’s new long-term model that targets a gross margin of more than 58% and an operating margin of over 32%. He highlighted that the company’s e-mobility serviceable available market is expected to grow at a 25% compound annual growth rate to $3.9 billion by fiscal 2028.
“ALGM’s portfolio is aligned with the industrial secular growth trends in clean energy and automation,” said Bolton. Allegro expects its clean energy and automation SAM to grow at an 18% CAGR to $3.5 billion by fiscal 2028. (See Allegro Insider Trading Activity on TipRanks)

Impressed by Allegro’s growth prospects, Bolton raised his price target to $50 from $42 and reaffirmed a buy rating. Remarkably, Bolton ranks 2nd out of more than 8,000 analysts followed on TipRanks. His ratings have been profitable 67% of the time, generating a 36.3% average return.

CrowdStrike

Recent results of several cybersecurity companies, including CrowdStrike (CRWD), have reflected resilient demand. Enterprises are moderating their IT spending due to macro pressures but continue to allocate decent budgets to cybersecurity due to growing cyber attacks.
CrowdStrike’s adjusted earnings per share for the fourth quarter of fiscal 2023 (ended Jan. 31) increased 57%, fueled by revenue growth of 48%. At the end of the fiscal fourth quarter, the company’s annual recurring revenue stood at $2.56 billion, reflecting 48% year-over-year growth.
TD Cowen analyst Shaul Eyal attributed CrowdStrike’s upbeat performance to solid execution and robust demand for the company’s Falcon platform. Eyal added that the company is collaborating with Dell to deliver its Falcon platform to Dell’s customers through various avenues.
“We believe CRWD is positioned to achieve its goals of generating ending ARR of $5B by the end of FY26 and of reaching its target operating model in FY25,” said Eyal. He reiterated a buy rating on CrowdStrike with a price target of $180.
Eyal is ranked No. 14 among more than 8,000 analysts tracked on TipRanks. His ratings have been profitable 66% of the time, with each rating delivering a return of 23.7%, on average. (See CrowdStrike Stock Chart on TipRanks)

Oracle

Next on our list is enterprise software giant Oracle (ORCL), which delivered mixed results for the third quarter of fiscal 2023 (ended February 28, 2023). The company’s adjusted EPS grew 8% and came ahead of Wall Street’s expectations, while revenue growth of 18% fell short of estimates.
Nonetheless, Oracle is optimistic about the solid potential of its cloud business, which delivered 45% revenue growth in the fiscal third quarter. Further, management stated that Cerner, a healthcare technology company acquired in June 2022, has increased its healthcare contract base by about $5 billion. 
Monness, Crespi, Hardt, & Co. analyst Brian White said Oracle delivered “respectable 3Q:FY23 results in a treacherous environment.” He contends that the company’s cloud business continues to navigate ongoing challenges better than the leading public cloud vendors, who reported notable deceleration in revenue growth.
White cautioned investors that the “darkest days” of the economic downturn are ahead of us. That said, he reiterated a buy rating on Oracle with a price target of $113, saying, “Oracle represents a high-quality, value play with the opportunity to participate in a compelling cloud transformation and gain exposure to digital modernization initiatives in the healthcare industry.”
White holds the 50th position among more than 8,000 analysts on TipRanks. Additionally, 64% of his ratings have been profitable, with an average return of 18%. (See Oracle Blogger Opinions & Sentiment on TipRanks)

BJ’s Wholesale Club   

Warehouse club chain BJ’s Wholesale Club (BJ) continues to perform well even as the macro backdrop is getting tougher and pandemic-induced tailwinds have faded. The company recently held its fourth-quarter earnings call and first-ever investor day.
Baird analyst Peter Benedict, who ranks 129th on TipRanks, noted that the company’s membership base is “stronger than ever.” Membership fee income grew 10% in fiscal 2022 (ended January 28, 2023), driven by a 7% increase in members to 6.8 million, a rise in higher-tier penetration and solid renewal rates. It’s worth noting that BJ’s hit its all-time-high tenured renewal rate of 90% for the year.   
“With a structurally advantaged business model, growing/increasingly loyal membership base and emerging unit growth runway, BJ has the fundamental building blocks of a compelling long-duration consumer staple growth story,” explained Benedict. (See BJ’s Wholesale Financial Statements on TipRanks)   
Benedict increased the price target for BJ stock to $90 from $85 and reiterated a buy rating based on multiple strengths, including a solid balance sheet, free cash flow generation and efforts to enhance assortment. His ratings have been profitable 64% of the time, with an average return of 13.4%.

Stryker

Medical devices giant Stryker (SYK) has built a solid business over the years through strategic acquisitions and continued innovation in its medical and surgical, neurotechnology, and orthopaedics and spine divisions.
BTIG analyst Ryan Zimmerman recently hosted a fireside chat with Spencer Stiles, group president of Stryker Orthopaedics and Spine business and Jason Beach, vice president of investor relations. He highlighted that orthopedics procedure volumes are benefiting from a backlog that is projected to last about four to six quarters, as patients who postponed care previously are returning.
Zimmerman thinks that “SYK retains its growth leadership position in orthopedics even as competitive robotic systems iterate.” He expects Stryker’s new Mako Knee 2.0 software, the Insignia Hip launch and upcoming robotic launches in shoulder and spine in fiscal 2024 could “support a long and robust growth cycle.”
Zimmerman reiterated a buy rating on Stryker with a price target of $281. The analyst ranks 657 out of more than 8,300 analysts on TipRanks, with a success rate of 45%. Each of his ratings has delivered an average return of 8.9%. (See Stryker Hedge Fund Trading Activity on TipRanks)

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Company: Illumina (ILMN)

Business: Illumina develops, manufactures and markets life science tools and integrated systems for large-scale analysis of genetic variation and function. It operates through Core Illumina and Grail. Grail, which was acquired in August 2021, is a health-care company focused on early detection of multiple cancers. Grail’s Galleri blood test detects various types of cancers before they are symptomatic.
Stock Market Value: $35.4B ($224.55 per share)

Activist: Carl Icahn

Percentage Ownership:  1.39%
Average Cost: n/a
Activist Commentary: Carl Icahn is the grandfather of activist investing and a leading pioneer of modern-day shareholder activism. When most people think of Icahn, health-care companies are generally not their first thought. However, Icahn has had extensive activist experience at health-care companies. In nine prior concluded activist engagements in the health-care industry going back to ImClone Systems in 2006, Icahn has averaged a 66.27% return versus -0.11% for the S&P 500. In situations in which he received board representation, that average return goes up to 93.90% versus 17.58% for the S&P 500.

What’s Happening?

On March 13, Carl Icahn sent a letter to the company’s shareholders announcing his intention to nominate Vincent J. Intrieri, Jesse A. Lynn and Andrew J. Teno for election to the company’s board at the 2023 annual meeting. Additionally, Icahn criticized the company’s acquisition of Grail, which he says has led to $50 billion of value destruction.

Behind the Scenes

Illumina created Grail as a business unit in late 2015 and spun it out in January 2016. Less than five years later, in September 2020, Illumina agreed to acquire Grail back for $8 billion. They closed the acquisition a year later despite not getting approvals from the Federal Trade Commission or the European Union and with indications that there would be resistance from one if not both regulators. This angered the European Commission, which ultimately blocked the deal and levied the maximum fine. Illumina has appealed the decision and set aside a $453 million liability reserve for the potential European fine. Since the acquisition closed in August 2021, Illumina’s stock price fell by 57% from $522.89 to $225.88, eliminating $47 billion of shareholder value. To put that into perspective, the entire market cap of Silicon Valley Bank prior to its implosion was less than $16 billion.

Icahn thinks Illumina is a great company but a quintessential example of what is wrong in corporate America. He takes issue with Illumina spinning off Grail cheaply just to overpay for it less than five years later, but that is only the beginning. Reasonable boards overpay for companies all the time, but we know of no other board that has ever consummated an $8 billion acquisition knowing that the regulators were likely going to have a problem with it. Icahn said this is at least gross negligence and later said that Illumina directors that approved the acquisition could be “personally liable.” He would like to see Grail divested from the company, potentially through a rights offering, and management focused on the core business of Illumina.

So, Icahn does what Icahn does: He took a position in the company and nominated to the nine-person board three directors who he thinks can come in, right the ship and restore the shareholder value that has been lost. One might expect that a company that has destroyed so much shareholder value in so little time would welcome experienced and fresh eyes to turn things around. But Illumina rejected Icahn’s nominees because “the board has determined Icahn’s nominees lack relevant skills and experience.” Icahn’s nominees have significant restructuring, corporate governance, M&A, capital markets and legal experience — five things the company desperately needs. The current board has nine directors, seven of whom have a science and engineering background and two of whom have a financial background. Not one director is an investor and even more incredible is not one of the nine directors has any legal background or experience whatsoever. This board made an unprecedented decision to close an $8 billion acquisition in the face of resistance from both U.S. and European regulators without having anyone with any legal experience on the board and despite having to know that at the very least this decision was going to embark them on a multi-year legal battle. Moreover, even after this battle started, they did not add anyone with legal experience to the board. Now, when Icahn suggests they add to the board Jesse Lynn, general counsel to Icahn Enterprises with 27 years of legal experience, the board responds that he lacks the relevant skills and experience. 
A board that makes mistakes that cost shareholders tremendous value is obviously not a good thing, but it is reparable. What is much worse is a board that cannot even see the problems and the mistakes, and it also thinks the situation is under control as shareholder value continues to erode. That is what we have at Illumina. This can be fixed by adding Icahn’s three nominees to the board. Not only do they have the legal, capital markets and corporate governance experience to help the board spot the issues, they have the restructuring and M&A experience to help management execute a plan to restore shareholder value. But most of all, they have tremendous skills and experience in the most important thing this board needs that they fail to realize – holding management accountable.
Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments.

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Gender equity investing is investing for financial return, while promoting gender diversity.
Assets in U.S. gender equity funds have doubled over the trailing three years, according to Morningstar.
Fund providers point to research that shows gender diversity can help boost returns and a company’s profitability.

Flashpop | Stone | Getty Images

As women in America struggle to get equal pay and rise up the ladder, companies that empower and promote female workers are being rewarded by impact investors.
Known as gender lens or gender equity investing, the idea is to invest for financial return, while promoting gender diversity. The theme is becoming more popular — although it still represents a small slice of the investment pie, according to Morningstar.

Assets in U.S. gender equity funds have doubled over the trailing three years to $1.3 billion, as of the end of February, Morningstar found. Yet those funds represent less than 0.01% of total equity fund assets in the United States, according to the firm.

Funds focusing on gender equality

Ticker
Name
Fund size ($)
Expense Ratio
YTD total return
3-year average annual total return

FWOZX
Fidelity Advisor Women’s Leadership Z
131,202,145
0.69%
3.24%
19.83%

SHE
SPDR MSCI USA Gender Diversity ETF
195,412,450
0.20%
2.09%
14.68%

FDWM
Fidelity Women’s Leadership ETF
4,924,881
0.59%
3.37%
N/A

PXWEX
Impax Ellevate Global Women’s Ldr Inv
805,158,928
0.76%
2.35%
14.44%

GWILX
Glenmede Women in Leadership US Eq
21,070,997
0.85%
1.40%
19.70%

WCEO
Hypatia Women CEO ETF
1,563,267
0.85%
N/A
N/A

EQUL
IQ Engender Equality ETF
5,388,005
0.45%
0.37%
N/A

WOMN
Impact Shares YWCA Women’s Empwrmt ETF
33,829,448
0.75%
3.49%
24.42%

FWOAX
Fidelity Advisor Women’s Leadership A
131,202,145
1.10%
3.10%
19.34%

Source: Morningstar

But what exactly qualifies as gender lens investing, does it correlate to returns and can it make an impact?

‘Isolate that female factor, there will be alpha.’

Patricia Lizarraga first noticed what she calls “the female factor” about 15 years ago when she was working in investment banking. Her women CEO and CFO clients were getting tremendous results, she said.
These days she’s the managing partner of Hypatia Capital. In January, the asset management firm launched the Hypatia Women CEO exchange-traded fund (WCEO). The fund invests in all publicly-traded U.S. companies that have women CEOs, from small cap to mega cap. It’s down about 1% from its Jan. 9 debut, as of Thursday’s close. It has an expense ratio of 0.85%.
The fund is in the early stages and has about $1.5 million in net assets. It is sector weighted, which means the fewer women CEOs in any given sector, the more shares the fund has in the companies that do have female leaders. One of its top holdings is Occidental Petroleum, helmed by CEO Vicki Hollub, whom Lizarraga called “a visionary.”

“Women today outperform as CEOs because it is so much harder for a woman to become a CEO,” Lizarraga said. “The woman who makes it to the CEO spot has to jump through more hoops. If you can isolate that ‘female factor,’ there will be alpha.”

Hypatia Women CEO ETF’s top holdings

Ticker
Name
% of net assets

OIS
Oil States International
2.11

INSW
International Seaways
2.08

OXY
Occidental Petroleum
2.08

JXN
Jackson Financial
1.22

PGR
Progressive Corp.
1.21

LBC
Luther Burbank Corp
1.21

GBX
Greenbrier Cos
1.21

BXMT
Blackstone Mortgage Trust
1.20

BEN
Franklin Resources
1.20

EGBN
Eagle Bancorp
1.18

C
Citigroup
1.18

Source: Hypathia Capital, as of 3/1/2023

In fact, research shows that gender diversity boosts a company’s financial performance. S&P 500 companies that have more than 25% of female executives have a higher subsequent one-year return on equity than the rest of those in the index, according to research by Bank of America. The same goes for those who have more than one-third of women on the board, the firm found.
In addition, companies in the top quartile of gender diversity on executive teams were 25% more likely to experience above-average profitability than peer companies in the fourth quartile, a 2019 analysis by McKinsey & Company found.

Tracking the gender theme

Yet gender lens investing can be more than just investing in companies with female chief executives.
Funds may screen for a percentage of women on the board of directors and women in executive management roles, said Kenneth Lamont, senior researcher at Morningstar. They may also look at hiring, retention and promotion figures for women within a given company and gender pay gap data, if available.
“Every provider is going to give you a slightly different approach,” he said. “There is no absolute correct approach to tracking the gender theme.”
Some providers use research from data provider Equileap, which focuses on gender equality, to help determine holdings. The Amsterdam-based firm researches and ranks 4,000 public companies around the globe using 19 criteria, including the gender balance of the workforce, as well as pay gaps, career training, recruitment and female-friendly policies.

Women in leadership matters, but we need a more robust scorecard to assess gender equity.

Julia Fish
vice president at Glenmede

One of those who use Equileap data is Glenmede Investment Management, whose Women in Leadership U.S. Equity Portfolio (GWILX) invests in large-cap companies with women in significant roles and tilts toward those that exhibit stronger gender equality policies and practices. It has about $21.4 million in assets under management, according to Morningstar, and it has an expense ratio of 0.85%.
“Women in leadership matters, but we need a more robust scorecard to assess gender equity,” said Julia Fish, vice president of Glenmede Trust’s sustainable and impact investing team.

Glenmede Women in Leadership’s top holdings

Ticker
Name
% of net assets

MPC
Marathon Petroleum
2.82

DGX
Quest Diagnostics
2.81

IPG
Interpublic Group of Companies
2.78

SNPS
Synopsys
2.62

BIIB
Biogen
2.53

MRK
Merck & Co.
2.49

ULTA
Ulta Beauty
2.45

GD
General Dynamics
2.38

BKNG
Booking Holdings
2.37

DBX
Dropbox
2.35

Source: Glenmede, as of 12/31/2022

Glenmede Investment Management analyzed Equileap data and found on a sector-neutral basis, companies in the top quintile of gender balance in leadership and workforce experienced an average greater return and less risk than companies in the bottom quintile.
Yet those extra metrics on gender equity matter. Those in the top quintile of other proxies for gender equity — including pay equity, training and career development, access to benefits and diverse supply chains — also experienced greater returns and lower risk than the bottom quintile, the firm found.

Making an impact

The people who run these funds believe the investments can make an impact.
“What investors should also look for is the existence of shareholder engagement within these public market strategies — so the ability of a public market investor to use their shares to ask the company to go farther across environmental, social and governance features, but especially on gender-related issues,” Fish said.
It’s something activist investors have been doing, to some success. In 2018, Citigroup became the first big U.S. bank to agree to publish statistically adjusted equal pay for equal work numbers after Arjuna Capital’s Natasha Lamb pushed for it. The result was an increase in compensation for women and minority workers to bridge the gap.
For New York Life Investments, putting money toward fixing the gender gap is part of its mission. The firm’s IQ Engender Equality ETF (EQUL) donates a percentage of its management fee to Girls Who Code, a nonprofit that aims to boost the number of women in computer science. The fund is just over a year old, so while it grows assets, it is also augmenting its donations to the organization with additional contributions, said Wendy Wong, head of sustainable investment partnerships at New York Life Investments. EQUL has an expense ratio of 0.45%.
“They are trying to close the gender gap in technology. The pipeline isn’t growing as much as it should,” Wong said. “By not having a pipeline of women going into technology, that has really broad implications across everything.”

Don’t forget fundamentals

Those interested in investing in companies that promote and empower women should be cognizant of what holdings are in the fund and how companies are screened. Also, be sure to understand what fees are charged.
“A good story, or even a good moral story in some cases, shouldn’t blind you to the core fundamentals of investing,” Morningstar’s Lamont said.
Be aware of any biases that may exist with the funds. For instance, when tech stocks have done well, gender funds have tended to lag, he said. That’s because the global funds, generally, are underweight tech since those companies don’t tend to do well with diversity, Lamont said.
“Depending on how the fund that you’re looking at is built, it may have really quite explicit biases in it or risk factors that you should really understand before you invest,” he said.
Lastly, understand that more may be at play than gender diversity when it comes to returns, he said.
“I wouldn’t take all of the claims that are made about the performance benefits of having an extra female director on the board as gospel,” Lamont said. “If you believe in that, that’s great. But be prepared for that not quite materializing in the way you might expect.”
—CNBC’s Michael Bloom contributed reporting

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