#12 HAPPY MLK DAY

“The same boiling water that softens the potato, hardens the egg. It’s what you’re made of. Not the circumstances.” –Unknown
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Friday, January 15th Closing Price


TABLE OF CONTENTS

  1. TUESDAY
  2. WEDNESDAY
  3. THURSDAY
  4. LAST WEEK’S EARNINGS
  5. UPCOMING EARNINGS
  6. MERCHANDISE
  7. DISCORD RECAP
  8. STOCKS ON OUR RADAR
  9. EDUCATIONAL LEARNING SEGMENT
MARKET LAST WEEK (1/11 – 1/15)
MARKET

TUESDAY (1/12)

Plug Power announced a joint venture with French carmaker Renault in a 50/50 deal for Research & Development, manufacturing, and the beginning sale of vehicles with Fuel Cell/ Hydrogen Turnkey solutions. This deal will become operational by the end of the first half of 2021 and serve the fastest growing market for fuel cell vehicles. Under the Biden Administration, we anticipate a move towards implementing new electric vehicle sales. As a result, Plug Power may receive funding and grants to develop more cost-effective and efficient hydrogen solutions.

Following the aftermath of the Capitol’s insurrection, lots of public companies have removed funding from political offices. Some of these companies include American Airlines, BlackRock, BP, Facebook, Google, Microsoft. The impact of these companies withdrawing financing could be a catalyst for change in the Republican Party. In 2020, candidates received $205M in donations from corporate PACs, and Democratic candidates received donations of $155M. Corporations withholding their dollars from politics could be a massive moment if they can stick to their word and force candidates to run on policy, not ad campaigns.

WEDNESDAY (1/13)

The United States has enacted a new rule that anyone flying in will need to show valid proof of a negative Covid-19 test. The order will take effect on January 26th to give all airlines and travelers time to comply with these new rules. This order is not just for foreign citizens alone, as U.S. citizens will need to provide a negative Covid-19 to enter back into the country. This new requirement is a positive sign for travel companies as they may be allowed to carry more passengers on each flight, and additional revenue may begin to come in.

In a stunning move late Wednesday night, President Donald Trump was impeached for the 2nd time. This is a historic event as no other President in the United States has ever been impeached twice. The chance of being removed from office is low as we are less than a week away from the inauguration. The House of Representatives brings up this impeachment; he is being charged with Inciting violence and making statements that resulted in lawlessness in the U.S. Capitol.

THURSDAY (1/14)

Joe Biden released his stimulus package in the range of 1.9 Trillion Dollars. The broadcast increased Treasury yields higher and to levels that haven’t been reached since pre-Covid-19. Some of the features range from support for State and Local authorities, direct payments of $1400, increased unemployment benefits of an extra $400 per week through September, $160B funding for vaccine distribution throughout the United States, opening schools, and rental relief to small businesses. Looking forward, this is a huge positive as much needed Covid-19 relief bill will be provided sooner rather than later for U.S. citizens. Also, he said he wants to deliver 100 Million shots in the first 100 days of his presidency within his speech.

Fed Chair Jerome Powell came out and said the job market “had a long way to go,” and applications for unemployment claims rose by 181,000 due to a surge in Covid-19 cases. J Pow also added that “we are a long way from maximum employment,” indicating that monetary policy will remain the same for the foreseeable future.

REVIEW OF LAST WEEK’S EARNINGS
1/11 – 01/15

Thursday (Before Market Open) (1/14)

BlackRock, Inc. - Home

BlackRock is a leader in asset management, alternative investments, and financial services.

  • Quarterly profits increased by 19% 

  • Profits of $1.5B and EPS of $10.02 beating expectations by over 10%

  • They posted Revenues of over $4.5B for Q4

  • Brought in $126.9B new investor money in Q4

  • AUM YoY increased by 17%; Revenues increased by 11% YoY

Takeaway:
Large sums of money have flocked into BlackRock, and the majority of it went to Bond Funds, as the world’s largest asset manager just reached $8.68T (Yes T) in AUM. During Q4, BlackRock reflected a 5% organic asset growth and 7% organic base fee growth. While other banks have suffered throughout the pandemic, BlackRock, with its unique investments, could bring in billions of dollars in new investments.

Thursday (Before Market Open) (1/14)

Delta Air Lines logo and symbol, meaning, history, PNG

In short, Delta’s earning releases is one of the ugliest financial reports we will see from 2020. Delta reports they expect airline travel to turn a corner for the year 2021 and expect revenue to begin to rebound.

Looking into the present

  • Delta reported a net loss of $755M for Q4

  • Yearly Net loss up to $12.4B total

  • Quarterly EPS of -$1.19 and Revenue of $4B beatings expected of $3.4B

  • Yearly EPS of -$2.53

  • Full-year pre-tax loss of $15.6B and EPS of -$19.49

Takeaway: 
This is an extremely ugly earnings release as Delta has been bleeding cash for the last nine months of 2020. Delta ended 2020 with over $16B in liquidity on the brighter side of things, which can be viewed as a positive as there are still dark days ahead.

Thursday (Before Market Open) (1/14)

JPMorgan (Chase) logo and symbol, meaning, history, PNG

Chase produced a brighter outlook in their Q4 earnings report. They ended the year on a strong note heading into the new year with average deposits up 35% after posting a record profit of 12.1 billion dollars in 2020.

Looking into the present

  • Chase Investment banking

    • Total Markets revenue of $5.9 billion or up 20%

    •  Fixed Income Markets up 15% 

    • Equity Markets up 32% 

  • Chase Commercial banking

    • Gross Investment Banking revenue of $971 million, up 53% 

    • Average loans up 1%, and the average deposits are up 52%

Takeaway:
Chase reported increased assets across all frozen sections, positioning them to excel in the first quarter of the new year. With a reported 2.7 trillion in managed assets (up 17%) and increased financial stimulus arriving from the incoming administration. We can expect to see a continuation of their increased asset trend.

Thursday (Before Market Open) (1/14)

Citibank — Story

Citi produced a relatively uneventful earnings report that can be viewed positively given the tumultuous year. Earnings were flat throughout the year, and Q4 stayed within the trend, closely resembling 2019’s Q4 reported revenue and profit with a minor decrease.

Looking into the present

  • Citi operating expenses increased 2% as they increased investment into the companies infrastructure

  • Q4 net income 4.6 billion, a reduction of  7%

  • Q4 cost of credit was 46 million, substantially down from 2.2 billion comparatively in Q4 of 2019

  • 1.1 billion released to shareholders through dividends

Takeaway:
Citibank did not have a stellar Q4 report; they reported a 10% decrease in revenue than 2019. Although objectively, given the year experienced due to the pandemic, there is reason to be optimistic as share prices were up 5% on the year. At the same time, they increased investments in their infrastructure and risk management teams.

UPCOMING WEEK 1/18 – 01/22
EARNINGS

Tuesday, January 19th, 2021

(Before Market Open) Goldman Sachs 

Goldman is perceived as the world’s premier investment bank. They are a non-traditional bank because Bank of America operates with ATMs, Goldman has asset management, alternative investments, debt financing, and financial services. They have had a remarkable recovery following the initial market crash of Covid-19 and reaching all-time highs. The expected EPS of $7.68 and expected revenue is $9.47B, and the expected quarterly revenue to have decreased by -31.4%.

(Before Market Open) Halliburton 

One of the world’s largest providers of products and services to the energy industry. Halliburton’s two main segments are (Completion & Production) and (Drilling and Evaluation). The expected EPS of $.17 and Revenue is expected to be $3.23B, with a quarterly revenue expected to decrease by -37.8%.

(Before Market Open) Charles Schwab

A financial services company with 1.6M corporate retirement participants, 10.5M active brokerage accounts, 1.2M Banking accounts, and above $3T in client assets. They provide a full range of wealth management, brokerage securities, asset management, and financial advisory services. Expected EPS of $.75 and expected Revenue of $4.06B, with quarterly revenue expected to increase by 55.8%.

(After Market Close) Netflix

The world’s leading Internet television network with millions of subscribers and a vast library of all different types of media products (shows, movies, documentaries). They offer a unique platform to watch anytime, anywhere, on any internet-connected device. They have an estimated EPS of $1.57 and Revenue of $6.6B, with expected revenues to increase by 20.7% this quarter.

Wednesday, January 20th, 2021

(Before Market Open) Procter & Gamble

One of the leaders in consumer staples who produce millions of goods is used across the globe. The company operates under five business segments Beauty, Grooming, Health Care, Fabric and Homecare, and family care. They are seen as a blue-chip stock that is safe equity to invest in. Current expected EPS of $1.59 and revenue of $19.15B, with an expected growth revenue of 5% quarterly and annual earnings of 4.9%.

(Before Market Open) Morgan Stanley

A financial services company that is a leader in its’ three primary businesses: securities, asset management, and credit services. They provide investment banking, financial planning services, sales and trading, and on-line brokerage services. Expected EPS of $1.40 and $11.08B revenue, with expected quarterly revenue to decrease by -17.2%.

(After Market Close) United Airlines

United Airlines, much like Delta last week, will continue to have earnings releases that are not up to the mark. The travel industry has been significantly tampered down since the global shutdown of Covid-19. Commercial airlines have been bleeding cash for three straight quarters, and with new travel restrictions, this will continue into Q1. With an expected EPS of -$6.36 and Revenue of $3.54B, it is expected that revenue has declined this quarter by 67.5%.

Thursday, January 21st, 2021

(Before Market Open) Fuel Cell

An alternative fuel company specializing in Hydrogen production to be used in turnkey products (Forklifts, EVs, etc.) With the new administration putting a heavy focus on Climate Change, we will have to keep a keen eye on the alternative energy companies to measure their revenue growth and operating margins. Expected EPS of $.03 and revenue of $15.92M, expected revenue this quarter is expected to increase by 44%.


(Before Market Open) Citrix

Citrix is a digital workspace leader; they provide access to instant chat, video conferencing, and cloud environments. They developed and now lead the workspace as a Service industry by providing an innovative, adaptable, and easy to use program. Businesses who wanted to endure through Covid-19 had to use digital workspace, and many of them flocked to Citrix. Expected EPS of $.81 and Revenue of $778M, with an expected revenue decrease by 3.8%.

(After Market Close) Intel

The world’s largest semiconductor maker has stifled these last few quarters. They recently had a CEO change due to a continued loss of market share in key segments of their business. They produce some critical pieces for digital processors, data centers, smartphones, video game systems, etc. Their expected EPS is $1.10, Revenue of $17.44B, and we expect a decreased quarterly revenue of 13.7%.

EVENTS & TALKS

Tuesday: Overall Net Capital Flows at 9:00 p.m. EST

Wednesday: President-Elect Joe Biden’s Inauguration 

Thursday: Jobless Claims 4-week Average at 1:30 p.m. EST

Friday: Existing Home Sales at 3:00 p.m. EST

MERCHANDISE

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DISCORD RECAP

Many notable names and plays for this past week; however, we would like to highlight our Zoom $ZM, Penn National $PENN, and Facebook $FB trades.

Moving forward, we will be focusing on charts that give us opportunities for multiple trades.

We have been eyeing Zoom’s chart for the past week and have not traded it until Wednesday of this past week.

This week, having patience on this trade paid off.

We bought the $410 calls for $3.10 and then added more, around $2.15.

We then sold this position at $5.68, or a 120% return on investment.  

Penn National Gaming, $PENN 

In last week’s newsletter, we covered Penn National research report. You can read the report here: Penn National Gaming Inc (PENN), January 9th, 2021 – Tiger-Wolf Capital

On Monday, Penn’s opening price was $90.59, and through the week, it quickly went up towards $107 and then pulled back down towards $99. 

However, this allowed us to catch out 3 of the trades for 100% return on investment. We were in the $PENN 115 calls for 2/12120 calls for 2/19, and the 130 calls for 2/26.

Facebook, $FB 

We bought and sold the $245 puts three times.

First trade we bought at $0.90 and sold at $1.2533% return on investment

Second trade, we rebought at $0.90 and sold 1.20, 30% return on investment

Third trade, we rebought at $0.9 and sold at 1.78; someone, please do the math.

To find out more about how and why we were able to do this, join our discord. 

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STOCKS ON OUR RADAR (1/19 – 1/22)

We are looking to short apple in the upcoming week.

Overall, tech in the last couple of weeks has been looking reasonably weak with low buying volume.

We anticipate a rector rotation from tech into energy.

We anticipate that Apple’s stock price will go from $127 to low $120 this upcoming week.

EDUCATIONAL LEARNING SEGMENT

“Show them every day why you are the best one for the job – Frank Mercado

Just because you have proved yourself before this does not mean you do not need to prove yourself time and time again.

Please do not take this as you are not good enough, but take it too good to forget.

You must prove to your significant other time and time again that you love them.

We must prove to our investors time and time again that we value their investment.

We must prove to the stock market repeatedly that we are ready for what it throws at us.

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