Ranking of the strongest companies on the stock exchange: The giant on the way to a trillion shekels
The cyber giant recovered sharply from last week's sell-off, jumping over 10% and approaching a threshold that no company on the stock exchange has ever crossed. On the other side, Elbit continued its retreat, falling below 100 billion shekels and losing fourth place in the ranking. What is driving these two trends?
The last trading week on the Tel Aviv Stock Exchange provided two contrasting stories at the top. On one hand, a giant approaching a historic threshold. On the other hand, a defense giant that continues to descend from the peak it climbed to. Together, they illustrate how quickly sentiment can flip in the market.
Just a week ago, Palo Alto crashed by more than 10% in a sharp sell-off. This week it did exactly the opposite: the stock jumped by 10.17% to a dizzying value of 946.35 billion shekels, and is now within touching distance of the trillion-shekel threshold, a level that no company in the history of the Tel Aviv Stock Exchange has ever reached.
These sharp fluctuations, minus 10% in one week and plus 10% in the week after, are exactly what characterizes a stock that trades at a particularly high valuation and reacts strongly to any change in investor mood.
The underlying background remains strong: the demand for cyber solutions in the age of artificial intelligence continues to grow, and analysts continue to raise target prices. It is important to remember: Palo Alto is an American company with a dual listing in Tel Aviv, so its price is determined on Wall Street and not on the local exchange. If the momentum continues, we may soon see the crossing of the trillion threshold for the first time in history.
On the opposite side of the table, Elbit Systems continued the negative trend. The stock fell this week by 5.63% to a value of 98.96 billion shekels, dropping below the 100 billion threshold and losing fourth place to Bank Hapoalim, which rose to fifth place. This is already the third consecutive week of declines for the defense giant.
What is behind the retreat? Not a business problem, but a valuation correction. Elbit published strong reports two weeks ago, but the stock was trading at an exceptional price-to-earnings ratio of over 50, a level never seen before. When a stock is priced so high, any report that is only "excellent" and not "dreamy" leads to a sell-off, and investors continue to gradually release the "war premium" that was factored into the price at the peak of the fighting.
"The market is bringing inflated expectations back down to earth. It is still a company in excellent condition, with a record order backlog of 32 billion dollars, but the price simply ran forward too fast."
Phoenix continued another strong week with an increase of 5.61% to a value of 47.4 billion shekels, on the back of the strong reporting season of the entire insurance industry. Hapoalim, which overtook Elbit, rose 1.17% to a value of 101.4 billion. Leumi and Mizrahi Tefahot rose moderately, while Teva remained almost unchanged. Tower continued a slight negative trend with a decline of 2.74%, a continuation of the volatility in the chip sector.
This week illustrates two lessons for those who save for retirement or manage an investment portfolio. The first: high valuation is a double-edged sword. Palo Alto and Elbit are both traded expensively, and that is exactly what makes them so volatile, in both directions.
The second: what looks like a dramatic fall is often just a healthy correction after a sharp run, and not a sign of a real problem in the company. For the public, which holds all these companies through the Tel Aviv indices, the ability to distinguish between the two is exactly what allows one to sleep well at night even in a volatile week.
