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After almost 100 days in office, Sir Keir Starmer on Sunday finally decided to get a grip on his stumbling administration. “Keir will always wield the knife when it needs to be done,” said one Labour MP. “Now he has.”

The departure of Sue Gray from her key role as Starmer’s chief of staff was the catalyst for Sunday’s complete overhaul of the Number 10 operation. Many were left wondering why it had taken the prime minister so long.

Starmer, who hired Gray in 2023 to help him prepare for government, had been loyal to his chief of staff in office, in spite of fierce internal criticism of her management style.

But those close to the prime minister say that a morose and fractious Labour conference in Liverpool last month convinced him he had to draw a line under the mis-steps that had dogged his first months in office.

“Keir came back from the conference pretty chastened,” said one Labour insider. “He realised he needed to get a grip on things.”

In Liverpool party members expressed their concern at how Starmer had cut winter fuel payments for 10mn pensioners, then appeared unable to contain a row over his receipt of £32,000 in “freebie” suits and glasses.

Gray had become a lightning rod for discontent, with hostile internal briefings about her £170,000 salary and alleged “control freakery”. Labour special advisers, or Spads, claimed she was partly responsible for holding down their salaries.

Gray’s allies said all of this was grotesquely unfair on a hard-working and loyal member of the Starmer team, a view shared by many cabinet members.

But one senior minister told the Financial Times: “It was only a question of when, not if. Not everything was her fault, but the transition to government, the situation with the Spads and the unending freebies clusterfuck were all on her and made her position untenable.”

A person close to the discussions over the Downing Street shake-up said that after returning from Liverpool — via the UN General Assembly in New York — Starmer began lamenting the fact that Gray had “become the story”. 

Gray acknowledged she had become a “distraction”. She will now take up a role as an adviser to Starmer on relations with the UK’s devolved nations and regions, but her grip on the levers of power in Number 10 is over.

The former civil servant was also blamed for being a bottleneck in appointing people to key jobs, a problem that was rectified by the prime minister on Sunday as he announced a dramatic overhaul of his team. 

Morgan McSweeney, who was on the long march in opposition with Starmer, replaces Gray as chief of staff. It was McSweeney who helped to slay the threat of the Corbynite left and then masterminded Labour’s landslide election victory in 2024.

But some question whether he is cut out to be a chief of staff, especially given his lack of Whitehall experience. “Morgan is very popular with Labour staffers — this is like a players’ revolt in a football dressing room,” said one Labour veteran. “But he’s not the sort of person who puts things down on paper.”

There was a long-standing narrative at Westminster that McSweeney was part of a “boys club” around Starmer that was treated with suspicion by Gray. 

Starmer appointed two women to work as deputy chiefs of staff alongside McSweeney — Vidhya Alakeson and Jill Cuthbertson — a move seen by some Labour MPs as a riposte to any suggestion that the boys club had won.

Gray did not have any deputy chiefs of staff, an omission seen in Labour circles as contributing to a lack of grip at the centre and a sign of her unwillingness to share responsibility with others. “That was her choice,” said one ally of Starmer.

While Alakeson and Cuthbertson are highly regarded in Number 10 — the former is Starmer’s political director and the latter is a long-term Starmer lieutenant — Gray’s departure leaves the centre decidedly short of Whitehall experience.

In despatching Gray to the UK’s regions and nations, he has brought into his inner circle people who were already part of his trusted gang. “It’s a circling of the wagons,” said one person close to Starmer.

The exception is James Lyons, a former Sunday Times political journalist, NHS communications chief and TikTok media executive hired by Starmer to beef up his media team, which will continue to be headed by director of communications Matthew Doyle.

Lyons will have a strategic comms role, including oversight of Downing Street’s “grid” of future announcements. It is a common complaint of Labour staffers that the grid, previously under Gray’s control, has been chaotic.

Pat McFadden, cabinet office minister and part of Starmer’s inner circle, is said by party insiders to have played a key role in the shake-up, being close to both McSweeney and Lyons. 

The result of Sunday’s upheaval is that Starmer ends his first 100 days in office with what looks more like a functioning Number 10 operation. Many Labour MPs, privately, believe it is not before time.

BBC

‘Supported not hindered’

‘Defies logic’

With proper insight and timing, an investor could have profited mightily from electric vehicle (EV) sector in recent years. For instance, had you invested $1,000 into Tesla (NASDAQ: TSLA) when its shares went public in June 2010, you’d have more than $156,000 today. Nowadays, many investors are looking for the next Tesla. If that’s your goal, pay attention to the two companies on this list.

Looking for the next Tesla? Here it is.

While many investors are looking for the next Tesla, it’s fair to mention that it’s still possible to invest in the original Tesla today. The company has a gargantuan $850 billion market value, but that shouldn’t stop you from jumping in.

There are two reasons to believe the stock still has plenty of long-term upside. First, shares are cheaper today than they have been in years. That’s due to a massive dip in revenue growth. Earlier this year, Tesla actually experienced a decline in companywide revenue. As a result, Tesla’s price-to-sales ratio has fallen from the mid 20s to under 10. To be sure, that’s still expensive, but it’s a bargain relative to the company’s history.

A cheap valuation on paper, however, is only attractive if you believe the company is about to turn the corner. Take note of the chart below. Tesla has experienced massive dips in revenue growth before, with its valuation usually following suit. A huge reason that things turned around was a jump in electric vehicle sales, as well as the introduction of new models like the Model 3 and Model Y — both of which resulted in sales spikes that persisted for several years.

According to Bloomberg, “Electric vehicle deliveries have been essentially flat since early 2023, and that’s not likely to change anytime soon.” But fortunately, Tesla has something else up its sleeve. “Tesla’s robotaxi event next week,” Bloomberg reports, “will see Musk lean even harder into the narrative of self-driving vehicles, artificial intelligence and robots.”

Am I buying into Tesla’s robotaxi hype? Not just yet. But Musk has dreamed big before. Sometimes he delivers, and sometimes he doesn’t, but it’s often a smart move to back the horse with a winning track record. And despite the company’s recent missteps, Tesla is still the company to bet on if you’re bullish on EV stocks in general. But if you’re looking for the most upside potential possible, the next stock on this list is for you.

This EV stock has huge growth potential

While Tesla is still a great stock to bet on for those bullish on the EV space, its shares are still expensive and the company’s biggest days of growth are likely behind it. Rivian Automotive (NASDAQ: RIVN) is in the opposite situation. Its biggest days of growth are very much ahead of it, and shares aren’t as expensive as you’d think.

Earlier this year, for example, Rivian was posting revenue growth rates above 80% year over year. Those growth rates came at a time when Tesla’s revenue base was actually shrinking. And while Rivian’s growth rates have converged with Tesla’s more recently, most of that has come from industry pressure and the maturation of its models.

This year, EV sales forecasts have been repeatedly trimmed industrywide, and Rivian’s two existing models, the R1T and R1S, have already been on the market for several years. But that’s all about to change.

Earlier this year, Rivian announced three new models: the R2, R3, and R3X. All are expected to be priced under $50,000 — the magic price point that EV makers need to sell beneath in order to market to mass audiences. Also, while EV sales in general have slowed this year, most long-term forecasts still predict massive growth in the years to come. Passenger EV sales are expected to surpass 30 million by 2027, according to a recent report from Bloomberg. And this figure should grow further to 73 million per year by 2040.

Rivian’s new models aren’t expected to hit the streets until 2026. That gives plenty of time for market conditions to improve as most forecasts predict. And in the meantime, investors can lock in a market capitalization of just $11 billion. That results in a price-to-sales (P/S) ratio of only 2.1 for Rivian versus Tesla’s premium P/S multiple of 8.8.

You’ll need to be comfortable with volatility as Rivian attempts to ramp up its manufacturing capabilities, as well as market new models to a consumer base still skeptical of EVs. But if you truly want to invest in the next Tesla, Rivian has all the characteristics you’d want to see.

Should you invest $1,000 in Tesla right now?

Before you buy stock in Tesla, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Tesla wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

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Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.

The Smartest Electric Vehicle (EV) Stocks to Buy With $1,000 Right Now was originally published by The Motley Fool

(Bloomberg) — Traders are staring down a series of risks after the stock market’s torrid start to the year, from economic fear, to interest rate uncertainty, to election angst. But perhaps the most important variable for whether equities can keep rolling returns to the spotlight this week: corporate earnings.

Most Read from Bloomberg

The S&P 500 Index has soared roughly 20% in 2024, adding more than $8 trillion to its market capitalization. The gains have largely been driven by expectations of easing monetary policy and resilient profit outlooks.

But the tide may be turning as analysts slice their expectations for third-quarter results. Companies in the S&P 500 are expected to report a 4.7% increase in quarterly earnings from a year ago, according to data compiled by Bloomberg Intelligence. That’s down from projections of 7.9% on July 12, and it would represent the weakest increase in four quarters, BI data show.

“The earnings season will be more important than normal this time,” said Adam Parker, founder of Trivariate Research. “We need concrete data from corporates.“

In particular, investors are eager to see if companies are postponing spending, if demand has slowed, and if customers are behaving differently due to geopolitical risk and macro uncertainty, Parker said. “It is exactly because there is a lot going on in the world that corporate earnings and guidance will particularly matter now,” he said.

Reports from major companies start arriving this week, with results from Delta Air Lines Inc. due Thursday and JPMorgan Chase & Co. and Wells Fargo & Co. scheduled for Friday.

“Earnings seasons are typically positive for equities,” said Binky Chadha, chief US equity and global Strategist at Deutsche Bank Securities Inc. “But the strong rally and above-average positioning going in (to this earnings season) argue for a muted market reaction.”

Obstacles Abound

The obstacles facing investors right now are no secret. The US presidential election is just a month away with Democrat Kamala Harris and Republican Donald Trump in a tight, fierce race. The Federal Reserve has just started lowering interest rates, and while there’s optimism about an economic soft-landing, questions remain about how fast central bankers will reduce borrowing costs. And a deepening conflict in the Middle East is raising concerns about inflation heating up again, with the price of West Texas Intermediate oil rising 9% last week, the biggest weekly gain March 2023.

Story continues

“The bottom line is that revisions and guidance are weak, indicating lingering concerns about the economy and reflecting some election year seasonality,” said Dennis DeBusschere of 22V Research. “That is helping set up reporting season as another uncertainty clearing event.”

Plus, to make matters more challenging, big institutional investors have little buying power at the moment and seasonal market trends are soft.

Positioning in trend-following systematic funds is now skewed to the downside, and options market positioning shows traders may not be ready to buy any dips. Commodity trading advisers, or CTAs, are expected to sell US stocks even if the market stays flat in the next month, according to data from Goldman Sachs Group Inc. And volatility control funds, which buy stocks when volatility drops, no longer have room to add exposure.

History appears to side with the pessimists, too. Since 1945, when the S&P 500 gained 20% through the first nine months of the year, it posted a down October 70% of the time, data compiled by Bespoke Investment Research show. The index gained 21% this year through September.

Bar Lowered

Still, there’s reason for optimism, specifically a lowered bar for earnings projections that leaves companies more room to beat expectations.

“Estimates got a little bit too optimistic, and now they’re pulling back to more realistic levels,” said Ellen Hazen, chief market strategist at F.L.Putnam Investment Management. “It will definitely be easier to beat earnings because estimates are lower now.”

In fact, there’s plenty of data suggesting that US companies remain fundamentally resilient. A strengthening earnings cycle should continue to offset stubbornly weak economic signals, tipping the scales for equities in a positive direction, according to Bloomberg Intelligence. Even struggling small-cap stocks, which have lagged their large-cap peers this year, are expected to see improving margins, BI’s Michael Casper wrote.

Friday’s jobs report, which showed the unemployment rate unexpectedly declined, quelled some concerns about a soft labor market.

Another factor is the Fed’s easing cycle, which has historically been a boon for US equities. Since 1971, the S&P 500 has posted an annualized return of 15% during periods in which the central bank cut rates, data compiled by Bloomberg Intelligence show.

Those gains have been even stronger when rate-cutting cycles hit in non-recessionary periods. In those cases, large caps posted an averaged annualized return of 25% compared with 11% when there was a recession, while small caps gained 20% in non-recessionary periods compared with 17% when there was a recession.

“Unless earnings are a major disappointment, I think the Fed will be a bigger influence over markets between now and year-end simply because earnings have been pretty consistent,” said Tom Essaye, founder and president of Sevens Report Research. “Investors expect that to continue.”

Most Read from Bloomberg Businessweek

©2024 Bloomberg L.P.

The Federal Reserve’s pivot to lower interest rates will have ripple effects throughout the economy and send investors looking for passive income to new places. As yields fall in vehicles like high-yield savings accounts, investors could turn to high-quality, high-yield dividend stocks. Consumer spending and healthcare are two pillars of the U.S. economy, and great places to look for such stocks.

I’ve identified three stocks with generous yields and the financials to afford their payouts. These companies also boast durable business models that should thrive through recessions, giving income-focused investors peace of mind.

1. Pfizer

Current yield: 5.8%

Pharmaceutical giant Pfizer (NYSE: PFE) was a big winner during COVID-19’s height due to its vaccine and treatment products, which created a temporary growth wave. However, the tide has gone out over the past couple of years, and the stock has plunged to multi-year lows as revenue and earnings contract.

But the company is poised to resume growth, with analysts anticipating 8% to 9% annual earnings growth for the next three to five years. Pfizer has pivoted its business to focus on oncology, using its pandemic profits to acquire Seagen for $43 billion last year.

Management raised Pfizer’s dividend by 2.4% last December, a sign of confidence the payout is safe. The payout ratio is also getting healthier. The dividend is approximately 64% of estimated 2024 earnings, so Pfizer seems poised to continue extending its streak of 15 years of increases. The stock trades at only 11 times its estimated 2024 earnings, a sharp discount to the broader market and an attractive price for a business with high single-digit earnings growth.

Pfizer represents a rock-solid income investment with the potential for capital appreciation ahead.

2. Altria

Current yield: 8%

Tobacco companies are renowned dividend stocks, and Altria (NYSE: MO) is an excellent example, having showered shareholders with cash for decades. The company sells Marlboro cigarettes and leading brands of cigars, chewing tobacco, and smokeless products in the United States. The company is also a Dividend King, meaning that it has raised its dividend for more than five decades, a testament to how durable the tobacco industry is despite declining smoking rates.

The dividend remains in good financial health, with a payout ratio of 80% of estimated 2024 earnings. That dividend is backed by an investment-grade balance sheet and a multi-billion-dollar stake in Anheuser-Busch, which the company could liquidate as needed.

Story continues

Altria’s cigarette shipments decline almost annually, but a combination of price increases and share repurchases continues inching earnings higher. Analysts estimate that the company will grow earnings by an average of 3% to 4% over the next three to five years, which means the dividend will continue inching higher, too.

Shares trade at 10 times Altria’s estimated 2024 earnings, but I’d hesitate to call the stock a bargain due to its low growth. However, you don’t need much when getting an 8% dividend yield. Those ultimately concerned with investment income will struggle to find a similarly safe yield this high.

3. Realty Income

Current yield: 5%

Real estate is one of society’s oldest industries, and real estate investment trusts (REITs) like Realty Income (NYSE: O) enable people to invest in real estate without directly owning property. REITs acquire and lease real estate, and then distribute most of their income to shareholders. That makes Realty Income an excellent dividend stock.

The company has paid and raised its dividend for 29 consecutive years, and the payout ratio is still just 75% of this year’s estimated funds from operations (FFO). Plus, Realty Income pays a monthly dividend, a perk for investors who want regular cash flow to help pay their bills.

Realty Income has thrived through economic ups and downs because it focuses on renting to retail businesses that people use regardless of what the economy is doing. Think grocery stores, restaurants, convenience stores, and pharmacies. Realty Income leases over 15,000 properties, so it’s a vast and diverse portfolio that generates steady rental income for the company.

Lower interest rates are a bonus for REITs like Realty Income because they often borrow to fund their property acquisitions. Cheaper borrowing costs should make Realty Income more profitable.

Realty Income trades at almost 15 times its estimated 2024 FFO, a fair price given the company’s bright outlook and reliable and growing dividend.

Should you invest $1,000 in Pfizer right now?

Before you buy stock in Pfizer, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Pfizer wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $765,523!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of September 30, 2024

Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Pfizer and Realty Income. The Motley Fool has a disclosure policy.

3 High-Yield Dividend Stocks That Are Screaming Buys Right Now was originally published by The Motley Fool