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Bear of the Day: Constellation Brands (STZ)

Is the party over for this alcohol producer? Constellation Brands (STZ) is a Zacks Rank #5 (Strong Sell) that produces and markets beer, wine and spirits. It is the third-largest beer company and a leading, high-end wine company in the United States. The company posted its first earnings miss in five quarters and the stock traded down significantly. After bouncing almost 10% off the recent lows, it might be time for longs to exit the stock due to falling earnings expectations.About the Company Constellation is headquartered in Victor, NY. The company was founded in 1945 and employs 10,000 people.Constellation’s portfolio consists of high-quality brands, including Corona, Modelo Especial, Robert Mondavi, Kim Crawford, Meiomi and SVEDKA Vodka. The company conducts its operations in the United States, Mexico, Italy, and New Zealand.The company is valued at $41 billion and has a Forward PE of 21. STZ holds Zacks Style Scores of “B” in Growth, but “D” in Value. The stock pays a dividend of 1.4%.  Q3 Earnings The company reported EPS on January 5th, missing expectations by 1.7%. Constellation reported Q3 at $2.83 v the $2.89 expected, while revenues came in below expectations.The company also cut its profit guidance as they warned of higher expenses. Constellation sees higher costs for raw materials, packaging, and logistics. Meanwhile some analysts are concerned that customers may trade down to cheaper drinks, which will make it harder for the company to raise prices to cover the higher costs.EstimatesAfter the quarter, analysts lowered their estimates and cut their price targets.Over the last 30 days, estimates have gone from $2.17 to $1.94, a drop of 10%. For next quarter they have fallen 6%, from $2.92 to $2.75.Looking ahead to next year, analysts have dropped their numbers 8% over the last 60 days, from $12.76 to $11.68.Almost every analyst that covers the stock cut their price targets after earnings:BMO reiterated outperform but cut to $265 from $290.JPMorgan reiterated Overweight, but lowered targets to $250 from $267.Cowen cut to Market perform and has a $200 target.Clearly the earnings performance will temporarily limit upside until the company gets costs under control.Technical TakeThe stock had already come well off its 2022 highs before reporting earnings, dropping from $260 to $230. After the report, the stock fell below $210, but has since rallied to the $227 area.The 50-day moving average is at $237 and the 200-day is at $240. Investors should expect these areas to be big selling zones and take off any positions into a rally to those levels.The stock might settle into sideways trading before taking out those recent lows. A break of the $210 area would likely bring a flush of the $200 level.Looking to the downside, the halfway back market from COVID lows to recent highs is $182, while the 61.8% Fibonacci retracement is $163. For those looking for a better long-term entry, they should wait until the stock is in that buying zone.SummaryCosts are adding up for Constellation Brands and it is hitting the bottom line. Investors should understand that upside in the stock is likely limited until this issue is resolved. Additionally, there is chance for more downside if the market decides to go lower.For those interested in the alcohol space, a better option in the sector might be Heineken (HEINY). The stock is a Zacks Rank #1 (Strong Buy) that is trading at 10-month highs.   Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Constellation Brands Inc (STZ): Free Stock Analysis Report Heineken NV (HEINY): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacksJan 25th, 2023

"The greatest opportunity to short on Wall Street": an overvalued corner of the market is set to blow up as recession looms, technical analyst says

Consumer staples outperformed the S&P 500 in 2022. Now the sector is"overbought and overpriced," says TheoTrade's chief market technician. Pepsi sodas on display at a Walmart Supercenter in Austin, Texas.Brandon Bell/Getty Images The "bubble is about to burst" in consumer staples stocks, says veteran market technician Jeff Bierman.  The sector outperformed the S&P 500 last year but now it's "overbought and overpriced". "The greatest opportunity to short on Wall Street, according to risk/reward, is consumer staples," Bierman said.  Investors sought refuge in consumer staples stocks last year as the broader equity market sank into bear territory, but that group is now in a bubble that's on the verge of popping, says one veteran chart technician. "The greatest opportunity to short on Wall Street, according to risk/reward, is consumer staples. This is the beginning of the breakdown in consumer staples, for the long term," Jeff Bierman, chief market technician at TheoTrade, said in a note this week. Bierman, who was previously TD Ameritrade's chief technical analyst, was taking a look at the S&P 500 Consumer Staples Sector SPDR Fund. The exchange-traded fund tracks 33 stocks in the sector. It had total net assets of more than $17 billion and Procter & Gamble, whose household brands include Tide and Crest, has the heaviest weighting. It also houses PepsiCo and Campbell Soup and Coca-Cola, which Bierman highlighted in his note. The ETF fell by 0.8% in 2022, significantly outperforming the 19% slide in the S&P 500.  But now the defensive consumer staples sector is "overbought and overpriced," Bierman said."Every sector of the S&P [500] needs to come to a single-digit multiple before it signals a market bottom. Semiconductors, oil, and retail (in certain parts) are there. Consumer staples - not even close," he said. Bierman noted Coca-Cola was trading at a 26 multiple when it's growing at 6% earnings and 2% revenue. Yet its return on assets–a growth-rate proxy–was 12."It's a bubble. This stock can … be cut in half before it's attractive," he said of the beverage giant.  MarubozoThe consumer staples sector—focused on goods and services used for people's everyday needs—served as a haven when the US equities sharply dropped last year, largely as red-hot inflation prompted the Federal Reserve to kick up interest rates from zero percent. Now, the "bubble is about to burst," Bierman said about the staples group.  "The signal? The biggest Marubozo … in the XLP we've seen since back in September," he wrote. A Marubozo is a candlestick chart pattern and candlestick charts look at the opening and closing price of a stock on a single day, Bierman explained. Marubozo is a long-bodied candlestick with no shadow and is regarded as a strong conviction signal depending on whether the candle's direction is up or down. The chart pattern gets its name from the Japanese word meaning close-cropped, the technician said. "We're heading into a recession and consumer staples are priced like growth stocks when they're actually value stocks," he said. "The Marubozo signals that we are in for a much deeper correction in consumer staples than we've experienced in the past couple of days." A fresh warning of economic contraction coming in 2023 arrived this week from nearly two-thirds of 22 chief economists surveyed by the World Economic Forum. The WEF was hosting the annual elite gathering of business and finance people in Davos, Switzerland.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJan 21st, 2023

Factors Likely to Hurt Bed Bath & Beyond"s (BBBY) Q3 Earnings

Despite transformational efforts, rising inflation, drab customer traffic and supply-chain constraints are expected to hurt Bed Bath & Beyond's (BBBY) Q3 results. Bed Bath & Beyond Inc. BBBY is slated to release third-quarter fiscal 2022 results on Jan 10. This leading specialty retailer is expected to deliver sales and earnings declines in the to-be-reported quarter.The Zacks Consensus Estimate for the company's fiscal third-quarter earnings is pegged at a loss of $1.96 per share, suggesting a 684% decline from the year-ago quarter's reported figure. The loss estimate has widened by 1.6% in the past 30 days. The consensus mark for fiscal third-quarter sales is pegged at $1.43 billion, suggesting a 23.6% decline from the prior-year reported number.We expect the company’s fiscal third-quarter total revenues to decline 23.1% year over year to $1,444.5 million. We expect the company to post a loss of $1.78 per share, whereas it reported a loss of 25 cents in the prior-year quarter.In the last reported quarter, the company delivered an earnings surprise of 102.5%. Also, the company has a trailing four-quarter negative earnings surprise of 1,638.4%, on average.Key Points to NoteBed Bath & Beyond has been reeling under sluggish sales, the inability to compete with other retail giants and a shift to private brands. This drove away many loyal customers who were looking for their favorite brands. Continued failed attempts to bring in-demand styles onto its shelves and efforts to launch more store-branded products went for a toss.Meanwhile, it collaborated with suppliers and undertook productive merchandise plans and store fleet optimization plans. However, these efforts failed to bear fruits.The ongoing inflation, which led to consumers cutting down on discretionary spending, has added to its woes. The company continued to witness industry-wide supply-chain constraints. Consequently, aggressive clearance activity in order to right-size its inventory and the negative impact of supply-chain costs are likely to have dented margins in the fiscal third quarter.In a recent development, management gave a sneak peek of its fiscal third-quarter results. The company leveraged the liquidity gained from the holiday season to pursue higher in-stock levels. The fiscal third quarter has been impacted by inventory constraints and reduced credit limits, which led to lower levels of in-stock presentation within the assortments.Based on lower customer traffic and reduced levels of inventory availability, management anticipates net sales of $1.26 billion, whereas it reported $1.88 billion in the year-ago period. The company envisions a net loss of $385.8 million, including impairment charges of $100 million, whereas it reported a loss of $276.4 million in the year-ago quarter.However, it has been on track with turnaround plans, with an increased focus on merchandising and inventory, enhancing digital and omni-capabilities, and strengthening its financial position. It has been trying to improve its cash position and mitigate potential liquidity shortfall. Also, the company has started to bring back some of the well-known national brands, such as Oxo, Ninja and SodaStream, as part of its turnaround efforts.Zacks ModelOur proven model does not conclusively predict an earnings beat for Bed Bath & Beyond this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, this is not the case here. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.Bed Bath & Beyond currently has an Earnings ESP of -54.38% and a Zacks Rank #5 (Strong Sell).Stocks Poised to Beat Earnings EstimatesHere are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:Dillard’s DDS currently has an Earnings ESP of +0.23% and sports a Zacks Rank #1. DDS is likely to register top and bottom-line growth when it reports third-quarter fiscal 2022 numbers. The Zacks Consensus Estimate for its quarterly revenues is pegged at $2.12 billion, which suggests growth of 0.3% from the figure reported in the prior-year quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for Dillard’s quarterly earnings has moved up 0.2% in the past 30 days to $8.87 per share, suggesting a decline of 43.4% from the year-ago quarter's reported number. HIBB has a trailing four-quarter negative earnings surprise of 144.2%, on average.Boot Barn Holdings BOOT has an Earnings ESP of +1.01% and a Zacks Rank of #2. The company is expected to register top-line growth when it reports third-quarter fiscal 2023 numbers. The Zacks Consensus Estimate for BOOT's quarterly revenues is pegged at $513.6 billion, which suggests growth of 5.7% from the prior-year quarter's reported figure.The Zacks Consensus Estimate for Boot Barn’s quarterly earnings has been unchanged at $1.81 in the past 30 days, suggesting an 18.8% decline from the year-ago reported number. BOOT has a trailing four-quarter earnings surprise of 11.7%, on average.Five Below FIVE currently has an Earnings ESP of +0.07% and a Zacks Rank #2. FIVE is anticipated to register top and bottom-line growth when it reports fourth-quarter fiscal 2022 results. The Zacks Consensus Estimate for quarterly revenues is pegged at $1.1 billion, indicating an improvement of 10.4% from the prior-year quarter.The Zacks Consensus Estimate for Five Below’s bottom line has been unchanged in the past 30 days to $3.03 per share. The consensus estimate suggests growth of 21.7% from the year-ago quarter's reported figure. FIVE has a trailing four-quarter earnings surprise of 26.3%, on average.Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Dillard's, Inc. (DDS): Free Stock Analysis Report Bed Bath & Beyond Inc. (BBBY): Free Stock Analysis Report Boot Barn Holdings, Inc. (BOOT): Free Stock Analysis Report Five Below, Inc. (FIVE): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacksJan 9th, 2023

Futures Rise On China Reopening, End Of Tech Crackdown As Asia Enters Bull Market

Futures Rise On China Reopening, End Of Tech Crackdown As Asia Enters Bull Market Futures extended their Friday post payrolls gain on the back of Chine reopening optimism coupled with speculation that China's tech crackdown is finally ending - just as we speculated this weekend when reporting on Jack Ma's ceding control of Ant Financial. S&P futures rose 0.4% as of 7:30 am ET while Nasdaq contracts 100 added 0.5%. And while European stocks were mostly in the green, the bulk of overnight action was in Asia where the Hang Seng Tech Index jumped 3.2% Monday, led by Alibaba Group after a top central bank official said the clampdown on the Internet sector was drawing to a close. The broader market also advanced, with a gauge of Chinese equities listed in Hong Kong rising 2%, helping push the MSCI Asia Index up 20% from its October low, setting it up for a bull market. The dollar weakened to a seven month low and oil rallied. Among premarket movers, Bed Bath & Beyond shares surged as much as 75%, set to rally after losing nearly half of their value in the previous week on bankruptcy worries amid mounting losses, and ahead of the company’s earnings due Tuesday. Coinbase and Riot Platforms led cryptocurrency-exposed stocks higher in premarket trading as Bitcoin rallied to extend gains for a sixth consecutive session — its longest streak in nearly a year. Lululemon dropped after the athletic apparel maker forecast a weaker gross margin. Here are other notable premarket movers: Oracle is upgraded to overweight from neutral at Piper Sandler as its cloud transformation takes hold. The brokerage also noted that fiscal 2024 might be a watershed year for the software company, where growth in operating profits and earnings per share could accelerate to more than 10%. Oracle shares are up 1.3%. Piper Sandler upgrades Uber to overweight and cuts DoorDash to underweight, recommending a pair-trade between the two as it favors ride-hailing over delivery in 2023. Elsewhere, Jefferies starts DoorDash with an underperform rating, with a buy on Uber. Uber shares rose 2.3%. Dash shares down 4.2%. Ally Financial upgraded to neutral from underweight at Piper Sandler, with headwinds seen as now priced into the stock. Shares rise 1.9%. Credit Suisse says fertilizer prices are on a downward trajectory in a note double-downgrading Mosaic (MOS) to underperform. Shares fall 1.1%. Elf Beauty is downgraded to hold from buy at Jefferies, with broker saying risk-reward is balanced for the cosmetics company against an uncertain macroeconomic backdrop. Shares fall 1.1%. Ipsen shares drop after it agreed to acquire Albireo for $42/share in cash plus a contingent value right (CVR) of $10/share related to the U.S. FDA approval of Bylvay in biliary atresia. Albireo shares soar 93%. Jefferies sees another year of uncertainty ahead for US bank stocks, in a note upgrading its ratings on Truist (TFC) and First Republic (FRC) and downgrading both Signature Bank (SBNY) and Regions Financial (RF). TFC falls 0.09%. FRC rises 1.2%. SBNY shares fall 0.4%. RF falls 1%. KeyBanc trims its natural gas price estimates for 2023 following a relatively mild winter to date and cuts its ratings on Comstock Resources (CRK) and Pioneer Natural Resources (PXD). CRK shares rise 0.8%. PXD rises 1%. There is a strong industry backdrop for Harmonic (HLIT), with greater competition in the broadband service market pushing cable multiple-system operators (MSOs) to invest aggressively, Jefferies writes in note that upgrades the stock to buy. Shares rise 1.8%. Lanvin Group is rated neutral at Citi, which initiated coverage on the stock noting that the luxury fashion group has solid brands but clear evidence of a turnaround is required to merit a buy call. Shares rise 3.5%. Markets closed last week solidly in the green, encouraged by Friday's jobs report which showed wage growth slowing, lifting the S&P 500 2.3% to notch its first winning week in over a month. They face another test on Thursday with CPI data that will likely help determine the size of the Federal Reserve’s next interest-rate increase. After the easing in wage inflation, swaps contracts showed investors expect the policy rate to peak at under 5% this cycle, down from 5.06% just before Friday’s jobs report. While traders remain divided about the size of February’s hike, with 32 basis points of tightening priced in, it appears that a quarter-point move is seen as more likely than a half-point increase. While pressure on the Fed to hike by 50 basis points on Feb. 1 has eased, “policy makers appear to be increasingly frustrated by market-pricing at odds with Fed signaling in terms of both the terminal funds rate and timing of initial rate cut,” BNP Paribas economists led by Carl Riccadonna wrote in a note to clients. “This could tilt their bias toward a more forceful response at the next meeting.” And while market pessimism is still dominant, analysts at Wells Fargo said Friday’s gains may be more durable than some expect, being “driven by a pro-cyclical post-jobs report reaction — not by risk/short-covering.” This market action “probably creates some positive investor sentiment since long-only’s are making money and short-sellers are faring better than one might expect.” On the other hand, Morgan Stanley strategists said US equities face much sharper declines than many pessimists expect with the specter of recession likely to compound their biggest annual slump since the global financial crisis. The bank's equity strategist, Michael Wilson, long one of the most vocal bears on US stocks, said while investors are generally pessimistic about the outlook for economic growth, corporate profit estimates are still too high and the equity risk premium is at its lowest since the run-up to 2008. That suggests the S&P 500 could fall much lower than the 3,500 to 3,600 points the market is currently estimating in the event of a mild recession, he said. At the same time, US stocks have been lagging the rebound in European, Asian and emerging-market peers as American equities trade at a hefty valuation premium. European markets also started the week amid a generally buoyant mood, as continental bourses opened higher, after posting the best week since March on optimism about China’s reopening, an easing energy crisis and signs of cooling inflation. Europe’s Stoxx 600 Index climbed 0.5%, touching the highest since mid-December with construction, technology and energy leading gains amid optimism over China’s demand for raw materials.  On the data front, euro zone unemployment was unchanged in November at 6.5% as expected. Here are some of Europe's biggest movers: UCB gains as much as 4.9%, the most in almost 11 months, after the Belgian biopharma company said its 2022 results should come in toward the high end of guidance Geberit shares climb as much as 3.5% after Goldman Sachs raised its recommendation on the Swiss manufacturer to neutral from sell, citing reduced risk related to energy prices BioArctic rises as much as 29% after Eisai and Biogen’s Alzheimer’s drug Leqembi (lecanemab-irmb) received accelerated approval from the FDA. The treatment originates from BioArctic TGS gains as much as 15%, the most intraday since 2020, after a 4Q update that DNB said showed a strong beat on late sales and supportive management comments on order inflow SAES Getters shares surge as much as 36%, the most on record, after SAES Group entered an agreement with Resonetics to sell its Nitinol production business for about $900m in cash AstraZeneca falls after agreeing to buy US biotech CinCor Pharma for as much as $1.8 billion. Analysts say the acquisition is a good fit for the firm’s existing cardiovascular franchise Fresnillo falls as much as 2.5% as RBC Capital Markets downgrades stock to sector perform, as it sees operational momentum widely priced in and expects limited growth in the pipeline Frontier Developments shares fall as much as 42%, its biggest intraday decline on record, after the video-game firm said it no longer expects to meet FY23 consensus expectations Ambea drops as much as 6.9%, the most since Dec. 23, after the Swedish elder care company saw its target price cut at DNB to SEK52 from SEK73 on continued headwinds due to inflation Devolver Digital shares fall as much as 9.5%, dropping to a record low, after downgrading profit expectations for FY22 in a trading update. Goodbody called the update “disappointing.” Earlier in the session, Asia’s benchmark stock index was on track to enter a bull market, as China’s reopening and a weakening dollar lure investors back to the region. The MSCI Asia Pacific Index climbed as much as 1.9% on Monday, taking its advance from an Oct. 24 low to more than 20%. The Asian benchmark is up 3.7% so far in 2023, beating the S&P 500 Index by about two percentage points. That’s after they both slumped about 19% last year, their worst performance since 2008. Gauges in Hong Kong, Taiwan and South Korea led gains in the session, while Japan was closed for a holiday. Strategists have predicted a better year for Asian equities after a dismal 2022, especially as stocks in China, which carry the second-highest weighting in the regional gauge after Japan, turned a corner in November following the nation’s shift away from stringent virus curbs. The bull market milestone comes after the MSCI Asia gauge tumbled nearly 40% from a peak in early 2021. The MSCI Emerging Markets Index is on track to enter a bull market after surging more than 20% from its October low, boosted by Chinese stocks after the nation pivoted on its Covid strategy and offered more policy support for the economy.   “The rally has been fast and furious, so it is only natural to expect some profit-taking,” said Charu Chanana, senior strategist at Saxo Capital Markets Pte. “There are also some risks to keep a tap on, such as BOJ’s hawkish shift and company earnings. But that being said, there is still room for Asian markets to outperform global peers in 2023.” Australian stocks climbed for a fourth day as miners advanced. The S&P/ASX 200 index rose 0.6% to close at 7,151.30, capping four consecutive days of advances. The winning streak is the benchmark’s longest since Nov. 25. The gauge followed Wall Street shares higher after US economic data boosted optimism for slower Fed rate hikes. Miners and energy shares contributed the most to the Australian index’s move. In New Zealand, the S&P/NZX 50 index rose 0.2% to 11,646.45. In FX, the Bloomberg Dollar Spot Index fell to its lowest level since June as the dollar weakened against all of its Group-of-10 peers apart from the yen. It pared the drop in European hours. NOK, NZD are best performers among G10’s. The euro pared gains after rising to $1.07. Bunds and Italian bonds underperformed Treasuries, with the largest losses seen in the belly of curves, while money markets added to peak ECB rate wagers. Focus is also on the EU’s first bond sales of the year The pound advanced, while gilts bear flattened. Bank of England Chief Economist Huw Pill comments are due later Norway’s krone and the Australian dollar led G-10 gains, with the latter climbing to $0.6947, its highest level in more than four months, supported by China’s reopening. AUD curve bull steepens with 3-year yield ~13bps lower Turkey’s lira weakened as investors weighed President Recep Tayyip Erdogan’s signal that general elections will be held in early May, a month earlier than scheduled In rates, Treasuries were pressured lower with losses led by long-end, continuing Friday’s post-payrolls steepening move amid wave of block trades. US yields are higher by as much as 4bp at long-end, steepening 5s30s, 2s10s spreads by around 2bp; 10-year around 3.595%, cheaper by 3.5bp on day but outperforming bunds in the sector by ~2.5bp.  Treasuries took their cue from wider bear-steepening move across core European rates following first EU bond sales of the year. Another heavy IG credit issuance slate is expected this week, which also includes December CPI data Thursday and Fed Chair Powell appearance Tuesday.   In commodities, crude futures advanced, pushing Brent up almost 3.5% to trade near $81.11. Spot gold rises roughly $8 to trade near $1,873/oz while base metals are in the green. In crypto, Bitcoin is firmer and has managed to surpass and gain a more convincing foothold above USD 17k, after fleeting breaches of the figure in recent sessions, with the 16th Dec USD 17524 peak into play The only event on today's quiet calendar is the consumer credit print at 3pm ET. There are two Fed speakers on deck as well, Bostic and Daly, speaking shortly after noon. Market Snapshot S&P 500 futures up 0.4% to 3,932.00 STOXX Europe 600 up 0.5% to 446.56 MXAP up 1.7% to 161.51 MXAPJ up 2.4% to 535.12 Nikkei up 0.6% to 25,973.85 Topix up 0.4% to 1,875.76 Hang Seng Index up 1.9% to 21,388.34 Shanghai Composite up 0.6% to 3,176.08 Sensex up 1.4% to 60,752.44 Australia S&P/ASX 200 up 0.6% to 7,151.33 Kospi up 2.6% to 2,350.19 German 10Y yield little changed at 2.27% Euro up 0.3% to $1.0677 Brent Futures up 3.0% to $80.90/bbl Brent Futures up 3.0% to $80.89/bbl Gold spot up 0.4% to $1,873.06 U.S. Dollar Index down 0.27% to 103.60 Top Overnight News from Bloomberg Central banks aren’t giving up their inflation fight yet with the peak in interest rates still to come in most economies, but pauses will come at some point in 2023 — and perhaps even pivots The ECB predicts wage growth — a key indicator of where inflation is headed — will be “very strong” in the coming quarters, strengthening the case for more interest-rate hikes, the institution said Monday in an article to be published in its Economic Bulletin UK Prime Minister Rishi Sunak is set for talks with the union leaders directing the wave of strikes that have hobbled the UK since the start of the year, as the threat of more widespread action hangs over the country Russian President Vladimir Putin’s plans to squeeze Europe by weaponizing energy look to be fizzling at least for now. Mild weather, a wider array of suppliers and efforts to reduce demand are helping, with gas reserves still nearly full and prices tumbling to pre- war levels The SNB expects an annual loss of about 132 billion francs ($143 billion), more than five times the previous record, it said Monday in preliminary results. The largest part of this, 131 billion francs, stems from collapsed valuations of its large pile of holdings in foreign currencies, accrued as a result of decade-long purchases to weaken the franc A ship has been refloated after running aground in the Suez Canal and briefly disrupting traffic in the waterway that’s vital for global trade Brazil’s capital was recovering early Monday from an insurrection by thousands of supporters of ex-President Jair Bolsonaro who stormed the country’s top government institutions, leaving a trail of destruction and testing the leadership of Luiz Inacio Lula da Silva just a week after he took office Chinese officials are considering a record quota for special local government bonds this year and widening the budget deficit target as they ramp up support for the world’s second- largest economy, according to people familiar with the matter Japanese Prime Minister Fumio Kishida said careful explanation and communication with markets would be part of consideration on monetary policy, when asked about possible future changes in the Bank of Japan’s ultra-loose policy A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks gained with the MSCI Asia Pacific index on course to enter a bull market as the region took impetus from last Friday’s rally on Wall St. ASX 200 was led higher by strength in the commodity-related sectors and with sentiment also helped by China’s border reopening which JPMorgan predicts could boost Australia’s economy by nearly one percentage point over the next two years, although gains are capped following disappointing building approvals data. KOSPI outperformed with the index and shares in LG Electronics unfazed by the Co.’s softer preliminary Q4 earnings. Hang Seng and Shanghai Comp were supported after China’s border reopening over the weekend added to the hopes of an economic recovery and with Alibaba shares spearheading the advances in Hong Kong after Jack Ma ceded control of affiliate Ant Group. Top Asian News Chinese President Xi Jinping stressed the importance of remaining committed to advancing reform, exploring new ground and carrying forward the fighting spirit, in a bid to modernize the work of judicial, procuratorial, and public security organs, according to China Economic Net. PBoC official Guo Shuqing said China’s growth will return to a normal path as China provides further support to households and companies to help recover following the end of the zero-Covid policy, according to People’s Daily. Tens of thousands of travellers began to fly in and out of mainland China on Sunday following the removal of nearly all of China’s border restrictions, according to WSJ. China’s health security administration said talks to include Pfizer’s (PFE) Paxlovid in the drug list for basic state health insurance failed due to the Co.’s high quotation for the antiviral medicine, according to Reuters. Six Chinese cities set GDP targets for this year ranging from 5.5%-7.0%, according to Securities Daily. Japanese PM Kishida said they must choose a successor to BoJ Governor Kuroda best suited for the post at the time when Kuroda’s term ends in April and must discuss with the next BoJ Governor the relationship between the government's and BoJ's policies. Kishida added that the government and BoJ must work closely together and each should play their own roles in achieving sustained price stability, while he noted that the government is ready to respond flexibly using reserves when asked if further steps could be taken to soften the blow on households from rising prices, according to Reuters. China reportedly considering a record special debt quota and a wider budget deficit, via Bloomberg; considering a deficit ratio of circa. 3% for the year. New special bond quota of up to CNY 3.8tln. European bourses are firmer across the board, Euro Stoxx 50 +0.3%, as the constructive APAC tone continues amid a limited European docket. Sectors are primarily in the green, with defensive names lagging somewhat in-fitting with the risk tone. US futures are in the green, ES +0.4%, in-fitting with the above sentiment ahead of Fed speak and a NY Fed Consumer Expectations survey. Apple's (AAPL) iPhone exports from India have doubled to a record USD 2.5bln, via Bloomberg. Top European News BoE’s Mann said energy price caps could be lifting inflation in other sectors by boosting consumer spending and noted it is unclear what would happen to inflation when caps are removed, according to Bloomberg. UK PM Sunak said inflation is not guaranteed to decline this year and that the government will need to be disciplined to ensure inflation is brought down, according to Reuters. In other news, PM Sunak said he was willing to discuss pay increases for nurses in an effort to end strikes as ministers prepare to meet union leaders on Monday, according to FT. Czech Central Bank Governor Michl said they expect a significant drop in inflation from spring and are ready to raise rates further if the baseline scenario of a decline in inflation does not materialise, while he added that policy will be strict until inflation begins declining, according to Reuters. FX   DXY continues to slip below the 104.00 mark between 103.860-420 parameters towards key technical support and its December low (103.380). Action which is benefitting peers across the board ex-JPY, which is suffering amid the easing in USTs/EGBs and a Japanese holiday, with USD/JPY above 132.50. Antipodeans are the current outperformers with AUD surpassing 0.69 and Kiwi eclipsing 0.64 vs USD, before waning slightly. EUR/USD hit, but failed to breach, 1.07 while Cable is off best but still above 1.21 in a 1.2089-1.2174 range. PBoC set USD/CNY mid-point at 6.8265 vs exp. 6.8276 (prev. 6.8912)   Fixed Income EGBs under pressure and continuing to retreat from Friday's best, with Bunds down by nearly 100 ticks and Gilts similarly dented though managing to retain 102.00 at present USTs are similarly softer, though have largely been consolidating towards the APAC trough given the absence of Japanese participants ahead of Fed speak and NY survey, with yields modestly firmer across the curve. Commodities Crude benchmarks are bid this morning, with WTI Feb and Brent Mar posting upside in excess of 3.0% or USD 2.0/bbl respectively. Action has been driven by China’s ongoing reopening and fresh geopolitical headlines, alongside other crude-specific developments (see below). Qatar set February marine crude OSP at Oman/Dubai plus USD 0.75/bbl and land crude OSP at Oman/Dubai plus USD 2.10/bbl. In relevant news, Qatar Energy is to sign Ras Laffan Petrochemicals Complex agreements with the project to cost USD 6bln and it created a JV with Chevron Phillips Chemicals of which it owns 70% and Chevron (CVX) owns 30%, according to Reuters. Iraq’s Oil Minister said the Karbala oil refinery will begin commercial production in mid-March, according to Reuters. US DoE rejected the initial batch of bids from oil companies to resupply a small amount of oil to the SPR in February, according to Reuters. Colonial Pipeline said repairs at the Witt Booster Station were completed and Line 3 returned to normal operations as of 17:51 EST on Sunday, according to Reuters. China has issued a second batch of 2023 crude oil import quotas to independent refiners totalling 111.82mln/T, via Reuters citing sources. Iraq February Basrah medium crude OSP to Asia -USD 1.40/bbl vs Oman/Dubai average, via Somo; to Europe at -USD 8.95/bbl vs Dated Brent. Spot gold is fairly contained around the mid-point of USD 1864-1880/oz parameters, with the yellow metal deriving some upside from the DXY struggling to attain a positive foothold; next resistance mark is USD 1885/oz from the 9th of May. Geopolitics Ukrainian President Zelensky said Ukrainian forces were repelling Russian attacks on Bakhmut in eastern Donbas and were holding position in nearby Soledar under very difficult conditions, according to Reuters. Russia’s Defence Ministry said it struck a building in eastern Ukraine which killed more than 600 Ukrainian troops in retaliation for Ukraine’s deadly strike against a Russian barracks, although Ukrainian officials denied there were any casualties and said the strike by Russia only damaged civilian infrastructure, according to Reuters and ITV. Russia and Belarus will conduct joint air force drills on January 16th-February 1st, according to the Belarusian Defence Ministry cited by Reuters. Russian Kremlin has rejected suggestions from Ukraine that Russian official Kozak is sounding out officials in Europe about a potential peace deal. Swedish PM Kristersson said they have fulfilled commitments made to Turkey at the Madrid summit but noted that Turkey is demanding concessions that Stockholm cannot give to approve its application to join NATO, according to FT. China's military said it carried out combat drills around Taiwan on Sunday, while Taiwan's Defence Ministry stated 28 Chinese aircraft crossed the Taiwan Strait median line and entered the air defence zone in the past 24 hours. Furthermore, Taiwan's presidential office said it condemns China's recent military drills around Taiwan and that Taiwan's position is very clear whereby it will not escalate conflict nor provoke disputes but added that it will firmly defend its sovereignty and national security, according to Reuters. Crypto Bitcoin is firmer and has managed to surpass and gain a more convincing foothold above USD 17k, after fleeting breaches of the figure in recent sessions, with the 16th Dec USD 17524 peak into play. Bafin warns of Godfather malware attack on banking/crypto apps. US Event Calendar 15:00: Nov. Consumer Credit, est. $25b, prior $27.1b Central bank Speakers 12:30: Fed’s Bostic Takes Part in Moderated Discussion 12:30: Fed’s Daly Interviewed in WSJ Live event DB's Jim Reid concludes the overnight wrap I hope your Sunday was more peaceful than mine. I played my first round of golf since back surgery (don't tell my consultant) and got stuck at the golf course afterwards as there was a big police search with helicopters over the area I walk home across. My wife and kids were out in the garden at the time and had to rush in as the copter nearly landed in the adjoining field. So at least they knew I wasn't making up being delayed. Had it not been pouring with rain I would have had time for another 9 by the time I could make it home via a huge detour. To be fair for me there are worst places to be stuck but it was a touch concerning. That capped the end of a week where if you thought 2023 might start calmer than 2022 then you may have wanted to think again as there was plenty to debate and plenty of big swings in markets and data. In fact, after weak European headline inflation last week and a bad miss for the US Services ISM on Friday it was the best week for 10yr German bunds (-35.8bps) since data on Bloomberg starts around reunification in 1990. This week the main highlights are a speech from Powell in Sweden tomorrow morning, US and China CPI on Thursday, and Q4 US earnings season starting in earnest with 3 big financials on Friday. Before we go through things in more detail it's worth recapping Friday's US data which resulted in a major shift lower in yields. Payrolls were firm as expected with the headline at +223k and unemployment unexpectedly falling a tenth to 3.5%, the lowest since Neil Armstrong first walked on the moon. As our US economists discuss here though, there were signs of slowing growth in the report with, for example, hours worked (34.3hrs vs. 34.4hrs) and average hourly earnings (+0.3% vs. +0.4%) declining. These factors led US yields lower after the report but the Services ISM dropping from 56.5 to 49.6 was a bit of shocker, especially when the consensus was at 55. There’s a chance the exceptionally cold weather could have artificially depressed the survey but the associated commentary wasn’t great and new orders fells 10.8 points to 45.2 which outside the pandemic is the lowest since the GFC and levels only previously associated with recessions. 2 and 10yr yields fell -21bps and -16bps on the day but around 15-16bps of both moves came after the ISM which shows its impact. Ironically the S&P 500 climbed +2.28% on the day but c.1.75% of this was after this shocker of a print showing that the influence of rates on equities outweighed the economic concerns. Such an equity move couldn't possibly last if this ISM print heralded in a stream of recessionary data. It can only last if the data suggests an environment weak enough to merit the Fed pausing soon with the economy managing a soft landing. Remarkably European PMIs now stand near a record high relative to the US which is part of the reason for preferring European credit given it still trades wide to the US. A fuller review of the week for assets (a significant one to start the year) can be found at the end as usual. Let's move on to this week now and start with the US CPI print for December on Thursday which will be the pivotal data point in January. In terms of the MoM rate, the headline CPI is expected at -0.15% at DB (consensus 0.0% vs. +0.10% previously) with core CPI expected at +0.22% at DB (+0.3% consensus vs. +0.20% previously). In terms of YoY, headline is expected to drop from 7.1% to 6.3% at DB (6.5% consensus) with core falling from 6% to 5.6% (5.7% consensus). Another inflation-related data point will come from the University of Michigan survey on Friday, where the gauge of consumer inflation expectations will be in focus. Other US data releases will include consumer credit (DB forecast +$30.5B vs +$27.1 in October) today and the NFIB small business optimism index on Tuesday. Central bank speakers will also be in the spotlight with appearances from Fed Chair Powell and BoE Governor Bailey at the Riksbank's International Symposium on Central Bank Independence tomorrow. We will also hear from a number of other Fed and ECB speakers throughout the week (see day by day calendar for the list). In Europe, key data releases will include industrial production and trade data in Germany, France and the Eurozone. Over in the UK, all eyes will be on the monthly GDP report for November on Friday. Elsewhere, retail sales (Wednesday) figures will be published in Italy along with the unemployment rate (today) for November. Over in China, the CPI and the PPI on Thursday will be the standout. Turning to earnings now and some of the largest American banks including JPMorgan, Citi and BofA will kick off the earnings season on Friday. We will also hear from BlackRock and UnitedHealth that day. The day before all eyes will be on results from TSMC as concerns over supply-demand dynamics and US-China tensions continue to weigh on the sector, with the Philadelphia semiconductor index down -35% in 2022. Asian equity markets are continuing their buoyant start to the year overnight and carried on where Wall Street left off it on Friday night. As I type, the KOSPI (+2.33%) is the strongest performer across the region with the Hang Seng (+1.60%), the CSI (+0.67%) and the Shanghai Composite (+0.54%) also edging higher amid receding risk-off sentiment after Hong Kong and China resumed quarantine-free travel over the weekend thereby marking the end of the Covid Zero policy. Elsewhere, markets in Japan are closed for a holiday. Futures on the S&P 500 (+0.36%), the NASDAQ 100 (+0.54%) and the DAX (+0.75%) are trading higher as well. Crude oil prices are also higher with Brent futures (+1.18%) at $79.50/bbl and WTI (+1.25%) at $74.69/bbl as we go to print. Early morning data showed that Australia’s building approvals (-9.0% m/m) dropped further in November compared to a downwardly revised -5.6% decline in October. In the US, the House Republican leadership standoff came to an end over the weekend after Republican Kevin McCarthy was elected as speaker after 14 failed attempts following days of gruelling negotiations. Recapping last week now, and markets put in a strong start to 2023 as signs of economic weakness and declining inflationary pressures raised hopes that central banks wouldn’t be as aggressive as feared on hiking rates. In particular, the aforementioned ISM services index on Friday created a major bond and equity rally to end the week. However ominously it means December was the first month since May 2020 that both the ISM US services and manufacturing components were in contractionary territory. On the back of ISM and payrolls, investors immediately moved to price in a less aggressive pace of rate hikes from the Federal Reserve. For instance, futures pricing for the end-2023 rate came down by -10.3bps over the week (-19.0bps on Friday) to 4.48%. That was a big catalyst for risk assets, with the S&P 500 surging +2.28% on Friday, which brought the index back into positive territory for the week at +1.45%. It also led to a massive decline in Treasury yields, with the 10yr down -31.7bps over the week (-16.0bps Friday) to 3.558%. Over in Europe there was a similarly optimistic picture, aided by the news on Friday from the flash Euro Area CPI release. That showed headline inflation falling to +9.2% in December (vs. +9.5% expected), although core inflation did hit a record high of +5.2%. This backdrop meant equities and bonds surged across the continent, with the STOXX 600 up +4.60% (+1.16% Friday) to mark its strongest weekly performance since March. At the same time, 10yr bund yields fell -35.8bps (-10.5bps Friday), marking their largest weekly decline in records going back to German reunification in 1990. Let's see what week 2 of 2023 brings Tyler Durden Mon, 01/09/2023 - 08:05.....»»

Category: blogSource: zerohedgeJan 9th, 2023

Bed Bath & Beyond (BBBY) Posts Dull Preliminary Results for Q3

Bed Bath & Beyond's (BBBY) dismal Q3 preliminary results and continued failed attempts to turn around raise investors' concerns. Shares of Bed Bath & Beyond Inc. BBBY plunged 30% during the close of the trading session on Jan 5, following its revelation of drab preliminary results for third-quarter fiscal 2022.In the quarter, the company leveraged the liquidity gained from the holiday season to pursue higher in-stock levels. Meanwhile, it collaborated with suppliers, and undertook productive merchandise plans and store fleet optimization plans. However, these efforts failed to bear fruits.The fiscal third-quarter results were impacted by inventory constraints and reduced credit limits, which led to lower levels of in-stock presentation within the assortments.Based on lower customer traffic and reduced levels of inventory availability, management anticipates net sales of $1.26 billion, whereas it reported $1.88 billion in the year-ago period. The company also envisions a net loss of $385.8 million, including impairment charges of $100 million, whereas the company reported a loss of $276.4 million in the year-ago quarter. SG&A expenses are expected to be $583.6 million, whereas it reported $698.0 million in the year-ago period, driven by cost-optimization initiatives.Bed Bath & Beyond also highlighted that it is on track with turnaround plans, with an increased focus on merchandising and inventory, enhancing digital and omni-capabilities, and strengthening its financial position. It is also making efforts to improve its cash position and mitigate any potential liquidity shortfall.But the turnaround plans do not seem to work much for the retailer. According to sources, the company’s dismal outlook has led to suppliers halting shipments. This is likely to further affect its financial situation.That said, BBBY raised concerns about its ability to continue based on recurring losses and negative cash flow from operations for the nine months ended Nov 26, 2022. Consequently, BBBY is currently exploring all alternatives, including restructuring debt, seeking additional debt or equity capital, reducing or delaying the company's business activities and strategic initiatives, selling assets, and filing for bankruptcy. Image Source: Zacks Investment Research In the past year, shares of this Zacks Rank #4 (Sell) company have plunged 87.8% compared with the industry’s decline of 4.8%.ConclusionBBBY has been on a downhill ride for nearly a decade, as evident from its sluggish sales and inability to compete with other retail giants and a shift to private brands. This drove away many loyal customers, who were looking for their favorite brands. However, the company has started to bring back some of the well-known national brands, such as Oxo, Ninja and SodaStream, as part of its turnaround efforts.All said, we hope that Bed Bath & Beyond will be able to come out of the woods soon.Stocks to ConsiderHere are three better-ranked stocks to consider, namely Wingstop WING, Ross Stores ROST and Technoglass TGLS.Ross Stores, an off-price retailer of apparel and home accessories in the United States, currently sports a Zacks Rank #1 (Strong Buy). ROST has an expected EPS growth rate of 10.5% for three to five years. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for Ross Stores’ current-year sales and EPS suggests declines of 1.6% and 11.7%, respectively, from the year-ago period’s reported figures. ROST has a trailing four-quarter earnings surprise of 10.5%, on average.Tecnoglass, the manufacturer and seller of architectural glass and windows, and aluminum products for the residential and commercial construction industries, currently sports a Zacks Rank #1.The Zacks Consensus Estimate for TGLS’ 2023 sales and EPS suggests growth of 11.2% and 9%, respectively, from the year-ago period’s reported levels. TGLS has a trailing four-quarter earnings surprise of 26.9%, on average.Wingstop, the operator of franchises and restaurants, currently carries a Zacks Rank #2 (Buy). WING has a long-term earnings growth rate of 11%.The Zacks Consensus Estimate for Wingstop’s 2023 sales and EPS suggests growth of 18.1% and 16.4%, respectively, from the year-ago period’s reported levels. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Ross Stores, Inc. (ROST): Free Stock Analysis Report Bed Bath & Beyond Inc. (BBBY): Free Stock Analysis Report Tecnoglass Inc. (TGLS): Free Stock Analysis Report Wingstop Inc. (WING): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacksJan 6th, 2023

Markets Have "Considerably More Downside" In 2023: Mark Spiegel

Markets Have "Considerably More Downside" In 2023: Mark Spiegel Submitted by QTR's Fringe Finance Friend of Fringe Finance Mark B. Spiegel of Stanphyl Capital released his most recent investor letter last week, with his updated take on the market’s valuation and Tesla. Mark is a recurring guest on my podcast (and will be coming back on again soon hopefully) and definitely one of Wall Street’s iconoclasts. I read every letter he publishes and only recently thought it would be a great idea to share them with my readers. Like many of my friends/guests, he’s the type of voice that gets little coverage in the mainstream media, which, in my opinion, makes him someone worth listening to twice as closely. Mark was kind enough to allow me to share his thoughts from his December 2022 investor letter, where he noted that his fund was up 17.4% for the month, rounding out a year where he finished up 75.5% net of fees. In his most recent letter he opens up about a new short position, his thoughts on Tesla, how he’s positioned overall in the market and other names he owns. He also, in my opinion, absolutely nails the current (bear) case for the overall market heading into 2023. Mark On Macro And Tesla December 30, 2022 Before I continue, I want to clearly state that the chance of this fund’s 2023 performance being anywhere near that of 2022’s is roughly equal to the chance of Elon Musk offering me a board seat at Tesla. (For the record, I would not accept such an offer as I don’t want to go to jail!) Okay, now that that’s out of the way… Tesla’s inevitable meltdown (alright, so I was a mere eight years too early!) was a big contributor to this year’s performance (and we remain short it, as I believe it has another 90% to go), as were our other short positions in the S&P 500 (via SPY) and, early in the year, the garbage-stock ETF ARKK (which I covered way too early, leaving lots of additional profit on the table). Another meaningful December contributor was an arb position we’ve had on for several months but I haven’t written about here as it was crowded: short AMC shares and long an equal number of APE shares—two essentially identical securities from the insolvent AMC movie theater chain that—thanks to the deliberate ignorance of AMC’s “meme stock” shareholder base—had a massive price disparity between them. In December the inevitable happened when the company announced a financing deal that will merge the two share classes and end that spread; their prices subsequently converged significantly and I anticipate further convergence in January. Meanwhile, we continue to carry a large SPY short position, as I believe the major indexes—although not all individual stocks—have considerably more downside to go, the inevitable hangover from the biggest asset bubble in U.S. history. Stated simply, there’s no way an “everything bubble” built on 0% interest rates and $120 billion/month in quantitative easing can not implode when confronted with near-5% rates and $90 billion a month in quantitative tightening. Although the current rate of 6% to 7% year-over-year inflation (down from over 8%) is unsustainable, I believe we’re in for a new “inflation floor” of around 4% (double the Fed’s already-too-high 2% target) thanks, in the near-term, to a new tailwind in commodity prices as China ends its “zero-Covid policy” and bails out its real estate industry while Biden ends his SPR drawdown and continues his war on fossil fuels. Longer term contributors to that higher inflation floor will be expensive “onshoring,” wage increases due to fewer available workers, and perpetual government budget deficits (most recently exemplified by the egregious new “Omnibus Spending Bill”).  And even if there’s a temporary dip in inflation (as we appear to be seeing now), the Fed does not want to reverse rates too soon and repeat the 1970s: Even an early-2023 Fed interest rate “pause” at 4.75% (and remember, a “pause” is not a “pivot”!) would, combined with $90 billion a month in ongoing QT, make current stock market valuations unsustainable, as stocks are still expensive. According to Standard & Poor’s, with 99% of companies having reported, Q3 S&P 500 GAAP earnings came in at around $44.41, which annualizes to $177.64. (And these were the sixth highest quarterly earnings in history; i.e., they were not “trough.”) A 16x multiple on that—generous for a rising rate, recessionary (or even just slow-growth) environment—would bring the S&P 500 down to 2842 vs. its current 3839. And remember, just as in bull markets PE multiples usually overshoot to the upside, in bear markets they often overshoot to the downside. A bottom formed at a considerably lower multiple is not unfathomable. Additionally, we can see from CurrentMarketValuation.com that the U.S. stock market’s valuation as a percentage of GDP (the so-called “Buffett Indicator”) is still very high, and thus valuations have a long way to go before reaching “normalcy”: For some historical perspective on current market excitement about inflation reports that are trending lower, keep in mind that when the 2000 bubble burst and the Nasdaq was down 83% through its 2002 low and the S&P 500 was down 50%, the rates of CPI inflation were just 3.4% in 2000, 2.8% in 2001 and 1.6% in 2002. In other words, once the bubble burst and the economy slowed, lower inflation did not help stock prices. A 50% drawdown from the S&P 500’s recent bull market peak of 4818 would drop it to 2409, while even a more modest 40% decline would bring it to 2891. Regarding sentiment, we can see from Ed Yardeni that in the Investors Intelligence poll the highest the “bear percentage” got so far in the current market was only around 45% (in the most recent poll it was just 33.3%), yet there were multiple times during the 1980s, 1990s and 2008 that it climbed much higher: Also, we can see from thi old academic paper that during the grinding bear market of 1973 to 1975, when the S&P 500’s GAAP PE multiple dropped from 18x to 8x, the bears in the Investors Intelligence poll climbed to around 75% and went over 80% during the bear markets of the 1960s. So if you think that based on this bear market’s sentiment we’ve “seen the bottom,” I wish you luck! Meanwhile, interest costs on the Federal debt are already set to grow massively. Does the Fed have the stomach to face the political firestorm of Congress having to slash Medicare, the defense budget, etc. in order to pay the even higher interest cost that would be created by upping those rates to a level commensurate with crushing even just 4% inflation? Powell may not have the guts for that, nor does anyone else in Washington; thus, this Fed may be behind the inflation curve for at least a decade. That’s why—as an inflation hedge—we remain long gold (via the GLD ETF). Here then is some commentary on some of our additional positions; please note that we may add to or reduce them at any time… We continue to own Volkswagen AG (via its VWAPY ADR, which represent “preference shares” that are identical to “ordinary” shares except they lack voting rights and thus sell at a discount). VW currently sells for around 3.5x estimated 2022 earnings due to a combination of “recession fears” and short-term issues obtaining energy (until either the Ukraine war is over or alternative supplies are in place), but it controls a massive number of terrific brands including recently IPO’d Porsche, of which it owns 75% at a current market cap (for Porsche) of $92 billion, thus valuing the rest of VW at only around $2 billion! I believe Audi alone is worth $40 billion, and a Lamborghini IPO (at around $15 billion) may be next. Additionally, VW is paying a January special dividend of around $1.90 per VWAPY share in proceeds from Porsche’s IPO (the stock went ex-dividend in December), and the regular yield is currently over 6%! Meanwhile VW Group’s EVs (several of which are more technologically advanced than any Tesla) combine to heavily outsell Tesla in Europe and by 2025 may outsell Tesla worldwide. We continue to own automaker Stellantis (STLA), which has a great balance sheet with plenty of net cash (and a 7.6% dividend yield!) and which—at a current price of $14.20/share—sells for only around 2.6x 2022 earnings estimates of $5.35/share. I believe Jeep alone (which in September announced a full electrification strategy) could be worth more than what we paid for the entire company, which also includes Dodge, Chrysler, Ram, Fiat, Citroen, Peugeot, Opel, Alfa Romeo, Vauxhall, Lancia and Maserati. And if current EV sales are your interest, Stellantis already has Europe’s best-selling mass-market model. We continue to own General Motors (GM), which currently sells for only around 5.4x the $6.26/share midpoint of its 2022 GAAP EPS guidance (which was reiterated in November). GM is doing all the right things in electric cars, software  and autonomous driving (via its Cruise ownership); in fact, Cruise is already running a fleet of fully autonomous cars in multiple U.S. cities—you can see many videos of this on its YouTube channel. GM will also benefit more than any other manufacturer from the proposed new EV tax credit, as it will soon have the largest variety of North American-made (a requirement of the credit) EV models fitting within the new price restrictions. Additionally, the company pays a modest dividend. I thus consider these positions (Stellantis, GM and VW) to be both “freestanding value stock buys” and “relative-value paired trades” against our Tesla short. One oft heard knock against “the autos” is a belief that their recent earnings have been “peak,” but keep in mind that due to supply chain issues they all sold around 20% fewer cars than they otherwise could have. Thus, I believe those recent earnings are more like “strong midcycle” and should likely have around a 10x run-rate PE, not the current 3x to 6x. Also, thanks to those same supply chain issues they’re much lighter on inventory than they’d normally be heading into a recession. Therefore, I believe these stocks have considerable long-term upside from here. We continue to own Fuel Tech Inc. (FTEK), a seller of air and water pollution control technologies, which in November reported a solid Q2, with revenue up 6.1% year-over-year (although at a lower gross margin), .01/share in GAAP earnings and around $600,000 in free cash flow. At a current price of $1.275/share with 30.3 million shares outstanding and $33.9 million in cash and Treasuries (and no debt), this is a 43% gross margin business selling for an enterprise value of only around 0.18x 26.4 million in TTM revenue. This is the kind of company that will either ignite growth and its stock will take off (its new “Dissolved Gas Infusion” water treatment technology is a potential medium-term catalyst for that), or it’s so cheap that it will make for a good strategic acquisition target, as removing the costs of being an independent public company could make it instantly earnings-accretive while allowing the buyer to acquire a nice chunk of revenue very cheaply. In short, I think it’s a good “value stock” in which to park some money and see what happens. If you enjoy this content, I would love to have you as a subscriber and can offer Zero Hedge readers 50% off by using this link. And now, Tesla… Despite running its new factories in the U.S. and Germany at only around 20% of capacity, massive amounts of excess Tesla inventory piled up in Q4, spurring huge, margin-slashing price cuts in China, Europe, the U.S. and Canada & Mexico, and even forcing the company’s China plant to slash December and January production. Tesla’s production capacity now hugely outstrips its rate of incoming orders, which undoubtedly explains why the company is implementing layoffs and a hiring freeze, and its used car prices are plunging too, further killing demand for new ones. Goodbye “story-stock tech company” and hello “cyclical car company” in an industry with single-digit PE ratios! As Tesla slashes prices it will undoubtedly sell more cars (I expect Q4 deliveries to be slightly over 400,000 vs. previous quarters in the 300,000s, thanks to the aforementioned massive price cuts plus a rush to beat big year-end expiring EV incentives in China, Germany, France and Norway), but any other car company can slash prices and do the same thing. And again, Tesla’s apparent market saturation rate of around 1.6 million cars/year worldwide (at least until it slashes prices yet again!) is massively below its current factories’ production capacity, much less the bulls’ absurd expectations of adding a new factory every six months for the next ten years in order to sell 20 million cars a year! For some valuation perspective, BMW sells around 2.5 million cars a year with very high margins (including the best electric SUV now on the market (the new iX), the best luxury EV (the new i7), and among the best small luxury EVs (the new i4), and has a market cap of around $59 billion. If Tesla grew annual deliveries to the size of BMW’s (50% higher than its current run-rate!) and had BMW-level margins, at BMW's current market cap it would sell for less than $19/share vs. this month's closing price in the $123s! (Remember: Tesla now has 3.16 billion shares outstanding!) Meanwhile, Elon Musk remains the most vile person ever to head a large-cap U.S. public company, and we remain short Tesla, the biggest bubble-stock in modern market history, because: It has a sliding share of the world’s EV market yet—even after its recent plunge—still has a market cap greater than those of Toyota, Volkswagen, Hyundai, GM and Ford combined (all of which now offer great EVs), despite stalling out at around 1.6 million annual deliveries vs. a combined 34 million for those other companies! It has no “moat” of any kind; i.e., nothing meaningfully proprietary in terms of its electric car technology (which has now been equaled or surpassed by numerous competitors) and its previously proprietary Superchargers are being opened to everyone). Excluding working capital benefits and sunsetting emission credit sales, Tesla generates only minimal earnings and free cash flow. Elon Musk is a pathological liar who—through his recent “Twitter insanity”—has wrecked the already competition-diminished Tesla brand. In January Tesla will likely announce Q4 deliveries of a bit over 400,000 cars, yet thanks to the massive amount of price-cutting necessary to sell those cars, its earnings (excluding unforeseen extraordinary items) will likely only slightly surpass its Q3 GAAP number of around .87/share excluding sunsetting emission credit sales. And if—after viewing this chart from Twitter user @Keubiko—you believe that Q3 earnings number wasn’t grossly exaggerated, I have a bridge to sell you in Brooklyn: Furthermore, Tesla’s minimal depreciation of its new factories appears fraudulently low, as does its warranty reserve. Even if you believe Tesla’s clearly nonsensical reported earnings, excluding emission credit sales they annualize to only $3.48/share, which based on the current price of $123.18 = a run-rate PE ratio of around 35 for a now slow-growing, margin-slashing car company in an industry with a current average PE of around 5! Meanwhile, Tesla has objectively lost its “product edge,” with many competing cars now offering comparable or better real-world range, better interiors, similar or faster charging speeds and much better quality. (Tesla ranks near the bottom of Consumer Reports’ reliability survey while British consumer organization Which? found it to be one of the least reliable cars in existence.) Thus, due to competitors’ temporary production constraints, waiting times are now longer for nearly all of Tesla’s direct EV competitors than they are for a Tesla.  In fact, Tesla is likely now the second, third or fourth choice for many EV buyers, and only maintains its volume lead though a short-lived edge in production capacity that will disappear over the next 12 to 36 months as competitors rapidly increase the ability to produce their superior EVs. Tesla’s poorly-built Model Y faces current (or imminent) competition from the much better made (and often just better) electric Hyundai Ioniq 5, Kia EV6, Ford Mustang Mach E, Cadillac Lyriq, Nissan Ariya, Audi Q4 e-tron, BMW iX3, Mercedes EQB, Volvo XC40 Recharge, Chevrolet Blazer EV & $30,000 Equinox EV and Polestar 3. And Tesla’s Model 3 now has terrific direct “sedan competition” from Volvo’s beautiful Polestar 2, the great new BMW i4, the upcoming Hyundai Ioniq 6 and Volkswagen Aero, and multiple local competitors in China. And in the high-end electric car segment worldwide the Porsche Taycan (the base model of which is now considerably less expensive than Tesla’s Model S) outsells the Model S, while the spectacular new BMW i7, Mercedes EQS, Audi e-Tron GT and Lucid Air make it look like a fast Yugo, and the extremely well reviewed new BMW iX, Mercedes EQS SUV and Audi Q8 eTron (as well as multiple new Chinese models) do the same to the Model X. Indeed, for years I’ve said “Tesla is Blackberry”—the maker of a first-generation version of a product that—once the market was proven—would be supplanted into niche obscurity by newer, better versions; now I can provide a much more recent analogy: Tesla is Netflix. For years Netflix had an absurd valuation based on its pioneering position in streaming media, but once it proved that such a market existed myriad competitors swarmed all over it, and in 2022 the stock collapsed when we learned that not only is Netflix no longer in “hypergrowth” mode but for the first time since 2011 (when it transitioned from physical DVDs) it actually lost subscribers. I believe Musk knows that Tesla is “the next Netflix” (hence his recent “Twitter buying distraction”), with VW Group, Hyundai/Kia, Ford, GM, Stellantis, BMW, Mercedes, BYD & other Chinese competitors and, in a few years, Toyota & Honda, being the Disney, HBO Max, Amazon Prime, Peacock, Hulu, Paramount+, etc. of the electric car market, stealing Tesla’s share and eventually pounding its stock price into low double-digits, where it would be valued as “just another car company.” Meanwhile, the NHTSA’s investigation of Tesla’s deadly Autopilot has expanded into “an engineering analysis,” the last required step before (finally!) demanding a full recall, and in October it was reported that this deadly scam is being investigated by both the SEC and the DOJ. The refund liability potential for Tesla for this is in the billions of dollars, and possibly even the tens of billions if a class action lawsuit proves that the cars involved were purchased solely due to the (fallacious) promise of “full self-driving.” And, of course, there will be a massive “valuation reappraisal” for Tesla’s stock as the world wakes up to the fact that its so-called “autonomy technology” is deadly, trailing-edge garbage. Meanwhile, the NHTSA continues to report a slew of Autopilot-related deaths, yet Tesla has sold this trashy software for over six years now and still promotes it on its website via a completely fraudulent video! (For all Tesla-related deaths cited in the media—which is likely only a small fraction of those that have occurred—please see TeslaDeaths.com.) Want to see another Elon Musk/Tesla fraud summarized in a simple bar graph? In this recent Consumer Reports test, note which of these cars never comes close—in any environmental conditions—to meeting its claimed EPA range: Another favorite Tesla hype story has been built around so-called “proprietary battery technology.” In fact though, Tesla has nothing proprietary there—it doesn’t make them, it buys them from Panasonic, CATL and LG, and it’s the biggest liar in the industry regarding the real-world range of its cars. And if new-format 4680 cells enter the market, even if Tesla makes some of its own,  other manufacturers will gladly sell them to anyone, and BMW has already announced it will buy them from CATL and EVE. And oh, the joke of a “pickup truck” Tesla previewed in 2019 (and still hasn’t shown in production-ready form) won’t be much of “growth engine” either, as by the time it’s in mass-production in late 2023/early 2024 it will enter a dogfight of a market vs. Ford’s hot-selling all-electric F-150 Lightning and GM’s fantastic 2023 electric Silverado (which already has nearly 200,000 reservations), while Rivian’s pick-up has gotten excellent early reviews, and Ram will also be out with a great electric truck in 2024. Regarding safety, as noted earlier in this letter, Tesla continues to deceptively sell its hugely dangerous so-called “Autopilot” system, which Consumer Reports has completely eviscerated; God only knows how many more people this monstrosity unleashed on public roads will kill despite the NTSB condemning it. Elsewhere in safety, the Chinese government forced the recall of tens of thousands of Teslas for a dangerous suspension defect the company spent years trying to cover up, and Tesla has been hit by a class-action lawsuit in the U.S. for the same defect. Tesla also knowingly sold cars that it knew were a fire hazard and did the same with solar systems, and after initially refusing to do so voluntarily, it was forced to recall a dangerously defective touchscreen. In other words, when it comes to the safety of customers and innocent bystanders, Tesla is truly one of the most vile companies on Earth. Meanwhile, the massive number of lawsuits of all types against the company continues to escalate. If you enjoy this content, I would love to have you as a subscriber and can offer Zero Hedge readers 50% off by using this link. About Mark Spiegel Mark manages Stanphyl Capital, established in 2011, a deep-value equity & macro long-short investing fund based in New York City. Mark can be reached at mark@stanphylcap.com or at @StanphylCap on Twitter. Disclaimer: This letter was not reproduced in full. I may own Tesla call and put options and may be long/short TSLA and or any names mentioned. You should assume I have positions in any names I publish about. I have no position in Mark’s funds. Mark is a subscriber to Fringe Finance via a comped subscription I gave him and has been on my podcast. The excerpts from Mark’s letter, above, shall not be construed as an offer to sell, or the solicitation of an offer to sell, any securities or services. Any such offering may only be made at the time a qualified investor receives formal materials describing an offering plus related subscription documentation. There is no guarantee the Fund’s investment strategy will be successful. Investing involves risk, and an investment in the Fund could lose money. Tyler Durden Thu, 01/05/2023 - 09:40.....»»

Category: blogSource: zerohedgeJan 5th, 2023

B&G Foods (BGS) Refines Portfolio With Back to Nature Sale

B&G Foods (BGS) sells the Back to Nature brand to Barilla America. Management expects to use the sale proceeds for long-term debt repayment, among others. B&G Foods, Inc. BGS is keen on refining its portfolio to increase its focus on growth areas. The company concluded the previously-announced (Dec 15, 2022) sale of the Back to Nature brand to BA Brussels, LLC — a subsidiary of Barilla America, Inc.Management expects to use the sale proceeds for general corporate purposes like the repayment of long-term debt and buying useful assets for B&G Foods’ business, pay taxes, fees and costs associated with the sale.What’s More?B&G Foods is focused on its main priorities, including managing the company efficiently amid the ongoing inflationary pricing and supply scenario. This implies undertaking quick pricing efforts to recover escalated input costs and raising production and critical supply to enhance service levels by more than 95%. It intends to improve organic growth beyond the pandemic recovery to above 1-2% — by making the most of remote/work-from-home trends and renewed cooking interests. Moving on, B&G Foods is focused on brands and categories wherein it has more capability. Next, it is focused on undertaking prudent buyouts that are accretive to the company’s portfolio and cash flows. Management is committed to speeding up cost savings and productivity initiatives to improve margins in the long term.We note that B&G Foods has a successful track record of acquisition-led growth. B&G Foods recently acquired the frozen vegetable manufacturing operations of Growers Express, LLC, which works well for the operations of the company’s Green Giant brand. B&G Foods acquired the Crisco brand in December 2020.Image Source: Zacks Investment ResearchCost Hurdles on the WayB&G Foods has been battling cost inflation like many other industry players. In the third quarter of 2022, the adjusted gross profit of $108 million declined 11.9% year over year from $122.6 million in the year-ago period. The adjusted gross margin contracted 340 basis points (bps) to 20.4%. The gross margin was hurt by greater-than-anticipated input cost inflation. This includes escalated raw materials and transportation expenses.The Zacks Rank #5 (Strong Sell) company expects the input cost inflation to bear a significant impact industry-wide for the remainder of fiscal 2022 and in fiscal 2023. It anticipates significant cost inflation for inputs, such as ingredients, packaging, labor and transportation, to continue based on factors like the pandemic, the Ukraine war, weather conditions, supply-chain hurdles and the shortage of labor. In fiscal 2023, the company expects inflation of 4-5%.That said, B&G Foods is on track to mitigate the impacts of inflation on the gross margin by undertaking cost-saving initiatives, increasing list prices and locking in prices via short-term supply contracts and advance commodities purchase agreements. Management has been undertaking pricing initiatives and cost-containment measures (like locking in costs through forward buying, downsizing and other productivity efforts) to protect margins.Shares of the company have declined 28.6% in the past three months against the industry’s growth of 10.5%.3 Solid Food PicksSome better-ranked stocks are Conagra Brands CAG, Campbell Soup CPB and General Mills GIS.Conagra Brands, operating as a consumer-packaged goods food company, currently carries a Zacks Rank of 2 (Buy). CAG has a trailing four-quarter earnings surprise of 1.8%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The Zacks Consensus Estimate for Conagra Brands’ current financial year sales and earnings suggests growth of 5.8% and 3.8%, respectively, from the corresponding year-ago reported figures.Campbell Soup, which manufactures and markets food and beverage products, currently carries a Zacks Rank of 2. CPB has a trailing four-quarter earnings surprise of 8.7%, on average.The Zacks Consensus Estimate for Campbell Soup’s current financial-year sales and earnings suggests growth of 8.2% and 4.9%, respectively, from the corresponding year-ago reported figures.General Mills, which manufactures and markets branded consumer foods worldwide, currently carries a Zacks Rank #2. GIS has a trailing four-quarter earnings surprise of 8.7%, on average.The Zacks Consensus Estimate for General Mills’ current financial year’s sales and earnings per share suggests growth of 4.5% and 4.6%, respectively, from the year-ago reported figures. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report General Mills, Inc. (GIS): Free Stock Analysis Report Conagra Brands (CAG): Free Stock Analysis Report Campbell Soup Company (CPB): Free Stock Analysis Report B&G Foods, Inc. (BGS): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacksJan 4th, 2023

B&G Foods (BGS) Refines Portfolio With Back to Nature Sale

B&G Foods (BGS) sells the Back to Nature brand to Barilla America. Management expects to use the sale proceeds for long-term debt repayment, among others. B&G Foods, Inc. BGS is keen on refining its portfolio to increase its focus on growth areas. The company concluded the previously-announced (Dec 15, 2022) sale of the Back to Nature brand to BA Brussels, LLC — a subsidiary of Barilla America, Inc.Management expects to use the sale proceeds for general corporate purposes like the repayment of long-term debt and buying useful assets for B&G Foods’ business, pay taxes, fees and costs associated with the sale.What’s More?B&G Foods is focused on its main priorities, including managing the company efficiently amid the ongoing inflationary pricing and supply scenario. This implies undertaking quick pricing efforts to recover escalated input costs and raising production and critical supply to enhance service levels by more than 95%. It intends to improve organic growth beyond the pandemic recovery to above 1-2% — by making the most of remote/work-from-home trends and renewed cooking interests. Moving on, B&G Foods is focused on brands and categories wherein it has more capability. Next, it is focused on undertaking prudent buyouts that are accretive to the company’s portfolio and cash flows. Management is committed to speeding up cost savings and productivity initiatives to improve margins in the long term.We note that B&G Foods has a successful track record of acquisition-led growth. B&G Foods recently acquired the frozen vegetable manufacturing operations of Growers Express, LLC, which works well for the operations of the company’s Green Giant brand. B&G Foods acquired the Crisco brand in December 2020.Image Source: Zacks Investment ResearchCost Hurdles on the WayB&G Foods has been battling cost inflation like many other industry players. In the third quarter of 2022, the adjusted gross profit of $108 million declined 11.9% year over year from $122.6 million in the year-ago period. The adjusted gross margin contracted 340 basis points (bps) to 20.4%. The gross margin was hurt by greater-than-anticipated input cost inflation. This includes escalated raw materials and transportation expenses.The Zacks Rank #5 (Strong Sell) company expects the input cost inflation to bear a significant impact industry-wide for the remainder of fiscal 2022 and in fiscal 2023. It anticipates significant cost inflation for inputs, such as ingredients, packaging, labor and transportation, to continue based on factors like the pandemic, the Ukraine war, weather conditions, supply-chain hurdles and the shortage of labor. In fiscal 2023, the company expects inflation of 4-5%.That said, B&G Foods is on track to mitigate the impacts of inflation on the gross margin by undertaking cost-saving initiatives, increasing list prices and locking in prices via short-term supply contracts and advance commodities purchase agreements. Management has been undertaking pricing initiatives and cost-containment measures (like locking in costs through forward buying, downsizing and other productivity efforts) to protect margins.Shares of the company have declined 28.6% in the past three months against the industry’s growth of 10.5%.3 Solid Food PicksSome better-ranked stocks are Conagra Brands CAG, Campbell Soup CPB and General Mills GIS.Conagra Brands, operating as a consumer-packaged goods food company, currently carries a Zacks Rank of 2 (Buy). CAG has a trailing four-quarter earnings surprise of 1.8%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The Zacks Consensus Estimate for Conagra Brands’ current financial year sales and earnings suggests growth of 5.8% and 3.8%, respectively, from the corresponding year-ago reported figures.Campbell Soup, which manufactures and markets food and beverage products, currently carries a Zacks Rank of 2. CPB has a trailing four-quarter earnings surprise of 8.7%, on average.The Zacks Consensus Estimate for Campbell Soup’s current financial-year sales and earnings suggests growth of 8.2% and 4.9%, respectively, from the corresponding year-ago reported figures.General Mills, which manufactures and markets branded consumer foods worldwide, currently carries a Zacks Rank #2. GIS has a trailing four-quarter earnings surprise of 8.7%, on average.The Zacks Consensus Estimate for General Mills’ current financial year’s sales and earnings per share suggests growth of 4.5% and 4.6%, respectively, from the year-ago reported figures. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report General Mills, Inc. (GIS): Free Stock Analysis Report Conagra Brands (CAG): Free Stock Analysis Report Campbell Soup Company (CPB): Free Stock Analysis Report B&G Foods, Inc. (BGS): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacksJan 4th, 2023

Coca-Cola Or Pepsi? Why The Answer For Investors Is Both!

As fears about a possible recession continue to swirl, investors are looking for places to put their money to protect it against a severe economic downturn. The consumer staples sector can be a source of protection at a time when there is virtually nowhere for investors to hide. While stocks in this sector may go […] As fears about a possible recession continue to swirl, investors are looking for places to put their money to protect it against a severe economic downturn. The consumer staples sector can be a source of protection at a time when there is virtually nowhere for investors to hide. While stocks in this sector may go up less during bull markets, they tend to be more stable during bear markets. Coca-Cola Co (NYSE:KO) and PepsiCo, Inc. (NASDAQ:PEP) are two consumer staples stocks that might be worth considering. In fact, the former is up more than 8% year to date, while the latter has gained 6%, demonstrating both companies’ resilience when the equity market is crumbling. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Warren Buffett Series in PDF Get the entire 10-part series on Warren Buffett in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q3 2022 hedge fund letters, conferences and more   Coca-Cola And Pepsi: The Highlights One of the best things about these two soda-pop companies is their dividends, with PepsiCo's yield at 2.47% and Coca-Cola's at an even more attractive 2.8%. These attractive dividend yields mean both companies might be worth holding even after the danger of recession is past. Warren Buffett certainly thinks so, at least when it comes to Coca-Cola. He has owned shares of the beverage maker for years, and it currently makes up 7.7% of Berkshire Hathaway's portfolio, a sizable chunk of a massive portfolio. Coca-Cola and PepsiCo are both quite profitable, albeit with relatively small net margins due to the many expenses involved in manufacturing and bringing consumer products to market. Both companies are also extremely stable and growing steadily. Digging Into The Fundamentals A review of Coca-Cola's and PepsiCo's fundamentals shows just how strong both of these food and beverage bellwethers are. Coca-Cola is smaller and more profitable, recording $9 billion in net income on $37.3 billion in 2019 before the pandemic and $9.8 billion in net income on $38.7 billion in sales in 2021. The company took a hit early in the pandemic due to the large number of shuttered restaurants that had been selling its beverages, but it recovered quickly as the economy reopened. However, PepsiCo offers a wider array of diversification within the food and beverage industry and is significantly larger than Coca-Cola. Additionally, PepsiCo grew steadily even during the pandemic as its sales soared from $67.2 billion in 2019 to $70.4 billion in 2020 and $79.5 billion in 2021. Meanwhile, its net income jumped from $7.4 billion in 2019 to $7.7 billion in 2021. Coca-Cola's trailing P/E has been fairly stable at around 28 times since December 2020, when it came back down to earth after a brief period above 100 times. On the other hand, PepsiCo's trailing P/E is more volatile but still resilient, falling from about 31 times earlier this year to around 26 times. Why Both Can Be Good For Diversification Investors who are weighing whether to buy just one of these two beverage stocks due to diversification concerns might be interested in knowing the differences between Coca-Cola and PepsiCo. These two companies both own a wide array of consumer brands between them, but they have taken different strategies in choosing which brands to acquire or launch. Coca-Cola is primarily a beverage maker that owns numerous beverage brands, while PepsiCo owns snack brands in addition to its flagship Pepsi brand and other beverage names. As a result, owning both names does give investors exposure to snacks in addition to numerous beverage brands. Benefits Now And In The Long Term At the end of the day, Coca-Cola might be marginally better than PepsiCo based on its slightly higher dividend yield and slightly better fundamentals. However, both of these companies are stalwart, profitable names that won't be going anywhere anytime soon. Thus, investors might want to consider adding one or both to their portfolios as hedges against inflation and recession in the near term and as dividend plays in the long term. Coca-Cola and PepsiCo are both dividend kings, meaning they have both increased their dividends every year for at least the last 50 years......»»

Category: blogSource: valuewalkDec 27th, 2022

How Netflix has changed the global entertainment industry

Netflix has driven a new market for storytelling with local-language series like "Squid Game" and "Money Heist," and now its business is pivoting again with advertising and other new strategies. Netflix's "Squid Game."Youngkyu Park Dominant streamer Netflix is rewriting the playbook for global entertainment. The company drove other major media conglomerates to launch streaming services of their own. As it faces headwinds, Netflix has launched an ad tier and entered the video game market. Since Netflix began its worldwide expansion in 2016, the streaming service has rewritten the playbook for global entertainment — from TV to film, and, more recently, video games.Hollywood used to export most global hit series and movies. Now, thanks to Netflix's investments in international TV and film, programming like South Korea's "Squid Game," Spain's "Money Heist," and France's "Lupin" are finding massive audiences around the world. And its English-language original series, such as Shonda Rhimes' "Bridgerton," Ryan Murphy's "Dahmer" and Tim Burton's "Wednesday," have continued to break Netflix's internal streaming viewership records. But the streamer is in the midst of a reality check, epitomized by its first quarterly subscriber loss in a decade, hundreds in layoffs in 2022, a halved stock price and the sense among employees that Netflix's famed corporate culture has soured somewhat. The squeeze has led the company to look more closely at new avenues for revenue and subscriber gains, such as an ad-supported version of the platform — which it had long dismissed — and a pending crackdown on password sharing. Still, Netflix's impact on the global TV industry is undeniable.How Netflix disrupted the global TV industryThe streamer figured out that to thrive on an international stage it needed both US mass-market programming like "Stranger Things" as well as local content that could win over viewers in specific markets (and produce breakout hits).The strategy helped the streaming service grow its customer base to 214 million global paid subscribers, as of September.Its momentum also reinvigorated production in places like Germany, Mexico, and India, as companies like Amazon, Disney, WarnerMedia, and Apple follow Netflix's lead. More on Netflix's effect on global TV:Netflix's 'Squid Game' is part of a robust international TV strategy that's far ahead of rivals10 reasons 'Squid Game' became a global phenomenon, according to a Netflix marketing execInternational TV producers describe how streaming competition is changing their marketsNetflix's Mark Millar plans to build a streaming superhero universe starting with 'Jupiter's Legacy'Data shows Netflix is leaning into international TV shows in its upcoming projectsHow to sell a show to Netflix with the help of an easily digestible pitch documentA Netflix slide deck shows how it's trying to fix lofty problems in personalizationThe streamer's executive team was rebuilt with a global focusIn recent years, Netflix reoriented its leadership around its new global model.The streaming company, cofounded by tech entrepreneur Reed Hastings, promoted content chief Ted Sarandos to co-CEO in 2020, which cemented the status of content within the organization.Meanwhile, Bela Bajaria, who had been in charge of international non-English TV, took the reins of the overall TV business, and product chief Greg Peters took on additional duties as COO, including streamlining how global teams work together. Peters also hired a new talent chief with international experience, former PepsiCo executive Sergio Ezama, to lead Netflix's global workforce.The company also formed an elite team of 23 interdisciplinary execs to help make its biggest decisions. Known internally as the "Lstaff" — the "L" stands for leadership — the group sits between the company's officers and its larger executive corps of vice presidents and above, who are called the "Estaff."After announcing in the spring that it would explore introducing a cheaper ad-supporter tier to help combat slowing subscriber growth, Netflix in August brought on board Snap executives Jeremi Gorman and Peter Naylor to lead its new ad sales business. The pivot in focus to the ads space has meant a higher profile for Peters, who keeps a low profile but has been speculated to be a contender for CEO, should Hastings and Sarandos consider a succession plan.More on Netflix's corporate structure:Meet the Netflix exec who's leading its disruptive new ads business strategy — and could be CEO one dayNetflix org chart: The 71 most powerful people at the streamer and who they report toThe top HR execs at Hollywood companies like Netflix and NBCUThe top data science execs at Netflix, Disney, WarnerMedia, and more Hollywood companiesNetflix salaries revealed: How much engineers, marketers, content execs, and others get paidNetflix has seen its first wide layoffs, though it continues to growThe corporate restructuring hasn't been without obstacles. The company in April laid off 25 full-time staffers in its marketing department, which included the dismissal of some writers at recently launched fan site Tudum, followed by another 150 cuts in May and the elimination of 30 animation jobs in September. Layoffs for the year have impacted at least 450 full-time Netflix staffers and dozens of contractors as the broader media and entertainment space grapples with a bear market.Still, the company's growth has generally made it a desirable place to work in recent years, despite some tests its corporate culture has faced. Public US work-visa data shows that Netflix, which says its pays staffers "market value," has offered six-figure annual base salaries for lots of roles in engineering, content, marketing, finance, and more.More on Netflix's business model and corporate culture: Netflix insiders describe a culture shift to 'fear-based' decision making, execs stretched thin, and belt tightening amid layoffs and subscriber lossesNetflix insiders reveal 'contentious' debates over how data drives creative decisions, and why beloved series don't always get renewedNetflix says password sharing is hurting growth as it loses subscribers for the first time in a decadeWhat Netflix's sudden embrace of ads could mean for its brand dealsNetflix spending cuts fuel fears that its golden creative age is overNetflix lays off Tudum writers months after 'aggressively' recruiting them for new fan siteNetflix's next frontiers include advertising and gamingNetflix is facing more competition than ever from an influx of rivals that are learning to play its game.Nearly every major media company, from Disney to Apple to Warner Bros. Discovery, now runs a streaming service. Their platforms are stockpiled with tentpole movies and TV shows that used to only be found in theaters or on linear TV, and their libraries now rival Netflix's, particularly as they claw back programming that had been previously licensed to Netflix.The competition is pushing the streaming giant to keep evolving.Netflix has expanded into podcasting and started peddling merchandise for series like "Squid Game" and "The Witcher." The streamer's new ad tier launched in the U.S. in November for $6.99 a month, a steep discount to its ad-free standard tier that costs $15.49 a month. Some TV writers were disappointed by the move into ads, with creators worrying that Netflix will take fewer risks on programming in order to please advertisers. The company is also bringing video games into its mobile streaming app.It hired in July 2021 Facebook's former head of Reality Labs, Mike Verdu, as its vice president of game development, and has been hiring for other video-game-related jobs.The streamer plans to approach gaming like it did movies and TV shows. It's starting slowly by commissioning and licensing mobile games, some of which are based on existing franchises like "Stranger Things." It plans to experiment with other kinds of video-game storytelling, as it did with its original series.In May, it plans to release both a game and animated series based off the same franchise, the "Exploding Kittens" card game, which will be a first for the platform."Maybe someday we'll see a game that spawns a film or a series," Peters, the operating and product chief, told investors in July. "That would be an amazing place to get to and really see the rich interplay between these sort of different forms of entertainment."More on Netflix's advertising and gaming ambitions: Netflix is entering a new era with ads. Here's how marketers and brands could influence the programming you see on the streamer.Netflix has launched its ad-supported tier — here's everything we know about how the streaming giant is pitching advertisersWhy Netflix could still win at advertising despite missing campaign viewer targetsI tried Netflix's new mobile video games. They're a work in progress, but lay the groundwork for bigger ambitions.Why Netflix's new video-game strategy will live or die by how well it can create mega movie and TV franchisesNetflix is doubling down on gaming, with dozens of new hires and a dedicated studio, as it chases younger audiences and battles to turn back subscriber lossesRead the original article on Business Insider.....»»

Category: topSource: businessinsiderDec 26th, 2022

Stocks Have "Considerably More Downside" & Commodities Have A "Brand New Tailwind" In 2023

Stocks Have "Considerably More Downside" & Commodities Have A "Brand New Tailwind" In 2023 Submitted by QTR's Fringe Finance Friend of Fringe Finance Mark B. Spiegel of Stanphyl Capital released his most recent investor letter last week, with his updated take on the market’s valuation and Tesla. Mark is a recurring guest on my podcast (and will be coming back on again soon hopefully) and definitely one of Wall Street’s iconoclasts. I read every letter he publishes and only recently thought it would be a great idea to share them with my readers. Like many of my friends/guests, he’s the type of voice that gets little coverage in the mainstream media, which, in my opinion, makes him someone worth listening to twice as closely. Photo: Real Vision Mark was kind enough to allow me to share his thoughts from his November 2022 investor letter. Mark’s Thoughts On Macro Despite the stock market’s recent rally (we were up a hell of a lot more this month before today!) we  continue to carry a large SPY short position, as I believe the major indexes—although not all individual  stocks—have considerably more downside to go, the inevitable hangover from the biggest asset bubble in U.S. history. For far too long, the Fed printed $120 billion a month and held short-term rates at zero while the government concurrently ran a record fiscal deficit. Now, thanks to the massive inflationary  hangover from those idiotic policies (November’s “not as bad as feared” data not withstanding), the Fed is reducing its balance sheet and raising interest rates, and although the current rate of high-7% year over-year inflation is unsustainable, the eventual end of China’s “zero-Covid policy” and its November reversal on bailing out its real estate industry combined with the end of Biden’s SPR drawdowns will give commodity prices a brand new tailwind in 2023. Longer term, the war on fossil fuel, expensive “onshoring,” fewer available workers and perpetual government budget deficits make a new baseline of  around 4% inflation (double the Fed’s 2% target) likely.  Even a 2023 Fed interest rate “pause” at 4.75% (and remember, a “pause” is not a “pivot”!) would,  combined with $90 billion a month in ongoing QT, make current stock market valuations unsustainable,  as stocks are still expensive. [QTR’s note: This echos Kenny Polcari’s sentiments & my sentiments of recent.] According to Standard & Poor’s, with 97% of companies having reported, Q3 S&P 500 GAAP earnings came in at around $44.79, which annualizes to $179.16. (And these were the sixth  highest quarterly earnings in history; i.e., they were not “trough.”) A 16x multiple on that—generous for  a rising rate, recessionary (or even just slow-growth) environment—would bring the S&P 500 down to 2867 vs. November’s close of 4080.11. And remember, just as in bull markets, PE multiples usually overshoot to the upside, in bear markets they often overshoot to the downside. A bottom formed at a  considerably lower multiple is not unfathomable.  Additionally, we can see from CurrentMarketValuation.com that the U.S. stock market’s valuation as a  percentage of GDP (the so-called “Buffett Indicator”) is still very high, and thus valuations have a long way  to go before reaching “normalcy”: Regarding sentiment, we can see from Ed Yardeni that in the Investors Intelligence poll the highest the “bear percentage” got so far in the current market was only around 45% (in the most recent poll it was just 31.5%), yet there were multiple times during the 1980s, 1990s and 2008 that it climbed much higher:  Also, we can see from this old academic paper that during the grinding bear market of 1973 to 1975, when  the S&P 500’s GAAP PE multiple dropped from 18x to 8x, the bears in the Investors Intelligence poll climbed to around 75% and went over 80% during the bear markets of the 1960s. So if you think that based on this bear market’s sentiment we’ve “seen the bottom,” I wish you luck! Meanwhile, interest costs on the Federal debt are already set to grow massively. Does anyone seriously think this Fed has the stomach to face the political firestorm of Congress having to slash Medicare, the  defense budget, etc. in order to pay the even higher interest cost that would be created by upping those rates to a level commensurate with crushing even just 4% inflation? Powell doesn’t have the guts for that, nor does anyone else in Washington; thus, this Fed will likely be behind the inflation curve for at least a  decade. And that’s why we remain long gold (via the GLD ETF).  Mark On His Fund’s Positions (Positions May Change At Any Time) We continue to own automaker Stellantis (STLA), which has a great balance sheet with plenty of net cash (and a 7% dividend yield!) and which—at a current price of $15.62/share—sells for only around 3x 2022 earnings estimates of $5.26/share. I believe Jeep alone (which in September announced a full  electrification strategy) could be worth more than what we paid for the entire company, which also  includes Dodge, Chrysler, Ram, Fiat, Citroen, Peugeot, Opel, Alfa Romeo, Vauxhall, Lancia and Maserati. And if current EV sales are your interest, Stellantis already has Europe’s best-selling mass-market model.  We continue to own Volkswagen AG (via its VWAPY ADR, which represent “preference shares” that are  identical to “ordinary” shares except they lack voting rights and thus sell at a discount). VW currently sells  for around 4.2x estimated 2022 earnings due to a combination of “recession fears” and short-term issues obtaining energy (until either the Ukraine war is over or alternative supplies are in place), but it controls a massive number of terrific brands including Porsche, of which it recently IPO’d a small percentage at  a $73 billion valuation, thus valuing the rest of the company at only around $10 billion; I believe Audi  alone is worth 4x that! And a Lamborghini IPO may be next. Additionally, VW will pay a January special  dividend of around $1.90 per VWAPY share in proceeds from Porsche’s IPO, and the regular yield is  currently over 5%! Meanwhile VW Group’s EVs (several of which are more technologically advanced than  any Tesla) combine to heavily outsell Tesla in Europe and by 2025 may outsell Tesla worldwide. We continue to own General Motors (GM), which currently sells for only around 6.5x the $6.26/share  midpoint of its 2022 GAAP EPS guidance (which was reiterated in November). GM is doing all the right  things in electric cars, autonomous driving (via its Cruise ownership) and software, yet it’s cheap because,  as with other established automakers, many investors have (for now) forsaken it in favor of “electric car  pure-plays,” a sector which has thus become the largest valuation bubble in history. Get 50% off: If you enjoy this article, would like to support my work, I would love to have you as a subscriber and can offer you 50% off for life: Get 50% off forever And regarding  “autonomy,” keep in mind that unlike Tesla, which sells a LiDAR-less fraud to rubes, Cruise is already  running a fleet of fully autonomous cars in San Francisco (and soon Phoenix and Austin); you can see many  videos of this on its YouTube channel. GM will also benefit more than any other manufacturer from the  proposed new EV tax credit, as it will soon have the largest variety of North American-made (a requirement of the credit) EV models fitting within the new price restrictions. Additionally, in August the  company reinstituted a modest dividend. I thus consider these positions (Stellantis, GM and VW) to be both “freestanding value stock buys” and “relative-value paired trades” against our Tesla short.One oft heard knock against “the autos” is a belief  that their recent earnings have been “peak,” but keep in mind that due to supply chain issues they all  sold around 20% fewer cars than they otherwise could have. Thus, I believe those recent earnings are more like “strong midcycle” and should likely have around a 10x run-rate PE, not the current 3x to 6x. Also, thanks to those same supply chain issues they’re much lighter on inventory than they’d normally  be heading into a recession. Therefore, I believe these stocks have considerable upside from here.  We continue to own Fuel Tech Inc. (FTEK), a seller of air and water pollution control technologies, which in November reported a solid Q2, with revenue up 6.1% year-over-year (although at a lower gross margin),  .01/share in GAAP earnings and around $600,000 in free cash flow. At a current price of $1.24/share with  30.3 million shares outstanding and $33.9 million in cash and Treasuries (and no debt), this is a 43% gross  margin business selling for an enterprise value of only around 0.14x 26.4 million in TTM revenue. This is  the kind of company that will either ignite growth and its stock will take off (its new “Dissolved Gas  Infusion” water treatment technology is a potential medium-term catalyst for that), or it’s so cheap that  it will make for a good strategic acquisition target, as removing the costs of being an independent public  company could make it instantly earnings-accretive while allowing the buyer to acquire a nice chunk of  revenue very cheaply. In short, I think it’s a good “value stock” in which to park some money and see what  happens.  And now, Tesla…  Despite big, margin-slashing price cuts in both China and Europe, Tesla delivery wait times worldwide  have declined substantially, down to just one week in China while in the U.S. (where Musk’s Twitter boondoggle is rapidly destroying the brand) Tesla is choking on Model 3 inventory and offers December Model Y delivery, while Europe’s backlog is expected to be completely gone by year-end. This means Tesla’s production capacity now outstrips its rate of incoming orders despite the new German and Texas  factories producing at only around 10% of capacity!  Meanwhile, combined deliveries for the last two quarters (Q2 & Q3 2022) were lower than those for  the previous two quarters (Q4 2021 & Q1 2022). As Tesla slashes prices it will undoubtedly sell more  cars (I expect Q4 deliveries to be in the range of around 400,000 vs. previous quarters in the 300,000s,  thanks to the cuts plus a rush to beat year-end expiring EV incentives in China, Germany and France), but any other car company can slash prices and do the same thing. (Welcome to the auto business,  which currently sells for around 5x earnings!) Tesla’s apparent market saturation rate of around 1.6 million cars/year worldwide (at least until it slashes prices yet again!) is massively below its current factories’ production capacity, much less the bulls’ absurd expectations of adding a new factory every six months for the next ten years! For some valuation perspective, BMW sells around 2 million cars a year with very high margins  (including the best electric SUV now on the market (the new iX), the best luxury EV( the new i7), and  among the best small luxury EVs (the new i4), and has a market cap of around $59 billion. If Tesla grew annual deliveries to the size of BMW’s and had BMW-level margins, at BMW's current market cap it  would sell for less than $19/share vs. this month's closing price in the $194s! (Remember: Tesla now  has 3.16 billion shares outstanding!)  Meanwhile, Elon Musk remains the most vile person ever to head a large-cap U.S. public company, and  we remain short Tesla, the biggest bubble-stock in modern market history, because:  1) It has a sliding share of the world’s EV market and a share of the overall auto market that’s less than 2%, yet a market cap almost as big the next 6 largest automakers (by market cap) combined.  2) It has no “moat” of any kind; i.e., nothing meaningfully proprietary in terms of its electric  car technology (which has now been equaled or surpassed by numerous competitors) and its previously proprietary Superchargers are being opened to everyone), while existing  automakers—unlike Tesla—have a decades-long “experience moat” of knowing how to  mass-produce, distribute and service high-quality cars consistently and profitably.  3) Excluding working capital benefits and sunsetting emission credit sales Tesla generates only  minimal free cash flow.  4) Growth in sequential demand for Tesla’s cars is at a crawl relative to expectations. 5) Elon Musk is a pathological liar.  In October Tesla claimed that it had Q3 GAAP earnings of around .87/share excluding sunsetting emission  credit sales. If you believe that after viewing this chart (courtesy of Twitter user @Keubiko), I have a bridge to sell you in Brooklyn: Orange is revenue, green is operating expenses Furthermore, Tesla’s minimal depreciation of its new factories appears fraudulently low, as does its  warranty reserve.  Even if you believe Tesla’s clearly nonsensical earnings number, it annualizes to only $3.48/share, which  based on November’s closing price of $194.70 = a run-rate PE ratio of around 56 for a now slow-growing (or growing-but-margin-slashing) car company in an industry with a current average PE of around 5.  Meanwhile, Tesla has objectively lost its “product edge,” with many competing cars now offering comparable or better real-world range, better interiors, similar or faster charging speeds and much better quality. (Tesla ranks near the bottom of Consumer Reports’ reliability survey while British consumer  organization Which? found it to be one of the least reliable cars in existence.) Thus, due to competitors’ temporary production constraints, waiting times are now longer for many of Tesla’s direct EV competitors than they are for a Tesla.   In fact, Tesla is likely now the second, third or fourth choice for many EV buyers, and only maintains its  volume lead though a short-lived edge in production capacity that will disappear over the next 12 to 36 months as competitors rapidly increase the ability to produce their superior EVs. Tesla’s poorly-built  Model Y faces current (or imminent) competition from the much better made (and often just better)  electric Hyundai Ioniq 5, Kia EV6, Ford Mustang Mach E, Cadillac Lyriq, Nissan Ariya, Audi Q4 e-tron, BMW  iX3, Mercedes EQB, Volvo XC40 Recharge, Chevrolet Blazer EV & $30,000 Equinox EV and Polestar 3. And  Tesla’s Model 3 now has terrific direct “sedan competition” from Volvo’s beautiful Polestar 2, the great  new BMW i4, the upcoming Hyundai Ioniq 6 and Volkswagen Aero, and multiple local competitors in  China.  And in the high-end electric car segment worldwide the Porsche Taycan (the base model of which is now  considerably less expensive than Tesla’s Model S) outsells the Model S, while the spectacular new BMW  i7, Mercedes EQS, Audi e-Tron GT and Lucid Air make it look like a fast Yugo, and the extremely well  reviewed new BMW iX, Mercedes EQS SUV and Audi Q8 eTron (as well as multiple new Chinese models)  do the same to the Model X.  Indeed, for years I’ve said “Tesla is Blackberry”—the maker of a first-generation version of a product  that—once the market was proven—would be supplanted into niche obscurity by newer, better versions;  now I can provide a much more recent analogy: Tesla is Netflix. For years Netflix had an absurd valuation  based on its pioneering position in streaming media, but once it proved that such a market existed myriad  competitors swarmed all over it, and this year the stock collapsed when we learned that not only is Netflix  no longer in “hypergrowth” mode but for the first time since 2011 (when it transitioned from physical  DVDs) it actually lost subscribers. I believe Musk knows that Tesla is “the next Netflix” (hence his recent  “Twitter buying distraction”), with VW, Hyundai/Kia, Ford, GM, Stellantis, BMW, Mercedes, BYD & other  Chinese competitors and, in a few years, Toyota & Honda, being the Disney, HBO Max, Amazon Prime, Peacock, Hulu, Paramount +, etc., of the electric car market, stealing Tesla’s share and eventually  pounding its stock price down 90% or so from today’s, into the valuation of “just another car company.” Despite this obvious “writing on the wall,” many Tesla bulls sincerely believe that ten years from now the  company will be twice the size of Volkswagen or Toyota, thereby selling around 20 million cars a year (up  from the anticipated Q4 annualized run-rate of around 1.6 million); in fact in May Musk himself even  raised this as a possibility. Setting aside the absurdity of selling that many cars into the limited market of Tesla’s high price points, the “logistical absurdity” of selling 20 million cars/year in ten years means that  in addition to 2.4 million cars a year of sold-out existing claimed production capacity (once the German  and Texas factories are fully operational), Tesla would have to add 35 more brand new 500,000 car/year  factories with sold out production; i.e., a new factory approximately every single quarter for the next ten years! Only a Teslemming could be dumb enough to believe this!  Meanwhile, in June the NHTSA announced that its investigation of Tesla’s deadly Autopilot has  expanded into “an engineering analysis,” the last required step before (finally!) demanding a full recall,  and in October it was reported that this deadly scam is being investigated by both the SEC and the DOJ.  The refund liability potential for Tesla for this is in the billions of dollars, and possibly even the tens of  billions if a class action lawsuit proves that the cars involved were purchased solely due to the  (fallacious) promise of “full self-driving.” And, of course, there will be a massive “valuation reappraisal”  for Tesla’s stock as the world wakes up to the fact that Tesla’s so-called “autonomy technology” is deadly, trailing-edge garbage. In fact, the NHTSA has reported a slew of Autopilot-related deaths just  since last year. For all Tesla deaths cited in the media—which is likely only a small fraction of those that  have occurred—see TeslaDeaths.com. And Tesla has sold this trashy software for over six years now:  …and still promotes it on its website via a completely fraudulent video! Another favorite Tesla hype story has been built around so-called “proprietary battery technology.” In fact  though, Tesla has nothing proprietary there—it doesn’t make them, it buys them from Panasonic, CATL and LG, and it’s the biggest liar in the industry regarding the real-world range of its cars. And if new-format 4680 cells enter the market some time in 2024 (as is now expected), even if Tesla makes some of its own,  other manufacturers will gladly sell them to anyone, and BMW has already announced it will buy them  from CATL and EVE.  And oh, the joke of a “pickup truck” Tesla previewed in 2019 (and still hasn’t shown in production-ready  form) won’t be much of “growth engine” either, as by the time it’s in mass-production in 2024 it will enter  a dogfight of a market; in fact, Ford’s terrific 2022 all-electric F-150 Lightning now has over 200,000 retail  reservations (plus many more fleet reservations), GM has introduced its fantastic 2023 electric Silverado which already has nearly 200,000 reservations, Rivian’s pick-up has gotten excellent early reviews, and  Ram will also be out with a great truck in 2024. About Mark Spiegel Mark manages Stanphyl Capital, established in 2011, a deep-value equity & macro long-short investing fund based in New York City. Mark can be reached at mark@stanphylcap.com or at @StanphylCap on Twitter. Disclaimer: This letter was not reproduced in full. I may own Tesla call and put options and may be long/short TSLA and or any names mentioned. You should assume I have positions in any names I publish about. I have no position in Mark’s funds. Mark is a subscriber to Fringe Finance via a comped subscription I gave him and has been on my podcast. The excerpts from Mark’s letter, above, shall not be construed as an offer to sell, or the solicitation of an offer to sell, any securities or services. Any such offering may only be made at the time a qualified investor receives formal materials describing an offering plus related subscription documentation. There is no guarantee the Fund’s investment strategy will be successful. Investing involves risk, and an investment in the Fund could lose money. Tyler Durden Sun, 12/04/2022 - 15:40.....»»

Category: blogSource: zerohedgeDec 4th, 2022

Rolex, Patek, And Audemars Piguet Watch Prices Continue Drop As Crypto Winter Worsens

Rolex, Patek, And Audemars Piguet Watch Prices Continue Drop As Crypto Winter Worsens Global macroeconomic headwinds increasingly mount, such as high inflation, quantitative tightening by central banks, elevated cross-asset volatility, increasing recession odds, and the Russia-Ukraine war, as the new year quickly approaches.  A few days ago, we pointed out that the newly minted crypto millionaires who panic-bought luxury vehicles are dumping Mercedes G-Wagons and McLaren supercars as crypto winter worsen with the implosion of FTX. And possibly the selling is spreading to other luxury items such as watches.  Besides fancy vehicles, fast money bought watches during the pandemic boom, and lots of them. Prices for Rolex, Patek Philippe, and Audemars Piguet soared to astronomical levels, but as stocks, bonds, and crypto entered bear markets earlier this year, these watches began to drop in value. Earlier this year, we pointed out the top in the watch market in a note titled "Investors' Clock Out' Of Rolex Bull Market As Demand Cools."  Now the Subdial50 index, an index tracking the top 50 most traded second-hand luxury watches on the pre-owned market, is making new lows, and according to Bloomberg, "has fallen to levels not seen since before an unprecedented boom in 2021 and early 2022."  The decline shows the most sought-after watches from the top Swiss brands haven't been able to maintain lofty prices hit during the pandemic when cash-flush consumers stuck at home snapped up Patek Nautilus, Audemars Piguet Royal Oaks and Rolex Daytonas in a frenzied search for the next hot asset class. Dominated by Rolex references including the Daytona ceramic bezel chronograph and GMT Master II, the Subdial50 Index has declined by almost 5% in 12 months and nearly 17% in half a year. The falling demand coincided with declines in technology stocks and the crash in cryptocurrencies. Secondary market prices for the Royal Oak "Jumbo" reference 15202 soared above £110,000 ($134,840) at their peak in March, more than doubling over 12 months. Now the watch is trading at around £70,000. -Bloomberg  Boom/bust chart of the luxury watch market.  And with the economy headed for more turmoil next year, as Citi chief economist Nathan Sheets warned this week to clients, that could mean watch prices have yet to hit bottom.  Tyler Durden Sat, 12/03/2022 - 08:45.....»»

Category: blogSource: zerohedgeDec 3rd, 2022

Valuation And Dividend Safety Analysis: Pfizer (PFE)

Pfizer (NYSE:PFE) is a well-known pharmaceutical company popular with dividend growth and income investors. The company has grown into one of the largest pharma companies. The company’s success in the past couple of years during the COVID-19 pandemic makes the stock attractive. Pfizer has used higher revenue, earnings, and cash flow smartly. Currently, Pfizer is […] Pfizer (NYSE:PFE) is a well-known pharmaceutical company popular with dividend growth and income investors. The company has grown into one of the largest pharma companies. The company’s success in the past couple of years during the COVID-19 pandemic makes the stock attractive. Pfizer has used higher revenue, earnings, and cash flow smartly. Currently, Pfizer is yielding over 3% and is a Dividend Contender. Even though Pfizer has performed relatively well during the bear market of 2022, the stock is trading at a low price-to-earnings ratio of about 7.65X, suggesting PFE is a long-term buy. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Series in PDF Get the entire 10-part series on Charlie Munger in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues. (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q3 2022 hedge fund letters, conferences and more   Overview Of Pfizer Pfizer is one of the largest global pharmaceutical companies. In the past several years, it was reorganized into a worldwide R&D pharma company. In addition, the firm divested its consumer health and off-patent business. Today, Pfizer focuses on inflammation & immunology, oncology, vaccines, and rare diseases. Major brands and therapies include Prevnar, Ibrance, Xtandi, Sutent, Inlyta, Paxlovid, Comirnaty, Xeljanz, Enbrel, and more. Sales have more than doubled in the past two years because of the COVID-19 vaccine, Comirnaty, an anti-viral drug, and Paxlovid. Total revenue was $81,288 million in 2021 and $99,878 million in the past twelve months. Selected Data for Pfizer (NYSE) Ticker PFE Market Cap $277.80 billion Stock Price $49.49 Dividend (FWD) $1.60 Dividend Yield 3.23% P/E Ratio (FWD) 7.65 Source: Data from Portfolio Insight (as of November 30, 2022) PFE's Dividend And Dividend Safety PFE is a Dividend Contender with 12 consecutive annual increases. The forward dividend rate is $1.60 per share; the calculated dividend yield is ~3.23% at the current price. Unfortunately, this value is less than the trailing 5-year average of 3.66%. But the dividend yield is more than twice the S&P 500 Index's average. The company's last quarterly dividend increase was to $0.40 per share from $0.39 per share in December 2021. Investors should expect another increase at the end of 2022. Pfizer generally raises the dividend in the low-to-mid single-digits. That said, the dividend growth rate is slowing. It was 5.39% CAGR in the trailing five years and 6.91% CAGR in the past ten years. Additionally, Pfizer has outstanding dividend safety metrics from the view of earnings, free cash flow (FCF), and debt. Based on adjusted earnings, the forward payout ratio is about 35% based on an annual dividend of $1.60 per share and estimated diluted non-GAAP earnings per share of $6.47 in 2022. Our target value is 65% signifying the company’s dividend is safe. However, Pfizer's revenue and net income surged because of its success with the COVID-19 vaccine and anti-viral. Declining sales of these two therapies will probably result in a high payout ratio in the future. The dividend is also safe from the standpoint of FCF. In the last twelve months, FCF was about $23,362 million. The dividend required $8,927 million, giving a dividend-to-FCF ratio of about 38%. This percentage is almost half of our target of 70%, suggesting the dividend is safe. Pfizer is an acquisitive company and tends to use debt often. At the end of Q3 2022, PFE had ~$33,304 million in cash, cash equivalents, and marketable securities. It held $5,990 million in short-term debt, and long-term debt was $34,294 million. But debt is not a risk for the dividend with a leverage ratio of 0.16X and interest coverage of more than 31X. Pfizer has used the cash flow from COVID-19 revenue to plus up its cash position. Moreover, PFE has an A+/A2 upper medium investment grade credit rating, a bit lower after its reorganization. However, debt is not a concern for dividend safety. Competitive Advantage, Risks, and Valuation As one of the largest global pharmaceutical companies, Pfizer has significant scale in R&D, manufacturing, regulatory affairs, distribution, and marketing. Scale and size allow Pfizer to bring new therapies to market, partner with smaller companies, or acquire entire companies outright. Only a few other pharma companies can do so. Also, Pfizer has at least eight drugs with $1+ billion in annual revenue and a robust pipeline. In addition, the company has used its success with the COVID-19 vaccine and anti-viral to reinforce its pipeline. Pfizer faces risks with patent expiration, generics, competition, and FDA regulatory approvals. The political landscape is also filled with efforts to combat higher prices, especially in the United States. The Inflation Reduction Act may result in Medicare negotiating prices for some of Pfizer’s drugs. Pfizer is undervalued. At the current stock price, the company trades at a forward PE ratio of about 7.65X, below the range in the past decade of 14.4X to 15.3X, implying PFE is undervalued. But the dividend yield is higher than the trailing 5-year average. However, Pfizer is increasingly viewed as an excellent dividend stock. Popular dividend ETFs, like SCHD or VYM, include the stock in their top 10 holdings. The combination of market leadership, a growing dividend, dividend safety, and undervaluation makes PFE a long-term buy. Disclosure: None. Disclaimer: The author is not a licensed or registered investment adviser or broker/dealer. He is not providing you with individual investment advice. Please consult with a licensed investment professional before you invest your money.  Author Bio: Prakash Kolli is the founder of the Dividend Power site. He is a self-taught investor, analyst, and writer on dividend growth stocks and financial independence. His writings can be found on Seeking Alpha, InvestorPlace, Business Insider, Nasdaq, TalkMarkets, ValueWalk, The Money Show, Forbes, Yahoo Finance, and leading financial sites. In addition, he is part of the Portfolio Insight and Sure Dividend teams. He was recently in the top 1.0% and 100 (73 out of over 13,450) financial bloggers, as tracked by TipRanks (an independent analyst tracking site) for his articles on Seeking Alpha......»»

Category: blogSource: valuewalkNov 30th, 2022

China’s Zero-COVID Restrictions Can’t Stop JD.com

JD.com is the Amazon.com of China with an annual active user base of 588.4 million making it the largest online retailer and internet company in the country Net revenues still managed to rise double digits 11.4% despite 17% of its customers in COVID restricted geographies JD stock moves with the rest of the Chinese stocks […] JD.com is the Amazon.com of China with an annual active user base of 588.4 million making it the largest online retailer and internet company in the country Net revenues still managed to rise double digits 11.4% despite 17% of its customers in COVID restricted geographies JD stock moves with the rest of the Chinese stocks as they fluctuate as a group in anticipation of China’s zero-COVID policy tightening and loosening rumors JD.com has strict and stringent quality controls that ensure its products are authentically sourced from the original designer brands to stop the sale of counterfeits hence the motto, “Authentic Products Delivered Today” if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q3 2022 hedge fund letters, conferences and more   Find A Qualified Financial Advisor Finding a qualified financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you're ready to be matched with local advisors that can help you achieve your financial goals, get started now. China’s largest online retailer JD.com (NASDAQ:JD) is also its largest internet company by revenue. It is often referred to as the Amazon (NASDAQ:AMZN) of China. The Company not only generates e-commerce revenues but also has a logistics division that has managed to increase revenues at a 20% annual clip and is finally hitting profitability. JD is continuing to show positive top-line growth while competitor Ali Baba (NYSE:BABA) has seen growth slow to low single digits in the same period. From household items to computers and electronics to cosmetics, apparel, baby and pet supplies to groceries and food delivery, JD carries everything and is a master of optimizing the supply chain. It’s Shop Now 1-hour delivery service recorded triple-digit general merchandise value (GMV) growth covering the majority of supermarket chains in China. The Company has seen its fastest growth in the home appliances, fresh goods, health, sports, and pets categories. Its nationwide fulfillment network cover 99% of China’s population. The Company is in a leading position to snap back sharply when COVID is finally in the rearview mirror in China, but that day seems to be getting pushed farther away with surging cases. Zero Tolerance Counterfeit Merchandise Policy To combat the tarnished image of counterfeits and knock-offs in China, JD has a one-strike “zero tolerance” policy to permanently ban and fine any merchants selling counterfeits on its platform. This has enticed many luxury European brands to partner with the Company to offer authentic luxury, and premiere products directly sourced from the designers. JD is the first platform to establish a partnership with nine luxury brands under the LVMH Group (OTCMKTS:LVMUY) after onboarding Italian fashion brand Fendi. JD also had a number of widely regarded brands join its platform including Christian Louboutin, La Prairie, and Lululemon Athletica (NASDAQ:LULU). The Company strives to maintain high quality over knock-offs and counterfeits with its direct control over the supply chain.   Double Digit Growth JD.com reported its fiscal Q3 2022 earnings on Nov. 18, 2022. The Company reported earnings-per-share (EPS) of RMB 6.27 per share beating consensus analyst estimates for RMB 4.46, by RMB 1.81. Revenues climbed 11.4% year-over-year (YoY) to RMB 243.53 billion or $34.2 billion, missing analyst estimates for RMB 243.77 billion, by (-$270 million). Annual active customer accounts rose 6.5% to 588.3 million. JD.com CEO Lei Xu commented, “We are pleased that JD.com's high-quality growth is increasingly powered by the millions of SMEs, especially in rural industries that look to us for the most efficient supply chain solutions and sustainable growth opportunities. Looking ahead, we are confident that our well-established supply chain infrastructure, technical capabilities, as well as the social responsibility we shoulder, will continue to enable JD.com to play an important role in the new development phase in the years to come.”   Dueling Weekly Market Structure Triggers JD shares have been in a year-long falling price channel that put in a bottom at $33.17 on Oct. 24, 2022, before staging a sharp rally into its Q3 2022 earnings upon triggering its weekly market structure low (MSL) buy trigger above $44.84. Shares managed to peak at $58.78 after releasing strong earnings only before a sell-the-news wave of selling formed a weekly market structure high (MSH) sell trigger below $49.24. This sets up an interesting bull versus bear dueling market structure triggers with the bulls attempting to hold the line at the $44.84 MSL buy trigger and bears at the $49.24 sell trigger. The weekly 20-period exponential moving average (EMA) is flattening at $52.22 while the weekly 50-period MA continues to fall at $59.33. The weekly stochastic continues to rise through the 40-band but volume took a dramatic slip to just half of the prior week’s volume heading into earnings. Pullback support levels sit at the $44.84 MSL trigger, $41.56, $37.69, $33.17 swing low, and $30.84. COVID Restrictions Impact on Logistics The Company addressed the logistics disruptions stemming from the zero-COVID policy. It’s had the heaviest impact in 2022 as 17% of customer home addresses have been affected by COVID control measures making it the worst year in terms of fulfillment. It has resulted in higher rates of cancelations and longer waiting times. However, JD Logistics (JDL) remains number one in the industry due to its supply chain capability managing over 1,500 warehouses and 30 million square meters. JDL Airlines commenced operations in Q3 2022 to strengthen JDL’s integrated supply chain services. The Company views “… the 20 new rules guiding COVID control policies as positive and constructive towards the recovery of domestic supply chain and consumer confidence,” but will take time to see the positive impact on consumption data according to JD CFO Sandy Xu.    Be Aware of Embedded China Stock Risk Geopolitical tensions between the U.S. and China have a muted effect on JD shares since it conducts most of its business in China. However, the zero-COVID policy has literally grouped all Chinese stocks or ADR/ADS’ together regardless of individual performance or even sector. Any indications of an easing of COVID restrictions tend to spike Chinese stocks higher, while indications of further clamp downs stemming from record COVID infections tend to rug-pull them down. Investors should be aware that every Chinese stock literally has the same structural risk involved with ownership. This means you may see JD stock down (-10%) along with unrelated Chinese stocks like search engine Baidu (NASDAQ: BIDU), electric vehicle maker NIO (NYSE: NIO) , and fintech Pinduoduo (NASDAQ: PDD) all gapping down (-10%) as well for no reason other than rising COVID cases in China. Should you invest $1,000 in JD.com right now? Before you consider JD.com, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and JD.com wasn't on the list. While JD.com currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys. Article by Jea Yu, MarketBeat.....»»

Category: blogSource: valuewalkNov 29th, 2022

5 Consumer Staples Stocks Near 52-Week High With More Upside

We have selected five consumer staple stocks that are currently trading near their 52-week highs with more upside left.These are: MGPI, LW, GIS, CAG and SJM. U.S. stock markets have been witnessing a strong rally since the middle of October. After an astonishing bull run in the last two pandemic-ridden years, Wall Street has had a disappointing 2022 so far.We are not sure whether the current uptrend is a bear market relief rally as we saw from mid-June to mid-August, or a genuine reversal from the bear market. However, some ;positive developments are visible this time in the inflation rate as well as on the part of the Fed.We are hopeful that the recent northbound movement of U.S. stocks will converge into a year-end rally. To tap this rally, we have selected five consumer staple stocks with a favorable Zacks Rank. These companies are — Conagra Brands Inc. CAG, General Mills Inc. GIS, Lamb Weston Holdings Inc. LW, The J. M. Smucker Co. SJM and MGP Ingredients Inc. MGPI.Positive Development on Inflation RateThe consumer price index and the producer price index for October came in lower-than-expected. These two data along with the third-quarter 2022 personal consumption expenditure (PCE) price index — Fed’s favorite inflation gauge — have indicated that peak inflation may be behind us.Consequently, the Fed is likely to relax its tighter monetary control. The central bank is expected to reduce the magnitude of the interest rate hike from the December FOMC meeting. This will help the overall equity market.Although the Fed is yet to deliver any signal of shifting from its ultra-hawkish monetary policies, a section of Fed officials has recently spoken in a relatively dovish tone. Per CNBC, on Nov 22, Cleveland Fed President Loretta Mester said recent inflation data is promising and that she’d support reduced interest rate hikes going forward.Market participants are assessing whether the terminal interest rate of the ongoing rate hiking process will remain within 5% or go beyond that.Consumer Staples Immune to the Vagaries of Economic CycleThe consumer staples sector is mature and fundamentally strong as demand for such services is generally immune to the changes in the economic cycle. The consumer staples sector includes companies that provide necessities and products for daily use. This makes the sector defensive in nature.Therefore, this has always been a go-to place for investors, who want to play it safe during extreme market fluctuations irrespective of internal or external disturbances. Moreover, the sector is known for the stability and visibility of its earnings and cash flows. Consequently, adding stocks from the consumer staples basket lends more stability to portfolios in an uncertain market.Out of the 11 broad sectors of the market’s benchmark — the S&P 500 Index — the energy sector is solely trading in ;positive territory with a huge rally of 68% year to date. However, within the remaining 10 sectors, consumer staples has suffered the least, with a marginal decline of 1.5% year to date while the benchmark has itself tumbled 16%.Our Top PicksWe have selected five consumer staple stocks that are currently trading near their 52-week highs with more upside left. Each of our picks currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The chart below shows the price performance of our five picks year to date.uImage Source: Zacks Investment ResearchConagra Brands has been benefiting from its robust pricing actions, which aided the top line in the first quarter of fiscal 2023. During the quarter, earnings and sales grew year over year. Results gained from strength in the company’s brands, efficient pricing and the ongoing execution of the Conagra Way playbook.CAG delivered improved service and productivity amid ongoing inflationary pressures and industry-wide supply-chain hurdles. Management expects the inflationary landscape to persist in fiscal 2023. CAG also expects volumes to be affected by supply-chain woes in the second quarter. Pricing and innovation are likely to aid Conagra Brands. We expect organic sales to increase 4.9% in fiscal 2023, which is at the higher end of CAG’s view of 4-5%.Conagra Brands has an expected earnings growth rate of 3% for the current year (ending May 2023). The Zacks Consensus Estimate for current-year earnings has improved 0.8% over the last 60 days.General Mills has been gaining from its Accelerate strategy, which is highlighted by its key priorities. These include competing efficiently, investing in Holistic Margin Management and Strategic Revenue Management initiatives and reshaping the portfolio.GIS’ recent portfolio reshaping actions are likely to drive long-term growth. In fiscal 2023, management expects a rise in the cost of goods sold. That said, saving and pricing actions should aid. GIS is also gaining from its Pet unit, as seen in the first quarter of fiscal 2023 when the top and bottom lines grew year over year.General Mills has an expected earnings growth rate of 3.8% for the current year (ending May 2023). The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the last 30 days.Lamb Weston produces, distributes, and markets value-added frozen potato products worldwide. LW’s top line has been benefiting from robust price/mix, as witnessed during the first quarter of fiscal 2023. The price/mix increased 19%, reflecting gains from pricing actions in the core business segments to counter input, manufacturing and transportation cost inflation.Lamb Weston’s top and bottom lines increased year over year in the quarter. LW saw net sales growth across all three reporting segments. While the macro environment remains volatile, management is on track to deliver results at the high end of the sales and earnings target in fiscal 2023. In addition, Lamb Weston has been keen on boosting production capacity to fuel long-term growth.Lamb Weston has an expected earnings growth rate of 45.7% for the current year (ending May 2023). The Zacks Consensus Estimate for current-year earnings has improved 8.6% over the last 60 days.The J. M. Smucker is a leading marketer and manufacturer of consumer food and beverage products and pet food and pet snacks in North America. Although the majority of SJM’s operations are concentrated in the United States, it also operates on an international basis.  SJM boasts a strong portfolio of iconic food and beverages. SJM mainly caters to the areas of coffee, pet food, peanut butter, fruit spreads, baking products, ready-to-spread frostings, frozen sandwiches, flour, juices and beverages as well as portion control products.The J. M. Smucker has an expected earnings growth rate of 12.6% for next year (ending April 2024). The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last seven days.MGP Ingredients produces and markets ingredients and distillery products to the packaged goods industry. MGPI’s Distillery Products segment primarily offers food-grade alcohol, fuel-grade alcohol, and distiller’s feed. MGPI’s Ingredient Solutions segment primarily provides specialty wheat starches and proteins, commodity wheat starches, and commodity vital wheat gluten.MGP Ingredients has an expected earnings growth rate of 12.5% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.9% over the last 30 days. This Little-Known Semiconductor Stock Could Be Your Portfolio’s Hedge Against Inflation Everyone uses semiconductors. But only a small number of people know what they are and what they do. If you use a smartphone, computer, microwave, digital camera or refrigerator (and that’s just the tip of the iceberg), you have a need for semiconductors. That’s why their importance can’t be overstated and their disruption in the supply chain has such a global effect. But every cloud has a silver lining. Shockwaves to the international supply chain from the global pandemic have unearthed a tremendous opportunity for investors. And today, Zacks' leading stock strategist is revealing the one semiconductor stock that stands to gain the most in a new FREE report. It's yours at no cost and with no obligation.>>Yes, I Want to Help Protect My Portfolio During the RecessionWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report General Mills, Inc. (GIS): Free Stock Analysis Report Conagra Brands (CAG): Free Stock Analysis Report The J. M. Smucker Company (SJM): Free Stock Analysis Report MGP Ingredients, Inc. (MGPI): Free Stock Analysis Report Lamb Weston (LW): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacksNov 24th, 2022

America"s PB&J Obsession: Profit With This Recession-Proof Staple

This stock has not only weathered the 2022 bear market, but it has flourished. Most of us grew up eating peanut butter and jelly sandwiches. They were likely one of the first meals we could make on our own. Their convenience and relative inexpensiveness make them an essential in most households, especially those with children. And surprisingly enough, the nutritional benefits are substantial, including healthy amounts of protein, unsaturated fat, and fiber. A classic sandwich, PB&Js represent a true mix between affordability, nourishment, and comfort food.Speaking of comfort, there haven’t been many places in the market this year that we can say were a comfortable ride. With most stocks succumbing to the bear market and experiencing slowing growth, places to hide were few and far between. But certain pockets of the market not only held up well, but flourished under the radar as the certainty and stability associated with their products drew heavy investment and increased buying pressure.One clear example that held up well this year is the Zacks Food – Miscellaneous industry, which currently ranks in the top 35% out of approximately 250 industry groups. Part of the Zacks Consumer Staples sector, the group has outperformed the market at nearly every turn this year, with a +3.4% return versus a -16.8% loss for the S&P:Image Source: Zacks Investment ResearchBecause this group is ranked in the top half of all Zacks Ranked Industries, we expect it to outperform the market over the next 3 to 6 months. Quantitative research suggests that approximately half of a stock’s future price appreciation can be attributed to its industry group. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1. By focusing on stocks within top-rated industries, we can dramatically improve our odds of success.Let’s take a deeper look at a highly-ranked stock within this leading industry group.The J.M. Smucker Co. (SJM)The J.M. Smucker Company manufactures and markets branded food and beverage products worldwide. In addition to peanut butter and fruit spreads, SJM offers mainstream roast, ground, single serve, and premium coffee; frozen sandwiches and snacks; baking mixes and ingredients; juices and beverages; and pet food and related items.The company provides its products under established brands such as Meow Mix, Pup-Peroni, Folgers, Dunkin’, Jif, and Smucker’s. SJM sells its products through direct sales and brokers to food retailers, discount and dollar stores, pet specialty stores, mass merchandisers, and online retailers. The consumer staple remains a leader in the U.S. at-home retail coffee category.A Zacks Rank #2 (Buy), SJM has exceeded earnings estimates in each of the last four quarters, with an average surprise of 18.5%. Just this morning, the food and beverage company reported fiscal Q2 EPS of $2.40/share, a 9.59% beat over consensus estimates. Sales of $2.21 billion also surpassed estimates by 2.05%. Shares have risen 11% this year and are currently trading near a 52-week high – a sign of strength.Image Source: Zacks Investment ResearchDespite the impressive performance, SJM stock remains relatively undervalued, irrespective of the metric used:Image Source: Zacks Investment ResearchIn addition, SJM pays a healthy $4.08 (2.79%) dividend. This stock has not only weathered the 2022 bear market, but it has flourished, illustrating management’s ability to navigate one of the most difficult environments in many years. Be sure to keep an eye on SJM as the stock appears primed to continue its outperformance. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The J. M. Smucker Company (SJM): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksNov 21st, 2022

A Proven Strategy to Bypass the Economic Uncertainty

There's certainly no absence of potential catalysts to push equity prices one way or the other. The rally off the October lows has clearly favored the Dow 30 holdings, as the major blue-chip average temporarily exited correction territory yesterday. Meanwhile, tech has not fared as well, as the Nasdaq remains near its bear market lows. The S&P 500 continues to hover in a bear market, down more than 20% from its January peak.There’s certainly no absence of potential catalysts to push equity prices one way or the other, as investors await several results from both the midterm elections as well as a slew of companies that have yet to report third-quarter earnings. And with October’s CPI release due out tomorrow morning, the end of this week is shaping up to be a market mover.The hard penny investing environment continues, as opposed to the easy dollar, ultra-low interest rate market setting we saw for much of the last decade. Yes, the Fed has begun to drop hints of slowing the pace of future rate hikes, but markets aren’t likely to meaningfully turn the corner until that process becomes clearer. And while it remains to be seen if we are headed for an official recession, stocks tend to put in bottom before that period ends. One of the ways we can bypass the current economic uncertainty is to identify leading industry groups. Quantitative research studies suggest that approximately half of a stock’s price appreciation is due to its industry grouping. Focusing on stocks within the top-performing industries provides a constant ‘tailwind’ to our investing results. Including this step in our selection process also allows us to narrow down the investment universe and select stocks with the best profit potential.The best-performing industry groups are dynamic and constantly evolving, so investors would be wise to stay abreast of these groups. The stocks within these groups will typically be leading the market – and it is these stocks that we want to target for long trade initiations. Below is one example of a group that is outperforming in the current market environment and whose constituents are receiving positive earnings estimate revisions.The Zacks Food-Confectionery industry, part of the Consumer Staples sector, is currently ranked in the top 8% of all industry groups. More specifically, this group is ranked #20 out of all 252 Zacks Ranked Industries. This group has steadily outperformed the market this year as we can see below:Image Source: Zacks Investment ResearchLet’s take a deeper look at a highly-rated stock within this leading industry group.Hostess Brands, Inc. (TWNK)Hostess Brands is a packaged food company that develops, manufactures, and distributes snack products primarily in the United States. TWNK provides a wide range of sweets such as donuts, pastries, cookies and wafers under various recognized brands like Twinkies, CupCakes, Donettes, HoHos, and Cloverhill.A Zacks #2 (Buy) stock, TWNK has exceeded earnings estimates in each of the past four quarters, delivering an average earnings surprise of 8.9% over that timeframe. The company most recently reported Q3 EPS last week of $0.23/share, a 9.52% surprise over consensus estimates. Sales of $346.2 million also beat estimates by 7.18%. The sustained success has aided TWNK’s stock this year, returning north of 40% while the major averages hover in a deep correction.Image Source: Zacks Investment ResearchFor the full year, analysts have raised their earnings estimates by 1.04% in the past week. TWNK is projected to post 2022 EPS of $0.97/share, reflecting growth of 10.23% relative to last year. Sales are seen climbing 17.68% to $1.34 billion.Make sure to keep an eye on TWNK as the stock continues to outperform the market. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Hostess Brands (TWNK): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksNov 9th, 2022

Is This The Bottom For Canopy Growth Corporation?

Canopy Growth Company surged 25% but don’t hold your breath for higher prices. An acquisition of Acreage Holdings leading to the US market sparked the surge. The full realization of potential relies on US legalization and the mid-term elections may not pan out. If you are wondering if this is the bottom for Canopy Growth […] Canopy Growth Company surged 25% but don’t hold your breath for higher prices. An acquisition of Acreage Holdings leading to the US market sparked the surge. The full realization of potential relies on US legalization and the mid-term elections may not pan out. If you are wondering if this is the bottom for Canopy Growth Corporation (NASDAQ:CGC) join the club. Investors have been asking themselves that for the last three years and, to be honest, the market could fall further. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q3 2022 hedge fund letters, conferences and more   Find A Qualified Financial Advisor Finding a qualified financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you're ready to be matched with local advisors that can help you achieve your financial goals, get started now. If you are wondering why Canopy Growth Company shares shot up more than 26% and appear to confirm a bottom it's because of the purchase of Acreage Holdings (OTCMKTS:ACRDF). The purchase is expected to be an all-stock deal worth 0.45 CGC shares for every share of Acreage but it is yet to meet shareholder approval. The reason is to accelerate Canopy Growth Corporation’s move into the US market which it has been slowly working on. Canopy Growth Gets Ready For US Legalization Canopy Growth Company is getting ready for US legalization but don’t hold your breath. Canadian and US pot companies alike have been “getting ready” for US federal cannabis legalization for a long time and it may still be a long time before it comes. For Canopy, a move into the US market could be worth as much as $50 billion even without federal legalization so it may not matter. The real hurdle is still banking, the multistate operators are having some success but they are still plagued with banking issues that keep them locked out of many mainstream services. A recent survey by the American Banking Association reveals that 66% of Americans support the cannabis industry's ability to access financial services like basic banking but it really comes down to the politicians. The SAFE Banking Act has passed the House many times but is yet to even hold a vote and it may not if there is no change in the leadership. The midterm elections are just a few weeks away and will have a very resounding impact on the future of the US cannabis market. The surge in Canopy Growth Company stock may be driven by the hope that cannabis-friendly politicians will retain and gain seats. What Is Acreage Holdings? Acreage Holdings is a US-based multistate integrated cannabis operator. The company has operations in 10 states including 27 dispensaries, 9 cultivation facilities, and 7 brands. Total expected revenue for 2023 is expected to top $310 million making it one of the larger operators. The deal will merge Acreage with Canopy Growth Company’s US arm Canopy USA, LLC. The news has other major Canadian and US operators moving higher as well but investors are urged not to read too much into the news until after the elections. The Analysts Are Holding Canopy Growth Company The analysts are holding Canopy Growth Company and that amounts to a Buy if you aren’t. The caveat is that it is a weak Hold verging on Sell according to Marketbeat.com’s analyst tracking tools and the sentiment is trending lower. The price target, on the other hand, offers about 165% of upside at the consensus mark but there is a caveat here too. The consensus target is relatively steady over the last three months but the low price target, which suggests about 33% of downside is coming, is among the most recently set. The chart of CGC is promising but we’ve seen bottoming actions before. If this one fails to bear fruit it could lead the stock into another decline that takes it back to its very lowest levels. One scenario that may cause such a drop would be a red sweep of both houses that puts cannabis firmly on the shelf for the next two years. Should you invest $1,000 in Canopy Growth right now? Before you consider Canopy Growth, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Canopy Growth wasn't on the list. While Canopy Growth currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys. Article by Thomas Hughes, MarketBeat.....»»

Category: blogSource: valuewalkOct 26th, 2022

Billionaire investor Dan Loeb flags the intense fear and worry in markets - and touts the bargains emerging from the turmoil

The Third Point chief said he recognized the slew of market headwinds, but planned to capitalize on the deals and discounts that appear. Dan Loeb.REUTERS/Steve Marcus Billionaire investor Dan Loeb underscored the deeply pessimistic mood in financial markets today. He welcomed the bargains emerging as investors stress about inflation and recession. The Third Point chief highlighted his fund's new stake in Colgate-Palmolive as a safe bet. Dan Loeb has flagged the intense fear and anxiety pervading financial markets today, and touted the cut-price assets emerging as a result.The billionaire investor and Third Point chief noted in his third-quarter letter to clients, published Tuesday, that the market mood has soured since the summer.Loeb complained that Britain's fiscal fiasco — which tanked the pound, caused bond yields to spike, and roiled the pensions industry — had "introduced a new narrative of concern around 'financial stability' that magnified an already gloomy scenario."The hedge fund manager noted that many leading financial pundits have "joined the negative chorus of perma-bear Nouriel Roubini with declarations that we are entering a severe recession and prolonged bear market."Moreover, he highlighted a dour mood at recent industry events, where attendees weighed up the risk of another financial crisis and competed to make the lowest prediction for the S&P 500's bottom.  However, that hasn't stopped him from pouncing on the deals materializing from the malaise."I am sympathetic to many of these economic and geopolitical concerns but, amidst all the gloom, we are seeing very attractive valuations, particularly assuming an economic scenario short of financial Armageddon, and are taking up exposures as we speak," Loeb said.He gave the example of Third Point's new stake in Colgate-Palmolive. Loeb and his team pounced on the consumer-products giant because they determined it was undervalued, liked the pricing power of its strong brands, and anticipated people would keep buying items like soap and toothpaste even during a recession.Loeb also said he's seeing the most enticing opportunities in the structured-credit market since the height of the pandemic in 2020, as the Federal Reserve's interest-rate hikes continue to foster unease and price volatility.The activist investor emphasized that he's keeping an eye on the plethora of market risks, but remains focused on buying into "world-class companies at bargain basement prices" and capitalizing on event-driven situations such as acquisitions or spin-offs.Even if the economic backdrop worsens and a severe recession sets in, Third Point has shorts and hedges in place to mitigate those headwinds, Loeb said. He added that allows it to make the most of the deals and discounts that emerge.Read more: Goldman Sachs: These 41 historically cheap stocks will still be a bargain if a recession crushes earningsRead the original article on Business Insider.....»»

Category: topSource: businessinsiderOct 19th, 2022

Elon Musk"s SpaceX says it can"t continue to pay for Starlink in Ukraine and asks Pentagon to foot the bill, a report says

SpaceX said running Starlink in Ukraine could cost nearly $400 million over the next year, per CNN. Elon Musk said Starlink was still losing money. SpaceX CEO Elon Musk.Reuters SpaceX told the Pentagon it couldn't fund Starlink in Ukraine and asked it to foot the bill, per CNN.  SpaceX said costs could reach nearly $400 million over the next year, per a letter seen by CNN. Elon Musk tweeted on Friday that Starlink was still losing money. Elon Musk's SpaceX has asked the Pentagon to fund its Starlink satellite internet service in Ukraine because the company can't afford it, CNN reported on Thursday.Shortly after Russia invaded Ukraine in February, SpaceX sent thousands of Starlink terminals to Kyiv at the request of the country's minister for digital transformation Mykhailo Fedorov. Starlink's high-speed connection has allowed Ukrainian soldiers and some civilians to stay online amid Russian strikes on infrastructure.In September, SpaceX wrote a letter to the Pentagon, warning that it might have to stop funding Starlink in Ukraine because the company could no longer afford it, according to documents obtained by CNN. In the letter, SpaceX asked the Pentagon to bear the cost of Starlink used by the Ukrainian government and military, per CNN.Musk's aerospace manufacturer wrote in the letter that it expected the cost of keeping Starlink running in Ukraine to add up to more than $120 million for the rest of 2022 and nearly $400 million over the next year, CNN reported. This was in line with what Musk tweeted on October 7 in relation to costs for sending Starlink to Ukraine reaching over $100 million by the end of the year."We are not in a position to further donate terminals to Ukraine, or fund the existing terminals for an indefinite period of time," SpaceX's director of government sales wrote in the letter, cited by CNN.Around 85% of the 20,000 Starlink terminals that SpaceX has delivered to Ukraine were fully or partially paid for by the US government, Poland, and other countries, according to the letter reported by CNN.The same countries also picked up the tab for 30% of the internet connectivity, while SpaceX paid for 70%, the letter said, per CNN. This connectivity costs $4,500 per month because SpaceX offered its top service, despite most Ukrainian users requesting the $500-a-month service, SpaceX told the Pentagon in the letter, per CNN.Meanwhile, the two models of Starlink terminals that SpaceX sent to Ukraine cost $1,500 and $2,500, per the documents seen by CNN. In comparison, the price of Starlink kit on the website is $600.In response to a Twitter thread that referenced CNN's article, Musk tweeted: "Starlink is still losing money!"The billionaire said it was "insanely difficult" for a low-Earth orbit communications constellation to avoid bankruptcy. He added: "When asked what the goal of Starlink was at a space conference, I said 'not go bankrupt'."The news comes after Musk rejected a request from Ukraine to enable the use of Starlink in Russian-occupied Crimea.SpaceX and the Department of Defense didn't immediately respond to Insider's request for comment made outside of US operating hours.SpaceX declined CNN's requests for comment. A Defense Department spokesman told CNN: "The Department continues to work with industry to explore solutions for Ukraine's armed forces as they repel Russia's brutal and unprovoked aggression. We do not have anything else to add at this time."Read the original article on Business Insider.....»»

Category: dealsSource: nytOct 14th, 2022

Constellation Brands Stock May Offer Safety In The Market Storm

Constellation Brands stock looks a bit oversold after reporting solid earnings and positive forward guidance. Beer sales drive the company’s growth and could reign as a solid, defensive choice for patient investors. The company’s cannabis investment still weighs on the stock. Investors looking to ride out the current bear market may want to take a […] Constellation Brands stock looks a bit oversold after reporting solid earnings and positive forward guidance. Beer sales drive the company’s growth and could reign as a solid, defensive choice for patient investors. The company’s cannabis investment still weighs on the stock. Investors looking to ride out the current bear market may want to take a close look at Constellation Brands (NYSE:STZ). The company reported earnings on October 5 and beat on both the top and bottom lines. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Walter Schloss Series in PDF Get the entire 10-part series on Walter Schloss in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues. (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q3 2022 hedge fund letters, conferences and more   Find A Qualified Financial Advisor Finding a qualified financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you're ready to be matched with local advisors that can help you achieve your financial goals, get started now. In the first two quarters of Constellation’s 2023 fiscal year, it has generated year-over-year (YOY) revenue 18% higher than fiscal year 2022 and earnings 23% higher on a YOY basis. As an investor in 2022, you know that the real story has to do with the guidance. In an environment where many companies adjust their earnings estimates lower, Constellation Brands stock is guiding slightly higher. The company is projecting full-year earnings to be in a range of $11.20 to $11.60. The low end of that range would be a 22% YOY increase. Constellation Brands is also guiding to full-year free cash flow (FCF) in the range of $1.3 billion to $1.4 billion. That would be lower than the last three years but in line with its 2019 number, which may be a more accurate reflection of the business. Beer Sales Remain Recession-Proof Beer is still a staple even in periods of high inflation. What may be less obvious is that, for now, consumers are not trading down. Constellation reported that the company’s beer business continues to be the leading market share gainer in U.S. track channels. It makes up 28% of the high-end segment. Specifically, the company highlighted the strength of its Corona and Modelo Especial brands. This is also carrying over to the company's wine and spirits business. As noted on the company’s earnings call, Constellation has been taking steps to make this more of a direct-to-consumer (DTC) model and it has made headway, with DTC net sales increasing by 15%. How Should Investors View Constellation’s Cannabis Exposure? One cautionary note for any investor looking to take or hold a position in STZ stock is the company’s ownership stake in Canopy Growth (NASDAQ:CGC), which has been disappointing for the company and investors, to say the least. That continued in this report in which the company took a $1 billion impairment charge. However, the Constellation CEO points to statistics that still suggest the U.S. legal cannabis market will reach approximately $50 billion by 2026, which would double the $25 billion the market represented in 2021. That data is starting to look a little stale. For the cannabis market to hit that number, a lot of steps will have to be taken. To be clear, it seems like legalization of recreational and/or medicinal cannabis in all 50 states is more a question of when then if. But the mid-term elections will have a lot to say about what the political will on this issue will be over the next two years at least. A Defensive Stock For Defensive Times If recent economic news is any indication, every investor may be looking to have a drink or two to get through this bear market. And while that might not necessarily be the right reason to consider Constellation Brands for your portfolio; it may not be the wrong reason either. At times like these, playing defense can be the right move. Constellation has products that are still in demand. This will give the company pricing power and, more importantly, may help prevent erosion of earnings. Plus, the stock looks a bit undervalued at the moment. Analysts surveyed by MarketBeat give STZ stock a consensus price target of $277.71. That’s a 23% increase from the current price. Reaction to the earnings report has been mixed with some analysts raising price targets and others lowering them. But overall, the sentiment appears to be bullish. Should you invest $1,000 in Constellation Brands right now? Before you consider Constellation Brands, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Constellation Brands wasn't on the list. While Constellation Brands currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys. Article by Chris Markoch, MarketBeat.....»»

Category: blogSource: valuewalkOct 14th, 2022