#8 : STIMULUS CHECK 2

“Life has many ways of testing a person’s will, either by having nothing happen at all or by having everything happen all at once.” – Paulo Coelho

Friday, December 14th Closing Price


TABLE OF CONTENTS

  1. STIMULUS – ITS FINALLY HERE
  2. FOMC – THE LATEST
  3. COINBASE FILES FOR IPO
  4. REVIEW OF LAST WEEK’S EARNINGS
  5. UPCOMING EARNINGS
  6. MERCHANDISE
  7. STOCKS ON OUR RADAR
  8. EDUCATIONAL LEARNING SEGMENT
  9. VIDEO OF THE WEEK

MARKET LAST WEEK (12/14 – 12/8)

MARKET
Corona Waiting GIF by INTO ACT!ON

IT’S FINALLY HERE – STIMULUS

After months of debate congress passes a stimulus bill totalling at the time of this writing totaling $900 billion. $166 billion is intended for direct checks/stimulus checks for Americans. At this moment we expect these stimulus checks to be $600 this is a 50% reduction from the last stimulus check. Additional aid for dependents are not included  in the current version of the bill instead the bill as-is opts into giving an additional $600 per child under the age of 18.  Retail stocks are currently doing well in anticipation of a strong shopping season due to the holidays previously retail companies  such as $TGT saw a sharp uptick  last time stimulus was issued. $325 billion of the billion has been appropriated for small business. It is important to note in the past there have been reports of specific loans being difficult to get for smaller businesses due lenders favoring larger/less riskier business. $15 billions have been set aside specifically to help the airlines with issues such as payroll which ideally will ease their cash low and prevent the need of layoff to stay afloat $JETS. $20 billion  has been set aside for the purchasing of vaccines from $PFE and $MRNA. Due to the stay at home orders amongst schools and lack of high speed internet in certain portions of the country $7 billion has been allocated to increase high speed internet with the intention of helping students who may not have quality internet from home.  $120 billion has been set aside for unemployment benefits. These benefits continue to help money continue to flow thru the economy via the continuing purchase of purchasing goods and services.

FOMC: The Latest

Last week we had our final FOMC meeting of the year, highlighting the unique and difficult position the Fed is with regards to issuing guidance for the future. As they stated “the path of the economy will depend significantly on the course of the virus.” Coronavirus is running rampant across the U.S. as we continue to see our number of cases and deaths continue to skyrocket. Despite that, Pfizer’s vaccine and most recently Modena’s have been approved for emergency distribution by the FDA. The economic horizon appears promising as the ability for life to resume again brightens economic outlook for this coming summer and fall when the public has widespread availability of the coronavirus vaccine.

While they have been hesitant to issue guidance with the uniquely volatile situation the pandemic presents, the Fed stated that they would keep asset purchases “at least at the current pace” with their aggressive asset accrual until substantial further progress has been made in the economy. They have been purchasing large amounts of government debt to aid in keeping our economic outlook feasible for the near future. Despite their efforts, there is still credible doubt as to our path towards recovery with less than half of the 17 officials believing the Fed would be able to raise their rates in the next 3 years to the 2% inflation level we are seeking

BITCOIN EXCHANGE COINBASE FILES FOR IPO

We have the latest in what seems to be a year of monster IPO’s. Coinbase, the premier cryptocurrency exchange platform, has filed their preliminary documents for their IPO with the SEC. The timing of such a revolutionary move is hard to ignore with Bitcoin finally surpassing the $20,000 mark this past Wednesday and even passing $23,000 later in the week. This coupled with a pivot in stance on Bitcoins viability long-term by institutional investors may possibly bolster this IPO to long-term success unlike the flame we experienced with Jack Ma’s Ant Group IPO earlier this year.

Analysis from JP Morgan  shows that institutional investors are moving from Gold ETF’s to Bitcoin. A far different tune than the concerns that were raised about their potential for sustainable growth. These concerns are due in large part to the volatility of cryptocurrency making it difficult to determine it’s intrinsic value. Coinbase saw their revenue grow exponentially from $17 million in2016 to $923 million the following year due to the surge in demand for cryptocurrency. Immediately afterwards making less than 60%of that revenue in the year following. This doesn’t inspire confidence but the recent uptick in demand is undeniable. Regardless this be interesting to see whether this is priced into Bitcoin’s value moving forward.

LAST WEEK’S EARNINGS

Wednesday

Blue Bird Corporation - Wikipedia

BLUE BIRD CORPS – $BLBD

A company that relies heavily on the public sector and movement of peoples is bound to have trouble during a prolonged quarantine such as the one we find ourselves in. What matters most is how the company is positioning itself for post quarantine operations and navigating the near term. Blue Bird Corps is moving to newer technologies for its production lines while increasing its efficiency through core structure improvements.

  • Full Year Net Sales of $879.2M and GAAP Net Income of $12.2M

  • Full-Year Bus Average Selling Price up 7.2% 

  • Grew Electric Bus Sales in FY2020 to 158 Units

  • FY2020 Adjusted EBITDA of $54.7M with Strong 4Q of $21.9M

  • GAAP net income Q4 and FY 2020 were $11.9 million and $12.2 million, respectively, up $0.3 million and down $12.1 millionfrom comparable FY2019 periods

Takeaways: 

Higher end vehicle mixes in the alternative fuel class allowed for an increase of average price per bus by $6,000 or 7%. Alternative fuel bus sales were 48% of all sales; tying a record from last year. A 7.3 liter engine developed with Ford and Roush will power their propane and gas-powered Blue bird Vision bus was announced. Transformational initiatives have improved profits by $14.4 million in the full year. Blue Bird Corps will be moving to a single shift production which will improve efficiency and production. Blue Bird Corps is a company positioning itself for the very long term with its leading alternative fuel vehicles. This can carry them very far as they keep innovating.

   New General Mills logo | A Taste of General Mills

GENERAL MILLS  – $GIS

The pandemic allows General Mills to increase their market share through the bevy of products in their arsenal. At-home demand is significantly larger now than in the beginning of the year. This will be maintained for at least another quarter as we have seen with New York City closing restaurants during the winter months.

  • Net sales increased 7% to $4.7 billion

  • Q2 net sales for General Mills’ North America Retail segment increased 9% to $2.92 billion

  • Q2 net sales for the Pet segment increased 18% to $460 million

  • Q2 net sales for the Convenience Stores & Foodservice segment declined 14% to $440 million

  • Operating profit increased 13% to $917 million up

  • Operating profit margin of 19.4% increased 1.10%

  • Net earnings attributable to General Mills increased 19% to $688 million

  • Diluted EPS increased 17% to $1.11

Takeaways:

General Mills expects future guidance for Q3 and Q4 to be near Q1 and Q2 earnings, and it to be more than 2020 FY. Their Pet segment is growing at a higher rate than the rest of the business suggesting it is not only because of Covid’s impact, but a natural increase due to their products. This is highlighted by a 40% increase in sales of their pet treats. General Mills should continue to be a reliable company into 2021 with a moderate and sustained growth.

FedEx Logo and Symbol Meaning – History and Evolution | Turbologo Logo Maker

FEDEX – $FDX

FedEx is a large player in the delivery service industry. This is highlighted with their need to deliver the two Covid-19 vaccines across the United States. Their business has upticked massively during the pandemic. This is seen by the approximate +90% increase in their EPS from Q1.

  • Total Revenue up to $20.6 billion up 19% YoY

  • Operating margin 7.1% up 3.9% YoY

  • Net income $.123 billion up 119% YoY

  • EPS $4.55 up 114% YoY

  • Operating income $1.47 billion

  • FedEx Express segment $10.368 billion up 14% YoY

  • FedEx Ground segment $7.344 billion up 38% YoY

  • FedEx Freight segment $1.936 billion up 5% YoY

Takeaways:

All three major FedEx segments are up this year with FedEx Ground achieving the highest percentage growth at 38%. This is reflected by strategic investments done by FedEx over the last 18 months. They expect e-commerce growth to bring record-breaking peak and returns volumes. This is also not expected to be all done once the pandemic subsides. There will be a sustained increase in the move to e-commerce and the need for delivery servicing. FedEx being a key player in vaccine distribution brings goodwill and increased revenue for the next year domestically and globally.

Nike Logo PNG Image | Nike logo, Nike logo wallpapers, Adidas logo wallpapers

NIKE – $NKE

Nike is the quintessential apparel brand from footwear to athletic and leisure wear. It is also a global brand with a key pillar of its global brand based in China. Continued expansion into newer markets will allow the company to sustain growth. And transforming its current physical in-person sales to online has the potential to drive down costs for Nike very dramatically.

  • Q2 Revenue $11.2 billion up 9% YoY, led by Greater China revenue growth of 24%

  • NIKE Direct sales were $4.3 billion, up 32% on a reported basis with double-digit growth across all geographies

  • Nike Brand digital sales were up 84% from triple-digit growth in North America and double-digit increases in EMEA, Greater China, and APLA

  • EPS $0.78 up 11% 

  • Inventories declined 2% YoY and returned to healthy levels globally

  • Gross margin decreased 0.90% to 43.1% due to advertising to reduce excess inventory

  • Net income $1.3 billion up 12% due to revenue growth and lower selling and administrative expenses

Takeaways:
Digital brand growth led the way to stronger revenue and was offset by lower revenue in brick and mortar parts of the business; but this is to be expected when demand shifted heavily online. Physical retail is still continuing to decline YoY due to Covid-19. Expect digital growth to continue due to convenience post-pandemic. As more people move online (highlighted by yearly increases in e-commerce with physical commerce falling every year) the digital segment of Nike will be key to its growth.

UPCOMING WEEK 12/21- 12/25
EARNINGS