Tag: day trading

Unusual Whales Trading Strategy

Filters used: https://unusualwhales.com/watchlist/8a71e227-7cee-493a-a729-639a80c1ab7b

Step 1: Create a scan filter for option contracts that you want.

The scan filter that I created looks for options that meet the following criteria:

      1. Have a premium under $1 or worth less than $100.
      2. Expires within the week.
      3. Traders are buying the contracts at the ask price.
      4. Avoiding companies that are reporting earnings soon.
      5. Not a hedge trade.

Reasoning:

I applied these filters looking to find option contracts in high demand because someone believes a big move will come soon.

I also have a budget of under $100 per contract.

 

Step 2: Review the alert’s technical details.

For this walkthrough, we will be going over the $AMD 2021-08-06 call $115.

 

The trade was alerted on August 2nd at 3:55 pm, minutes before the market closed.

The bid and ask were around 0.67 and 0.69,  well within our $100 budget.

When the alert was given, $AMD was trading around $109.12.

The delta of the contract was 0.1951m which is an excellent delta for this contract.

We also note the 35,450 volume – meaning there is a relatively large interest/liquidity in this contract.

 

Step 3: Do your technical analysis on the underlying stock to qualify or unqualify the alert.

On the 2hour time frame, we can note that the 14-day simple moving average ( dashed blue line) is well above the 30-day simple moving average ( dashed yellow line).

We can also take note that AMD has recently reported earnings. The stock sold off into the 30-day simple moving average ($89.5) and then bounced up towards $95.24, then $99.74, then $102.52, $105.3, $107.02, $109.81.

So far, the stock seems to have impressive positive momentum and continues to push into new highs.

The potential downside: the stock is over-extended since it went from $89.5 to $109.81 without stopping. Could potentially see a near-term reversal. It could possibly come down towards $107.02

 

On the 1 day timeframe, we pretty much the same analysis that we saw on the 2hour time frame.

Our intraday and daily time frames indicate that the stock has very positive momentum and is likely to push higher into new highs.

This leading to my conclusion: the alert to buy the $AMD $115 calls offers a good risk-reward.

Step 4: Placing your trade.

Now that we know what contract we’re going to trade, we have to execute the trade.

Given that the trade was alerted at 3:55 pm, just 5 minutes before market close, I had to wait until the next day actually to place the trade.

Once the market opened, $AMD opened around $108 and then pushed higher into $109.81, but it could not hold above it.

Price continued to fluctuate between these two levels until around 11 am.

Around 11 am, $AMC pushed above the $109.81 resistance that we took note of previously.

This was my ideal entry point.

Around this time, the $115 contracts were trading at $0.54 or $54, perfectly within our budget and at a lower price than initially alerted.

$AMD then pushed higher into $112.59 – a good price target to reduce some risk. A good idea to sell around 50% of your position.

After this, we continued to push higher into $114.85, pretty close to the $115 strike. A great idea to sell the remaining position here.

The option contracts went from $0.54 to a high of $2.6.

An insane 381% return on investment.

Step 5: Stop trading.

It is best to walk away while you’re up than to give back your profits.

 

 

Second trade : AMD $112puts

On Wednesday, August 4th, at 3:49 pm, the filter alerted AMD $112puts

 

We dive into Step 2: Review the alert’s technical details.

The bid and ask were around 0.69 and 0.72,  well within our $100 budget.

A delta of -0.1722, an excellent delta for this trade.

Delta represents how much your option contract will increase/decrease per $1 move in the stock price.

In this situation, if AMD goes down $1, your option contract will increase by .17 or $17.

If we bought the contract at $70 and the price increases by $17, we just earned a 24% return on investment.

Step 3: Do your technical analysis on the underlying stock to qualify or unqualify the alert.

We opened up our 1hour time frame and noticed that an Asymmetric Triangle was being formed.

This setup is good for bullish and bearish trades.

Typically if we want to buy puts when the price is on the upper resistance trend line and calls when we are on the lower support trend line.

We would also buy puts if we fall below the lower support trendline and calls if we get above the upper resistance trendline.

I went on the 2hour time frame and took note of the levels that mattered to me.

Below $117.87 will be below the bottom support line, confirming weakness in the stock. Meaning more downside action to come. The target price would be $114.31 or $112.59

Above $120.3 will be above the upper resistance line, confirming strength in the stock.

 

Step 4: Placing your trade.

Now that we know what contract we’re going to trade and what price levels we are looking for, we now have to execute the trade.

Given that the trade was alerted at 3:51 pm, just 9 minutes before market close, I had to wait until the next day actually to place the trade.

At 9:32 on August 5th, AMD opened around $116.16, well below our $117.87 level. The stock was showing a great deal of weakness.

The $112puts were trading around $1.02 – this was out of my $100 budget.

I decided to wait and see if these contracts would come back down in value before getting into the trade.

Around 10:05 am AMD was trading around $115.82 and the $112 puts were now trading around .74.

I saw the stock was consolidating between $115.75 and 116.14.

I went ahead and bought the $112puts here with a stop loss at $116.2.

With having cleared defined target price and stop-loss, we were able to take this trade from .74 to 2.17, a 192% return on investment.

Step 5: Stop trading.

It is best to walk away while you’re up than to give back your profits.

 

For more information on how to use the 14-day and 30-day simple moving average:

https://www.youtube.com/watch?v=ikOSIJ4lOXk

 

For more information on how Option contracts change in value :

http://trading.tigerwolfcapital.com/resources

 

If you are interested in being part of Discord chat:

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Tiger Wolf Capital : Stocks to trade this week

$BA Boeing

News: Southwest Airlines on Monday said it is buying 100 new Boeing  737 MAX jets.

This is big news for Boeing, which lost hundreds of orders during a prolonged grounding of the troubled jet and reduced demand for travel during the coronavirus pandemic.

The order for the MAX 7 jets, the smallest MAX variant, means Boeing will retain its lock on one of its most important airline customers. Southwest’s fleet is made up entirely of 737 jets, but the carrier had been re-evaluating that strategy.

Technical Analysis: On Monday: $BA closed @ $250.52, +2.31% from Friday’s close.

In my personal opinion, I do not think this news is big enough to make the stock continue going up.

I think this was a 1-time push and we should anticipate more downside to come.

I do believe $BA will trade lower into $242.69 and maybe even 233.78

I like the $230puts for 4/9 – currently trading @ 1.90

 

 

PENN Penn National Gaming Inc.

News:  Deutsche Bank Gaming report warns about NY government being more pessimistic about passing new gaming laws.

Now I personally do not agree with the report, but I do see the stock continue to sell-off.

After recently joining the S&P500 ETF, SPY, investors are not interested in owning the individual company when they can just bet on the overall market doing well.

On Monday, PENN closed at $98.21, down 7.85% from Friday’s closing price.

I do see the stock heading lower into $86.17

I do like the $90 puts for 4/9, currently trading at 2.41

Join our discord for more trade ideas like this: https://www.tigerwolfcapital.com/discord/

Market Sell-Off Part 2: Zoom Earnings and 10 Year Treasury

THE SECRET SAUCE | COMPLEX IDEAS | SIMPLE SOLUTION

Market Sell-Off Part 2:  Zoom Earnings and 10 Year Treasury

Friday, March (3/5) Closing Price

 

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DISCORD RECAP (March 1st – March 5th)

We like energy and oil.

After OPEC’s surprise to cut oil production through April,  we anticipate oil prices will continue to climb.

Crude oil has been a top-performing asset this year, with variants like gasoline and diesel also delivering significant gains in 2021 of 38.6% and 24.3%, respectively.

To participate in this, we will be investing in Exxon Mobil, $XOM.

On Friday, XOM closed at $60.93 and we see a potential to hit $85.

If you trade this stock, we have a short-term target price of $63.17.

Day trading short-term call options could also be a good idea.

Zoom Logo - PNG and Vector - Logo Download

Fundamental Analysis Matters???

Investors have decided that fundamental analysis is essential this week, reflecting in Zoom’s stock price dropping $100 or 30% in two days.

Zoom released its earnings on Monday, and they blew expectations out of the water. The video-calling software maker reported its revenue grew 369% YoY in the quarter that ended on January 31st, after growing 367% in the

third quarter and losing fewer customers than executives had expected.

  • Revenues soared to $883 million, up from $188 million the year before.
  • Based on formal accounting rules, Zoom’s net income rose from $15 million to $260 million, or 87 cents a share.
  • The gross margin expanded from the previous quarter’s 66.7% to 69.7%.
  • small customers grew to 467,100 customers with more than 10 employees at the end of the fiscal fourth quarter, nearly five times as many as it had before the pandemic hit, or up 470% on an annualized basis, compared with 354% growth in the previous quarter.
  • It ended the quarter with $4.24 billion in cash, cash equivalents, and marketable securities, significantly up from the previous quarter’s $1.87 billion.
  • Consensus estimates for their Earnings per Share (EPS) was $0.79, and actual was $1.22 for Q4.
  • Zoom’s revenue topped $822B, almost 9% better than estimates, and provided 2022 earnings guidance of $3.62 per share.

Despite these robust estimates, investors do not agree that the stock should be trading at 110x its 2022 Earnings estimates as well investors are wary of whether or not Zoom can continue this momentum.

Just two weeks ago, researchers from Stanford University argued about possible “Zoom fatigue.”

The study found that all the countless hours spent on zoom calls take more of a tool on the human brain and body than regular office work.

The fact that we are always connected, and sharing is leaving us mentally fatigued. The address four key reasons.

  1. Excessive amounts of close-up eye contact are highly intense.

  2. Seeing yourself during video chats constantly in real-time is fatiguing.

  3. Video chats dramatically reduce our usual mobility.

  4. The cognitive load is much higher in video chats.

We wouldn’t be surprised if we started to see a decline in zoom video usage in the upcoming months with vaccine rollouts, re-openings, and taking a break.

Target Reports Record-breaking Earnings, stock sells off.

Target-Logo - Earl & Brown

best friends yes GIF by Target

Target’s stock closed down 6.8% on Tuesday trading but has soared 64% over the past year.

For the fiscal fourth-quarter ending on January 30th,

  • revenue rose 21% to $28.34 billion from $23.4 billion last year, higher than analysts’ expectations of $27.48 billion.
  • Comparable sales, a critical metric that tracks sales at stores open at least 13 months and online, went up 20.5% compared to the prior year as comparable digital sales rose by 118% YoY.
  • After strong holiday sales, online sales gained even more momentum as Americans cashed in their $600 stimulus checks in January.
  • Store sales increased by 6.9%, digital sales increased 118%, and same-day service grew 212%.
  • As impressive as they are, both metrics show a deceleration in growth rates versus the third quarter.
  • In mid-January, Target reported that sales grew 17% during the holidays, which is a slight slowdown from the third quarter’s 21% spike, but it is still a lot better than the 9% that Walmart experienced.

So why did the stock sell-off?

Target did not provide guidance within their earnings report, and this has spooked investors.

  • Target also reported on-GAAP EPS of $2.67, beating estimates by $.13, and revenue of $28.34B beating estimates by $920M.
  • The only real forward direction that Target provided is that they will spend $ 4B annually for the next several years.
  • A big step up from 2020 where they spend $2.7B and in 2019, they spent $3B.
  • Target is planning to increase the number of stores by 30-40 stores annually.
  • Target plans to remodel 150 stores this year and increase that number to 200 in the following year.
  • Investors did not take to this news lightly, and the stock price reflected it.

Their earnings were solid outside of the spending guidance, and their omnichannel business presence led to their revenue growth.

In conclusion, investors do not like spending more money.

Somethings AREN’T Best Left Unsaid 

Investors often make decisions based on what was said in meetings, press conferences, and interviews. In this case, markets moved because of things that were left unsaid; investors were left with a sour taste after Federal Reserve Chairman Jerome Powell failed to address the Gigantic Elephant in the room. 10-Year Treasury Yields are rising due to expected economic growth and inflation in the future. Due to the pandemic, borrowing is near an all-time high, and any change in interest rates can have a massive multiplier effect across the country. High Growth companies, small businesses, and millions of individuals will face defaults with higher interest rates. This lack of reassurance from Powell sent markets tumbling despite a positive jobs report showing unemployment rates falling to 6.2%. We will have to keep a close eye on the 10-Year Treasury Yield in the future with it carrying such grave implications.

Tesla Divides Believers and Values Skeptics

Elon Musk Mic Drop GIF by FullMag

The market is split between believers and skeptics.

Those who believe that Tesla’s value is limitless and those who are more pessimistic about its prospects, especially given its current market price.

The company’s progress so far in “accelerating the world’s transition to sustainable energy” is a credit to Tesla. Still, there is a lot more left to do in its master plan to justify today’s valuation.

Tesla’s history of executing many of its audacious goals seems to be expected to continue, given the optimism in the current stock price. This gives the company very little room for error.

Read more about it on our website: https://www.tigerwolfcapital.com/tesla-divides-believers-and-skeptics/

REVIEW OF PAST WEEK 3/1 – 3/5

UPCOMING WEEK 3/8 – 3/12

EVENTS & TALKS

Tesla divides believers and skeptics

Tesla divides believers and skeptics.

The market is split between believers and skeptics.

Those who believe that Tesla’s value is limitless and those who are more pessimistic about its prospects, especially given its current market price.

The company’s progress so far in “accelerating the world’s transition to sustainable energy” is a credit to Tesla. Still, there is a lot more left to do in its master plan to justify today’s valuation.

Tesla’s history of executing many of its audacious goals seems to be expected to continue, given the optimism in the current stock price. This gives the company very little room for error.

 

Investors Are Giving Tesla A Lot Of Credit For Future Execution

See the source image

Tesla (NASDAQ: TSLA) is easily one of the most controversial companies in the world right now. Most either love it or hate it. These two groups seem to be split into those who owned it through 2020 and those who watched on the sidelines as the price multiplied 10-fold.

What’s undeniable is that Tesla is working on some exciting innovations in the world’s transition to sustainable energy. The company’s grand ambitions for electric vehicles, autonomous driving, battery design, energy storage, and energy generation have contributed to the widely differing opinions on the business’ future. Some believe its plans are possible, while others are skeptical.

Let’s look at where Tesla is today versus its future expectations, plus what it needs to do to get there.

  • Tesla is in the early days of its ambitious plan.
  • Perfect execution is needed to reach its bold targets.
  • If any doubt arises about its ability to execute, the stock will re-rate downwards significantly.

Tesla Today Versus Tesla In The Future

Tesla currently generates revenue through 3 sources: automotive sales and leasing, energy generation and storage, and services.

The automotive business generated 97.2% of total revenue while energy generation and services contributed .7% combined during the 2020 financial year.

To understand the expectations related to Tesla’s future, we need to understand where the company is now versus where it is expected to be in, say, 10 years.

In 2020 Tesla did the following :

Production Deliveries
Model S/X 54,805 57,039
Model 3/Y 454,932 442,511
Total 509,737 499,550

In 2020, the company delivered half a million in vehicle sales and generated $27.23bn in revenue (sales and leasing combined). This is a 30% increase over 2019’s automotive revenue.

Years ago, in 2016, Tesla brought in $7 billion in total revenue, while in 2020, it brought in $31.54 billion while its earnings per share went from -.94 to now a positive .64, a 350% and 168% increase.

Sources: tesla.com

The company earns tradable regulatory credits because it operates under regulations related to zero-emission vehicles and clean fuel. It sells these credits to other carmakers who want to comply with the regulations and avoid fines because Tesla doesn’t need them. The CFO stated in an earnings call that demand for these credits would remain strong for the next few years. Still, as electric vehicles become more mainstream and other manufacturers also begin complying with the regulations through their own operations, earnings from these credits’ sales will decline.

Regarding future expectations for the automotive side, Tesla’s CEO, Elon Musk, stated the company plans to produce 20 million cars per year by 2030. That may sound audacious, and it is. But in 2014 (when it sold around 32k cars), Tesla said that it planned to sell 500k cars by 2020, which also seemed audacious, but it did it.

So to put that 20m into perspective, here are a few numbers. That means Tesla needs to increase its current production by 40x (a 44% CAGR). It needs to double what Volkswagen and Toyota (the two biggest carmakers currently) sold in 2020, which was 9.35 million and 9.5m cars, respectively. Plus, market forecasts from Deloitte and Bloomberg New Energy Finance’s likes expect the number of electric cars sold annually to be around 25m in the year 2030. So if true, this implies that Tesla would have an 80% share of the electric vehicle market in 2030, compared to its current 18% in 2020 (it was the market leader in 2020). Tesla is overly optimistic, or the industry forecasts underestimate electric vehicles’ total adoption in 10 years.

Considering that the company generated 43% YoY growth in cars produced from 2018 to 2020, it will need to continue expanding its production capabilities aggressively to continue this growth rate. Achieving this growth will rely heavily on three things: first, an improvement in the company’s capital efficiency (continual reduction in production costs), second, the successful creation of many new factories around the world to support production, and third, widespread adoption of Tesla’s Full Self-Driving (FSD) technology (if the software is successful). We will touch more on these points later.

Regarding Tesla’s energy generation and storage business, it deployed 3.02 Gigawatt hours of energy storage products and 205 megawatts of solar energy in 2020.

At Tesla’s recent Battery Day, Musk announced plans to get to 3 Terawatt hours (TWh) per year in batteries by 2030, a 1000x increase from its current installations.

Considering Bloomberg NEF predicts that energy storage installations around the world will reach 1.1TWh to 2.8TWh by the year 2040, it appears there are some big discrepancies. Tesla’s forecasted energy installations in 2030 would be more than 100% of what BloombergNEF forecasts for the entire world’s installations.

Again, either Tesla is optimistic, or industry forecasts are underestimating the growth of global battery installations.

How will Tesla Reach These Bold Targets?

These bold predictions from Tesla seem vastly different from what some market research by other firms suggests will occur. Regardless, to achieve what it’s claiming is possible, a few things need to occur.

1. Tesla Needs To Spend Big

To build more factories in its automotive and energy businesses, Tesla will need to spend money and lots of it. The company had $19.38bn of cash at the end of 2020 (after raising $10bn via equity in the second half of 2020, which was 2% dilutive), generated $5.9bn cash flow from operations, and spent $3.16bn of that on capital expenditures for the year. For 2021, 2022, and 2023, Tesla expects to spend between $4.5bn and $6bn on capital expenditures per year (page 33 of the 2020 annual report). Some forecasts suggest that Tesla will need somewhere between 20 to 40 new gigafactories to reach its goals by 2030, which could cost anywhere between $32bn and $64bn over the next 10 years (if we use the $1.6bn cost of the Shanghai factory). Yearly, that would equate to between $3.2bn and $6.4bn of capital expenditure over the next 10 years. Given the current cash flow from operations and the high cash balance, this seems affordable, at least for the next few years.

Here’s an outline of the company debt to equity situation since 2014 from our company report.

Source: Debt to Equity History and Analysis – Simply Wall St

 

2. Tesla’s FSD Software Needs to Win

Tesla FSD software is up against almost every other company in the space (e.g., Waymo, GM, Toyota), using LIDAR technology. It’s beyond my current capabilities to outline the technological differences between the two (and they are significant), but what is important to keep in mind is that neither are at full level 5 autonomy just yet. This means both systems are yet to prove they have the capabilities for full autonomy without a human driver.

However, while Tesla’s FSD software is reportedly only at level 2 autonomy, it claims it will be at level 5 (i.e., fully autonomous) by the end of 2021. This could be since it has accrued somewhere in the range of 3 billion miles of data from its fleet of cars on the road to building its FSD software. This is significantly more data than its competitors. So if that software comes to market successfully at the end of this year like the company plans, that would provide more substantial evidence that supports Tesla’s case for being the market leader in autonomous driving software and driving its potential exponential growth. Not only that, the software would provide a very high margin source of recurring revenue. But again, that’s yet to happen, and if it does experience any hiccups in the process, it could be incredibly damaging. So execution is key.

3. Tesla Needs To Continue Improving Capital Efficiency

In the manufacturing business, capital efficiency is key to growing production rapidly and affordably. Ark Invest, one of the most widely known bulls on Tesla (Ark owns around $3.7bn of Tesla across its ETFs), believes there is a 50/50 chance Tesla will be more capital efficient than traditional US auto-makers. The Bureau of Economic Analysis showed that traditional US automakers spent $14k per car on fixed assets in 2016. For reference, the Tesla Shanghai factory-required $1.6bn in financing with an initial capacity of 150,000 cars, meaning it costs $10,700 per car (Shanghai recently reached 8k cars per week and expects to produce 550k cars in 2021). To grow rapidly and affordably and enable this growth required to get to 20m cars by 2030, Tesla needs to continue to improve its efficiencies and productivity even further with its future factories.

The thing here is that it seems a lot of Tesla’s current market price is counting on the successful execution of these future events playing out. The CEO even noted this to employees in an internal letter in 2020. The expectations of exponential growth rely on simultaneously expanding production capabilities, increasing productivity, and successfully delivering FSD software to market. The company has a track record of executing, but if any doubt arises from investors about their ability to further execute, it would be incredibly damaging to the stock price.

What This Means For Investors

While Tesla seems to still be in the early days of its ambitious plans, the stock’s current market valuation seems to largely expect that all of these developments occur, even though they’re likely years away and not guaranteed. The huge share price increase in 2020 versus more conservative growth in the actual business indicates that a lot of the rise was due to increasing expectations that the company would successfully execute. As investors, we need to assess a range of possible future outcomes, assess the probability of each outcome occurring, and estimate the potential risk-reward that comes with each outcome playing out.

There’s a saying from Charlie Munger that goes, “No matter how wonderful a business is, it’s not worth an infinite price.” It’s up to us as investors to determine what an appropriate price is.

How to trade Tesla : 

On the overall 2hour, 360-day time frame, Tesla’s technical analysis reads bearish with more downside to come.

The 14-day simple moving average is now well below the 30-day simple moving average.

As a result, we now see more downside for tesla to come in the near future.

As a day trader and an option trader, we would be looking to buy $550 or $500 puts if this downward trend were to continue.

The price target will be $566.77 and then $533

Join our discord to see more real-time analysis.  

 

Tesla’s weight in SPDR S&P 500 ETF Trust, SPY, has led the stock market to retrace back down towards the $370 price level.

Price action has led to many stating that the stock market is crashing.

But to be honest, we have not seen a market crash yet.

Tiger Wolf Capital owner Frank Mercado wrote this article is general in nature. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

#18 The First Crack: Why the Market Crashed Last Week

Friday, February 26th Closing Price

 

“The secret of your success is determined by your daily agenda“ – John C. Maxwell

 

DISCORD RECAP (2/22 – 2/26)

We shorted the market.

$SPY (S&P 500 ETF)

We are anticipating more downside in the overall market.

On Friday, $SPY closed at $380.36; this is below our support level of $380.71.

Our 14-day simple moving average is below the 30-day simple moving average as well our MACD parameters are becoming redder and redder.

We are anticipating seeing SPY trading around $370 / $366 shortly.

JOIN OUR DISCORD

www.tigerwolfcapital.com/discord

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EDUCATIONAL LEARNING SEGMENT

Learn How to Lose!

 

UPCOMING WEEK 3/1 – 3/5

EVENTS & TALKS

UPCOMING WEEK’S

EARNINGS 3/1 – 3/5

EARNINGS
REVIEW OF PAST WEEK 2/22 – 2/26

MARKET LAST WEEK (2/22 – 2/26)

MONDAY (2/22)

10-Year Treasury Yields Jumped

10-Year Treasury Yields jumped 14 basis points to 1.34% and reached1.37% overnight. Yields have increased 28 basis points so far in February, which can significantly impact high-growth companies who rely on low-interest rate loans. While this may hurt high-growth companies, this is a sign of growing confidence in the economy. House Democrats are looking to finalize a large stimulus package that could cause an uptick in inflation and increase short-term interest rates. Businesses are borrowing at low rates, and any increase can seriously hamper their growth moving forward. When vaccinations have been implemented, and society can resume, the economy may overheat in a short period with rapid amounts of inflation. The 10-Year Treasury Yield having an uptick is a preemptive measure to counteract the economy’s possibility of overheating.

TUESDAY (2/23)

In Spite of the Red, the Fed Shows Optimism

J Pow spoke with Congress on interest rates and inflation for the short-term. Jerome Powell says there is a lot of liquidity in the market, and people want to place it in Treasury bills. He is worried that downward pressure on rates and the Treasury General Account is shrinking in size. He also believes that there will be more realized gains later this year with the economy and vaccines.

Facebook reached an agreement with the Australian Government about proposed amendments to the media bill. The original bill would have made digital platforms pay for news content displayed in search results or feeds, meaning they would have to pay local media and publishers to link their content. Google previously agreed to pay for news, and Facebook has held out for a better arrangement.

WEDNESDAY (2/24)
Regulation Standards Under Review Across the Board

A new report has come out stating that Boeing and the Federal Aviation Administration have a flawed relationship, which may obstruct the FAA’s ability to identify future safety challenges. The FAA has agreed to implement 14 recommendations in the report and addressed innovations to existing aircraft designs and improved communication with Boeing.

The Securities and Exchange Commission has committed to reviewing its policies on Climate Change. They are evaluating and speaking with companies about the extent to which they are complying with climate change disclosure guidance. They are looking to make a comprehensive framework for companies to produce consistent climate-related disclosures. This will have a significant impact as companies will have to change their business models to factor in climate change practices, which can be expensive. Looking forward, we will have to watch the SEC’s change in policy overwatch.

THURSDAY (2/25)

Mcdonald’s Looks to the Future and the Outlook is Green

In a massive announcement, Beyond Meat has partnered with Yum Brands and McDonald’s to produce an alternative meat product for Vegan Customers. These are some of the largest food brands in the United States, and Beyond will begin to skyrocket in the future. This is a good deal for both partners as Vegan customers are continually looking for cheaper alternatives, and fast food brands are always looking for a new market segment to reach. McDonald’s is looking to create a full line of products, the “McPlant Series,” while the Yum brands will be making pizza toppings, taco fillings, and chicken alternatives. Beyond Meat is now involved in almost all fast-food chains within the United States.

AT&T sells a stake in its pay-TV unit to Private Equity firm TPG and carves out struggling business. AT&T will retain a 70% stake in the business, and TPG will pay $1.8B cash for a 30% stake. This deal values the new company at $16.25B, with about $6.4B in debt. AT&T will now be allowed to stop including the results of its U.S. video operations in its financial reports.

FRIDAY (2/26)

Midnight Riders Filled the House of Representatives

As usual, Friday never goes quietly into the weekend, and it was full of important events. Primarily, the house held the vote for the 1.9 trillion dollar stimulus bill. During the session, Democrats were able to pass the bill, and now the Senate will move to vote on whether it will pass. Although every vote is crucial one way or the other, it will be a tight finish, as even one non-partisan vote can decide the fate of the session.

    While the market continues to be erratic, treasury yield bonds briefly touched their highest point in over a year but came down slightly again, under 1.6%. If the market continues to be volatile, we may see an increase in investors picking up more bonds with a higher yield.

#17 From Wallstreet to Cancun, A Recap of this Weeks Ice Age

Friday, February 19th Closing Price

 

TABLE OF CONTENTS

  1. DISCORD RECAP
  2. MERCHANDISE
  3. EDUCATIONAL LEARNING SEGMENT
  4. UPCOMING WEEK EVENTS & EARNINGS
  5. MONDAY
  6. TUESDAY
  7. WEDNESDAY
  8. THURSDAY
  9. FRIDAY
  10. LAST WEEK’S EARNING

 

“Why wait to do something next week when you can do it right now?” – Frank Mercado

 

DISCORD RECAP (2/16 – 2/19)

We had a number of great trades last week but the winner is definitely $RIOT.

RIOT is a company that is focused on building, supporting and operating Blockchain.

With Bitcoin making new record highs, we thought it would be best to trade those companies that will help Bitcoin succeed.

We bought shares around $60 and option contracts.

Our members made over $3,000 in profits on this trade alone.

JOIN OUR DISCORD

www.tigerwolfcapital.com/discord

EDUCATIONAL LEARNING SEGMENT

Don’t chase the companies that are making every headline, follow the companies that are supporting them.

 

Bitcoin has been a topic of conversation for the past few months.

In the past 3 month, Bitcoin has surged over 200%. Nice return on investment.

 

If you invested $1,000 in Bitcoin you would have $3,085 today.

 

However, if you invested the same $1,000 in $RIOT, a company that engages in the provision of investment services to the blockchain ecosystem as well as manufacturing in-vitro substances, you would have $10,564.

 

UPCOMING WEEK 2/22 – 02/26

EVENTS & TALKS

Monday February 22 2021:

  • Fed Bowman Speech 3:30 PM EST

Tuesday February 23 2021:

  • Fed Chair Powell Testimony 10 AM EST ( Two Day event)

  • Consumer Confidence FEB 10 AM EST

  • S&P/Case-Shiller Home Price YoY DEC 9:00 AM EST – With a reported 10% national price increase, amid a housing shortage it is clear that the price increase may not be slowing down anytime soon.

Wednesday February 24 2021: 

  • New Home Sales MoM JAN 10:00 AM EST – The new homes sold bounced back after a pullback in December, but there continues to be a housing shortage and price volatility hampering prospective buyers.

  • Fed Chair Powell Testimony 10:00 AM EST

  • Fed Brainard Speech 10:30 AM EST

  • Fed Clarida Speech 1:00 PM EST

Thursday February 25 2021:  

  • Durable Goods Orders 8:30 AM EST

  • Initial Jobless Claims 8:30 AM EST

  • GDP Growth Rate QoQ 2nd Est 8:30 AM EST

  • Fed Quarles Speech 11:10 AM EST

  • Fed Williams Speech 3 PM EST

Friday, February 26, 2021: 

  • US Budget Plan FY 2022

  • Personal Spending MoM JAN 8:30 AM EST

 

EARNINGS

Image

Monday, February 22, 2021

Before Market Open

$RCL – Royal Caribbean has been forced to dock all their ships, and they have to remain running while docked. Royal Caribbean has been burning cash throughout the pandemic, and their business model requires them to have full ships to overcome the cruise costs. Expected EPS of –$5.40 and Revenue of $52.14M, with expected quarterly revenue to decrease by -97%.

Tuesday, February 23, 2021

Before Market Open

$HD – Home Depot has had success throughout the pandemic with people staying at home and committing to DIY projects at home. Home Depot is the largest home improvement retailer, and they offer a wide array of products. Expected EPS of $2.74 and Revenue of $30.45B, with expected quarterly revenue to increase 18%.

$MCY – Macy’s was at one point the world’s largest retailer and since then have fallen from grace and accrued many losses with the growth of online shopping. Along with the fall of retail service due to online shopping, Covid-19 has curbed tons of retail shopping and hurt Macy’s business severely. Expected EPS of $.40 and Revenue of $6.51B, with expected quarterly revenue to decrease by -22%.

After Market Close

$SQ – Square provides financial services as a point of sale system and payment taker. They can receive no-touch payment, their software for collecting payment using a phone, and several other in-house payment options. Square has had a unique 2020 with its various payment options, which has allowed them to be successful. Expected EPS of $.34 and Revenue of $3.1B, with expected quarterly revenue to increase by 136%.

$INTU – Intuit is the leader in DIY taxes and financial management services for small businesses and individual consumers. They own several flagship products: Quickbooks, TurboTax, and Mint. Individuals turn to TurboTax for an easy-to-use and cost-effective way to file taxes. Intuit is reporting its annual and quarterly earnings. Expected EPS for Q2 is $.13, and revenue is $1.57B, and quarterly revenue is expected to decrease by -7.4%, while annual revenue is expected to increase by 16.2%.

Wednesday, February 24, 2021

Before Market Open

$LOW – Lowe’s, the tertiary home improvement company, operates a very similar business model to Home Depot as they are substitutes for each other. Consumers are spending more money on DIY projects and home improvement, which can be reflected in their earnings. They have an expected EPS of $1.36 and Revenues of $19.33B, with expected quarterly revenue to increase by 20%.

$JMIA – “The Amazon of Africa” Jumia provides an e-commerce service that offers a wide variety of services and products across Africa. This stock has recently had a long bullish run and has much promise from investors. Expected EPS of -$.46 and Revenue of $50M, we can expect Revenue for Jumia to increase in the future.

After Market Close

$NVDA – Nvidia is one of the leaders in the semiconductor industry and provides chips to several companies across several sectors. They offer microchips to data centers, electric vehicles, artificial intelligence, and a GPU platform. Expected EPS of $3.26 and Revenue of $4.83B, with expected quarterly revenue to increase by 55%.

$BKNG – Booking is one of the leading online hospitality services providers and has been struck throughout Covid-19. Booking derives revenue from agents accommodating trips and merchant revenue from users to services. Expected EPS of -$4.43 and Revenue of $1.17B, with expected quarterly revenue to decrease by -65%.

Thursday, February 25, 2021

Before Market Open

$PLUG – A company we have kept a strong focus on in the last two months and many of their sales. Plug is one of the leaders in the alternative energy/hydrogen fuel cell, and moving forward, demand for their products will begin to increase exponentially. They have an expected EPS of –$.09 and Revenue of $83.34M, with expected quarterly revenue to decrease by 9%.

$DPZ – Domino’s Pizza is the second-largest pizza chain globally; they have made the entire process of delivery much more efficient. Domino’s serves competitive-priced pizza, easy order access, and efficient service by new technology. They have an expected EPS of $3.85 and Revenue of $1.38B, with expected quarterly revenue to increase by 20%.

$BBY – Best Buy is a leading retailer of technology products and services. While people are continuing to work from home, they rely on Best Buy for new products and Geek Squad services to fix their existing tech products. They have an expected EPS of $3.64 and Revenue of $17.20B, with expected quarterly revenue to increase by 13.2%.

$MRNA – Moderna is one of the three pharmaceutical companies that could produce and manufacture a feasible Covid-19 Vaccine to be distributed throughout the world. Soon, Moderna will continue to generate extraordinary revenues after spending absurd amounts on R & D. They have an expected EPS of -$.17 and Revenue of $326.58M, with an expected quarterly revenue increase of 2,223.6%.

After Market Close

$CRM – Salesforce performs on-demand CRM applications that allow customers to manage and share all of their sales, support, and marketing. Salesforce offers a unique platform that enables companies to share, exchange, and install applications with a few simple clicks. They have an expected EPS of $.81 and Revenue of $5.68B, with an expected quarterly revenue increase of 17%.

$BYND – Beyond Meat is an ever-expanding meat alternative that is becoming highly popular with partnerships with global conglomerate companies. They offer various products that can serve any vegan or non-meat consumer taste. They have an expected EPS of –$.20 and Revenue of $104.48M, with an expected quarterly revenue increase of 6%.

$NKLA – Nikole Corporation manufactures electric vehicles and offers battery-electric and hydrogen fuel-cell electric vehicles. They have an Expected EPS of -$.33 and Revenue of $.06M.

$FSLR – First Solar designs and manufactures solar modules with a semiconductor film that can keep these products at a low cost. First, Solar wants to reduce the cost of Solar to combat and become a substitute for traditional energy sources. Expected EPS of $1.31 and Revenue of $713.59, with expected quarterly revenue to decrease -49%.

$DELL – Dell technology provides information technology solutions, and their operating segments consist of Client Solutions, Enterprise Solutions, and Dell Software group. Dell sells desktops to commercial and retail clients and data storage for clients. Expected EPS of $2.35 and Revenue of $23.99B, with expected quarterly revenue to remain the same.

Friday, February 26, 2021

Before Market Open

$DKNG – DraftKings is a direct competitor to Penn Gaming, and we have kept a strong focus on Penn. DraftKings promotes an exclusively online sports book/casino, and they have seen extended user growth over the last six months. Expected EPS of -$.55 and Revenue of $229.70M.

MARKET LAST WEEK (2/16 – 2/19)

MONDAY (2/16)

Image result for facebook logo

Mark Zuckerberg at a security conference said the social-media platform is in between a newspaper and a telecommunications company in terms of responsibility for the content and should be regulated as such. With all the recent news about Twitter shutting down accounts, and censorship being an undertone in the news, Zuckerberg confirms the heavy responsibility they bear with the most extensive user base. Its users drive Facebook’s content, and therefore they should have the role of a telecommunications company, while on the other side, they are broadcasting user content. They lie in a difficult position where regulators on both sides are looking to increase Facebook rules and be responsible to everyone.

TUESDAY (2/17)

A massive cold front has moved across the continental United States, and there have been rolling blackouts in many of the Middle American states. The supply of crude oil has fallen, which has sent the US Crude oil prices above $60 a barrel. The cold has halted production, threatening to reduce gasoline and diesel supply throughout the country. Frigid weather is expected to remain throughout the middle of the week, and Covid-19 vaccinations have faced possible disruption. Some Covid-19 vaccines rely on extremely cold temperatures, which require electricity. Without it, the Covid-19 vaccine becomes useless, and this will cause lots of money wasted.

Beijing is exploring whether China can limit the export of rare earth materials to the US Department of Defense, crucial to manufacturing Lockheed Martin’s F-35 and other sophisticated weaponry. China controls about 80% of the global supply of these rare earth materials and can severely restrict the production of defense materials. Boeing, Lockheed Martin, and Raytheon will be severely hurt by China limiting these rare Earth materials.

WEDNESDAY (2/18)

Image result for bitcoin logo

Bitcoin began a big rally Wednesday, eclipsing the $50K mark for the first time. Several companies such as Mastercard, Bank of New York, and Tesla started investing in Bitcoin. Tesla invested $1.5B in Bitcoin as an alternative cash position and began receiving Bitcoin payments for their cars. This is massive momentum for the cryptocurrency as more institutions develop trust in the alternative asset. MicroStrategy offered $900M of debt to develop a Bitcoin position, and Jack Dorsey from Square started taking Bitcoin as payment.

The Treasury yield increased by 1.3% after hitting a new high on Friday, while the 30-year gained eight basis points. With increased vaccinations and the economy beginning to restart, Janet Yellen, alongside Jerome Powell, wants to keep Nominal Yields low with such high debt levels in the marketplace.

THURSDAY (2/19)

Unemployment claims rose to 814K showing signs that the economy is beginning to worsen after continued positive trends over the last several weeks of decreasing unemployment claims. An upward claim of 55K from the week prior, Marianne Wanamaker, a labor economist from the University of Tennessee, is quoted saying, “Things are not as stalled as they were in January, but we don’t have any momentum.”

In light of the GameStop stock saga craziness, several key players will have a hearing on Capitol Hill. Vlad Tenev Robinhood CEO, Melvin Capital Gabe Plotkin, Reddit Steve Huffman, and Citadel’s Kenneth Griffin and Keith Gill. Lawmakers will get their chance to ask the executives in a hearing focused on “short-selling, online trading platforms, gamification, and their impact on capital markets and retail investors.” Several House Committee members on Financial services worked tentatively to expose any fraudulent acts that developed from the GameStop stock price boom.

FRIDAY (2/20)

This week may have felt like a month for many residents in Texas. With the large snowstorm that covered the state and left many without working utilities, the situation was dire for some. Although Texas was able to restore electricity services to most of the state Friday morning, with Federal aid, government officials are hoping to safely treat water soon as well. This would be a massive stride to restoring many Texan’s safe drinking water, as damaged pipes have led to “boil water” advisories across the state.

    Another area that may be expecting a federal aid boost soon is the EV sector. New legislation proposed would grant companies such as GM and Tesla another round of federal tax credits. With new EVs being unveiled by the manufacturer from foreign competitors such as Audi, BMW, and Polestar, access to federal tax incentives could help Tesla and GM continue to lead the American EV market. While not entirely waiting to see if the new bill would pass, Tesla lowered its pricing system on its base model cars in hopes of encouraging those who may have been on the fence about their decision to buy a new Tesla or not. The EU is pushing heavily to transition to emission-free vehicles; we will have to wait and see if the US will join them in creating aggressive incentives and tax rebates to expand interest in switching from conventional ICE vehicles.

REVIEW OF LAST WEEK’S EARNINGS (2/16 – 2/19)

Tuesday (2/16)
(Before Market Open)

 

$PLTR – Planatir Technologies

Palantir Technologies is a data-driven company that provides the best user experience by building platforms to integrate, manage, and secure data. Palantir’s business has grown significantly throughout 2020, with Stay-At-Home orders and businesses needing to have data packaged in one place.

  • Revenue growth of 47% in 2020, to $1.09B

  • Q4 Revenue increased by 40% to $322M

  • 17% Adjusted operating margin

  • 21 deals signed in Q4, each worth $5M

  • Palantir generated $610M from Government customers, which totaled 56% of revenue

  • 77% of Revenue Growth derived from Government contracts

  • 2019 Customer Concentration was 67% of revenue, and decreased to 61% in 2020

Takeaway:

Palantir is showing extremely healthy earnings, and this should continue with the growth of Data and demand for places to store and use this data in one place.

 

$CVS –  CVS Health

CVS Health had experienced an extraordinary year amid the Global Pandemic with their healthcare services, pharmaceutical services, and cosmetic business bolstering.

  • 2020 Total Revenue increased to $268M, up 4.6% YoY

  • 2020 EPS of $7.50 and Q4 $1.30

  • Full Year Cash Flow from operation of $15.9B

  • 4.6% revenue growth for Q4 YoY

  • Operating income increased 16% YoY

Takeaway:

CVS has steadily increased sales throughout 2020, and every business segment has grown YoY. We will continue to watch for news with CVS on implementing the Covid-19 vaccine and the profits they derive from it.

 

$AN –  Autonation

Autonation is the world’s largest car dealer, and their earnings will provide useful insight into consumer disposable income.

  • Q4 Revenue of $5.8B an increase of 5%

  • Gross Profit totaled $984M, an increase of 11% YoY

  • Operating income $309.4M increase 31% YoY

  • EPS of $1.73, down -1% YoY

  • Q4 Common Stock repurchased 4.7M for a purchase price of $302M

Takeaway:

These earnings show that consumers are spending their disposable income, and with interest rates being at an all-time low, consumers are willing to take out loans right now.

 

$ECL – Ecolab

Ecolab is a leader in sanitization for the hospitality and healthcare industry.

  • Q4 earnings show massive improvements in QoQ from Q3

  • Sales were down -6% YoY, $3.06B Sales for Q$

  • Diluted EPS from operations $1.04, -23% YoY

  • Operating Income $416M, -20% YoY

  • Cash Flow from operations of $650M and $523M FCF

Takeaway:

Ecolab shows the signs of an economy rebounding while still facing some harsh winter conditions, with restaurants beginning to re-open.

Wednesday (2/17)

(Before Market Open)

$SHOP – Shopify

Shopify is a cloud-based platform that has thrived throughout the pandemic, with consumers purchasing more goods online than ever before.

  • Q4 Revenue Growth of 94% YoY, Total Revenue was $977M

  • Full-Year 2020 Revenue Growth of 86%

  • Gross Merchandise Volume exceeded $41B for Q4 and $120B for 2020

  • Subscription Solutions revenue was $280M, up 53% YoY

  • Monthly Recurring Revenue was $82.6M

Takeaway:

Shopify has continued to grow massively with the unprecedented growth of online sales, and the demand for users to track their packages minute by minute has increased significantly.

 

$HLT – Hilton

Hilton is one of the largest hotel chains globally, and Covid-19 has stunted hotel use and caused massive losses across the board.

  • Diluted EPS was -$.80 for Q4 and -$2.56 for 2020

  • Net loss was $225M for Q4 and $720M for 2020

  • Revenue for 2020 $1.6B, and Q4 of $384M

  • Issued $1.9B in Senior Notes in Decembers

Takeaway:

These earnings show how hard Covid-19 is still hitting the hospitality industry as Hilton is losing hundreds of millions of dollars throughout 2020.

 

$TSEM –  Tower

Tower produces analog semiconductor chips that are growing in demand with the increased need for data storage and growth of Electric Vehicles that require these chips.

  • Q4 Revenue of $345M, 11% Growth QoQ, and 13% Growth YoY

  • Organic revenue growth of 20% QoQ and 17% YoY

  • Revenue for 2020 of $1.26B, Operating Profit for Q4 $33M

  • EBITDA for Q4 was $96M; Cash Flow was $73M

Takeaway:

Demand for the semiconductor industry is at an all-time high, and Tower Semiconductor supplies that demand. Looking forward, Tower will need to increase its production capacity to provide this supply for the market.

(After Market Close)

$TWLO – Twilio 

A cloud-based communication platform that allows developers to make and receive text messages, phone calls, and web service APIs. Twilio is experiencing growth to unprecedented levels, with companies using their platform on a more frequent basis.

  • Q4 revenue of $548.1m, YoY Growth 65%

  • Full-year revenue of $1.76B, 55% YoY

  • Loss from operations of $185.3M for Q4, in comparison to $93.8M in 2019

  • EPS of $.04 in Q4, and a net loss of -$3.35 

  • Loss from operations of $429M for 2020, compared to $369.8M for 2019

Takeaway:

Twilio is growing revenue, while at the same time increasing costs. We will have to continue to look into their Earnings to see if they can decrease expenses moving forward.

$BIDU- Baidu 

Baidu is a leading AI company from China that works on AI cloud solutions, produced a strong Q4 earnings report. With the growth in demand for AI involvement, from cloud work to autonomous driving, Baidu stands to continue to benefit.

Baidu reported the following

  • Baidu Core non-marketing revenue grew 52% year over year in Q4

  • Baidu AI cloud differentiating with AI solutions grew 67%year over year in Q4

  • Baidu’s revenue reached US$16.4 billion

Takeaway:

Technology is becoming more integrated into everyday life with every passing month. With Bixby or Siri in most phones, computer chips in cars, and even smart light bulbs, for the most part, our society is pushing towards autonomy through “smart” devices for convenience. That will require increased AI involvement and production, which may provide Baidu with the avenue to continue to thrive.

Thursday (2/18)

(Before Market Open)

$WMT – Walmart

Walmart is a retail giant, with big box stores carrying items ranging from camping gear to fresh produce, aiming to be close to a one-stop-shop for all customers’ needs.

While failing to reach most analysts’ expectations for Q4 earnings, they still produced a solid Q4.

Walmart reported the following:

  • adjusted earnings came out at $1.39 per share, $1.51 expected

  • Raising wages at/above $15 an hour average

  • Online sales rose 69% in the quarter

  • Sales at US stores increased 8.6%

Takeaways:

Walmart always benefits during the holiday season with their large selection of products that end up shopping lists, from food to electronics. While the stimulus bill provided consumers with a small boost in purchasing power. Moving into the new quarter, growth may not expand as much as last year but can be expected to remain consistent as demand for household items is not likely to reduce.

 

$WM – Waste Management

One of North America’s largest waste disposal companies, with arguably the most recognizable logo in their sector. Everyone benefits from their services, which explains how when most companies struggled during the pandemic they were able to continue producing similar financial reports as the previous year.

They reported the following

  • in the fourth quarter of 2020, revenue increased $185 million in the Company’s collection and disposal business

  • Collection and disposal yield was 2.3% in the fourth quarter of 2020 compared to 3.2% in the fourth quarter of 2019

  • For the full year, total Company volumes declined 4.5% in 2020 compared to growth of 2.3% in 2019

Takeaways:

With a relatively flat 2020 vs 2019 Waste management can expect to recover some of the minor losses experienced with the majority of business reopening. Which can add volume back to their revenue streams, that may have been lost during the extended quarantine lockdowns.

 

$MAR – Marriott

One of largest and most recognizable hotel brands across the globe, released a weak Q4 earnings report, but as with the entire hospitality sector it was expected.

Marriott reported the following

  • Fourth quarter adjusted diluted EPS totaled $0.12, compared to fourth quarter 2019 adjusted diluted EPS of $1.51

  • Fourth quarter reported net loss totaled $164 million

  • Adjusted EBITDA totaled $317 million in the 2020 fourth quarter, compared to fourth quarter 2019 adjusted EBITDA of $901 million

  • The company added nearly 63,000 rooms globally during 2020, including more than

  • 28,000 rooms in international markets and a total of roughly 8,100 conversion rooms

Takeaways:

Everyone expected brands such as Marriott to continue to struggle as tourism was way down. They reported large losses compared to 2019, but with the vaccine rollout underway the hospitality sector is hoping to get a boost in business again by the end of the year.

(After Market Close)

$Roku – Roku  

Now a days it seems impossible to find smart TVs that are not Roku compatible. As a company they provide streaming services for TV shows, movies and sports across all of their compatible products, which included 38% of the sold smart TV’s in 2020.

Roku reported the following

  •  Total net revenue grew 58% YoY to $1,778 million

  • Platform revenue increased 71% YoY to $1,268 million

  • Gross profit was up 63% YoY to $808 million

  • Streaming hours increased by 20.9 billion hours YoY to a record 58.7 billion

  • In 2020, 38% of all smart TVs sold in the U.S. were Roku TV models

Takeaways:

It should come as no surprise more people were streaming entertainment more during 2019, with everyone confined to their homes during the pandemic, streams were a popular choice to pass the time. Now that more people are leaving their homes again, it will be interesting to see how they adjust and maintain part if not all of those increased streaming hours moving forward.

$AMAT – Applied materials

A leader in their sector, they produce  engineering solutions for the semiconductor, flat panel display and solar photovoltaic (PV) industries. With solar energy becoming more and more popular, their products are vital in producing efficient panels.

AMAT reported the following.

  • Record quarterly revenue of $5.16 billion, up 24 percent year over year

  • Quarterly GAAP EPS of $1.22 and record non-GAAP EPS of $1.39, up 27 percent and 42 percent year over year

  • Generated $1.42 billion in cash from operations

  • paid dividends of $201 million to shareholders

  • the company recorded gross margin of 45.5 percent,operating income of $1.28 billion or 24.9 percent of net sales for Q1

Takeaways:

Although they may not be the first tech company that comes to mind when compared to those in FAANG, applied materials is for all intents and purposes a tech engineering company. Providing the hardware that powers race car sensors to solar panels, they are positioned to continue to grow as demand for their products is not expected to slow down at all. Everyday items including cars, continue to become more advanced and companies will continue to require hardware that can keep up, so for 2021 we can watch to see just how high their ceiling can be.

$DBX – Dropbox

For all of us who have been students or worked in an office, chances are, you have used dropbox at one point. A leader in digital file storage and cloud solutions they produced a strong Q4 to close out their fiscal year.

Dropbox reported the following

  •  Total revenue was $504.1 million, an increase of 13% from the same period last year

  • Fourth Quarter Revenue of $504.1 Million

  • Net Cash Provided by Operating Activities of $170.7 Millionand Free Cash Flow of $158.4 Million

  • Paying users ended at 15.48 million, as compared to 14.31 million for the same period last year. Average revenue per paying user was $130.17, as compared to $125.00 for the same period last year

  • Cash, cash equivalents and short-term investments ended at $1.121 billion.

Takeaways:

With remote work becoming a new normal in our workforce, digital file storage and transfers become paramount in maintaining cohesion between company departments when everyone is no longer in the same building. As companies decide remote work can continue to be a viable solution, Dropbox may continue to show the same revenue growth in 2021 as it did in 2020.

#16 $1.9 Trillion Stimulus Package

Friday, February 12th Closing Price

TABLE OF CONTENTS
  1. MERCHANDISE
  2. DISCORD RECAP
  3. STOCKS ON OUR RADAR
  4. MONDAY
  5. TUESDAY
  6. WEDNESDAY
  7. THURSDAY
  8. FRIDAY
  9. LAST WEEK’S EARNINGS
  10. UPCOMING EARNINGS

“Remember that failure is an event, not a person.” – Zig Ziglar

JOIN OUR DISCORD

DISCORD RECAP (2/8 – 2/12)

Last week, a mixed week with the team, had a 65% win rate with a 40% expected return.

Our biggest losses came from Tesla, Citibank, DoorDash, and Apple.

Our biggest winners came from Paypal, Aphria, and Cronos

EDUCATIONAL LEARNING SEGMENT

Welcome, change. Embrace change. Seek change.

 

STOCKS ON OUR RADAR (2/16- 2/19)

$LAZR 

Luminar Technologies, Inc. operates as a vehicle sensor and software company for passenger vehicles and trucks. The company operates in two segments, Autonomy Solutions and Other Component Sales. The Autonomy Solutions segment designs, manufactures, and sells lidar sensors, and related perception and autonomy software solutions for original equipment manufacturers in the automobile, commercial vehicle, robo-taxi, and other related industries. The Other Component Sales segment engages in the designing, testing, and consulting of non-standard integrated circuits for government agencies and defense contractors. The company was founded in 2012 and is headquartered in Orlando, Florida.

With all the hype surrounding the car sales industry and the electric vehicle industry, we believe that LAZR one way or the other will benefit from the positive momentum.

Stock is currently trading at around $37.78 (as of Friday February 12th, 2021 close)

We believe shares will begin to trade higher to around low $40or high $47 in the near future.

Join our discord to see how we trade this monster

MARKET LAST WEEK (2/1 – 2/5)

MONDAY (2/8)

Tesla has managed to make history and headlines yet again. Tesla disclosed that they had invested $1.5 Billion in popular cryptocurrency Bitcoin. Tesla announced that they would be accepting Bitcoin as payment in the near future. As they stated in their 10-K filing, they may or may not liquidate said bitcoin upon receipt of payment. This change represents a significant backing for the currency and fuels rumors of major institutions gravitating towards Bitcoin acceptance. News of Tesla’s purchase sent Bitcoin price skyrocketing up 20% past the $42,000 market and had Tesla shares up 3% pre-market.

TUESDAY (2/9)

The Senate voted on Tuesday to proceed with the second impeachment of Donald Trump, after what was a long day of arguing over whether it was constitutional to try the former president. All 50 Democrats and 6 Republicans decided to proceed with the impeachment that began on Wednesday. Sixty-seven votes would be needed to convict Trump, and only a few Republicans have committed to saying they would likely vote guilty.

Following two crazy weeks of trading and proving that their platform has some serious firepower, Reddit has doubled its valuation to $6B with a $250M funding round. The CEO Steve Huffman said the company plans to use the new funding to invest in video, advertising, and consumer products. They are looking to enter the international markets, which can be a massive move to grow their user base to all-time high levels.

WEDNESDAY (2/10)

Facebook is building their audio-chat product to rival the famous new app Clubhouse. Clubhouse is an invitation-only audio-chat social networking app launched in 2020 by software developers Alpha Exploration Co. They are abuzz with good news after their $100 million valuationvaluations last year was demolished by a $1 Billion valuation due in part to $100 millionin fundraising in January. Mark Zuckerberg, Facebook’s Chief Executive Officer, hosted a room in Clubhouse this past Sunday to discuss virtual reality’s merits and future. If this happens, this will be the latest move by Facebook to copy a competitor’s popular feature. They successfully copied Instagram’s stories and reels feature and created Facebook rRooms in an attempt to appeal to Zoom’s customer base. The legal hoops they’ll need to jump through to createmake their version have have not beenyet to be  addressed yet.

THURSDAY (2/11)

AstraZeneca recently announced that they are fixing problems with manufacturing its Covid-19 vaccine and expects to double monthly production to 200M doses. AstraZeneca and Oxford University are working to create new versions of the vaccine to combat the latest variants of Covid-19 from South Africa and Brazil.

Labor Reports came out, and they are reporting a decline in unemployment claims from the beginning January peak. This sign shows employers are increasing payroll, and states have begun to open again. Early January unemployment claims exceeded 900k, and the recent report showed a decrease to 730K, while still high, this is a positive sign. This recent dropoff is credited to the remaining more states that were closed, beginning the process to re-open and bounce back. Some legislatures believe that the unemployment numbers are inflated and that some people claim unemployment while going backreturning to their job.

FRIDAY (2/12)

After a long week, the Senate impeachment trial entered its last phases, with senators expected to vote Saturday evening. With several senators meeting with Trump’s defense team, such as Cruz and Graham, it does not appear likely the Democrats will receive enough bipartisan support to convict former president Trump.

In EV news, investors favorite or most hated brand, depending on your views, Tesla. Recently announced the expected battery size for their upcoming EV semi-truck. WhileAt the same time, promising models with ranges between 300 to 500 miles per charge, the batteries revealed by Elon Musk were surprisingly smaller than many expected. A model S contains a 100Kwhbattery pack, while the 300-mile range semis are expected to have 500Kwh battery packs. At the same time, they face criticism for electric semi-trucks’ practicality, with the Federal government encouraging carmakers to push EVs. Tesla stands to lead the market in a new direction once again, and with the first deliveries set to take place this year, we can expect Tesla to continue to rise in the market.

REVIEW OF LAST WEEK’S EARNINGS (2/1 – 2/5)

Monday (2/8) 
(After Market Close)

Chegg

Chegg had their earnings announcement Monday, where they announced that they outperformed every metric and expectation for the past year and raised their guidance for 2021 as well. The pandemic’s effects increased the need for remote learning and subsequently the demand for Chegg services.

Chegg reported the following:

  • 4.4 Million new Chegg Subscribers, up 74% YoY

  • $206 Million in revenue, up 64% YoY

  • 67% YoY growth for 2020

  • 72% gross margin

  • Acquired Mathway

Takeaways:

Chegg’s leadership lauded 2020 as their best year as a company by any metric exceeding their expectations for revenuerevenue expectations, adjusted EBITDA, and all other keycritical operating metrics. Chegg also scores highest in unaided awareness by college students, with 87% having heard of a Chegg service. 92% of their customers believe Chegg has helped them get better grades. As a software company built to scale online, they handled the pandemic flawlessly. With their stellar current standing/ positioning, we have no reason to expect less than stellar growth.

KKR & Co Inc.,

a global leading investment firm that manages multiple investment classes, reported their earnings, and the results were undoubtedly strong and bode well for their future.

KKR & Co Inc reported the following:

  • $2.01 Billion in revenue

  • $1.47 Billion in net income (GAAP)

  • 15% increase in earnings YoY

  • Dividend earnings (DE) of $0.49 vs. project $0.41

  • Private equity portfolio up 32%

Takeaways:

KKR & Co announced a profit during their fourth-quarter earnings call that more than doubled their previous year’s fourth-quarter earnings per share. Company revenue grew just shy of 90%, which is phenomenal in and of itself. Real estate, infrastructure, and leveraged credit funds were all profitable during the quarter, boding well for KKR & Co Inc’s future.

Simon Property Group reported their earnings after-market Monday. Simon Property Group is among those companies adversely impacted by the pandemic. They narrowly missed fourth-quarter revenue and EPS projections. Despite this, share value rose nearly 4% following their earnings call.

Simon Property Group

SPG reported their earnings after-market Monday. Simon Property Group is among those companies adversely impacted by the pandemic. They narrowly missed fourth-quarter revenue and EPS projections. Despite this, share value rose nearly 4% following their earnings call.

SPG reported the following:

  • $1.13 Billion in revenue, down 24.2% YoY

  • Q4 EPS OF $0.86

  • $2.3 Billion in operating cash flow

  • An acquired majority stake in Taubman Realty Group

Takeaways:

Despite the challenging year due to the pandemic, Simon Property Group is positioned to do well long term. Without a fundamental shift in the way consumers purchase, they will weather the storm pandemic or otherwise. Foot traffic in retail stores has returned and higher than pre-pandemic levels in some areas. Simon Property Group projects an EPS of $4.60-$4.85 with analysts projections at $3.90. The common consensus being 2021 will be a positive year of growth for SPG.

Tuesday (2/9)
(Before Market Open)

Canopy Growth Corporation

Canopy Growth Corporation had their earnings call Tuesday morning that was exciting. Canopy outlined a strategy and is executing it in perfect accordance. They regained the leading market share for the Canadian recreational market and have lured several first-time clients in their practical marketing approaches, including adding Martha Stewart CBD gummies to improve customer reach.

CGC reported the following:

  • Record quarter revenue of $153 million, 23% growth YoY

  • Net revenue $99 million

  • $135 million free cash flow

  • R&D expenses of $55 million

Takeaways:

Canopy Growth Corporation is building strong momentum in developing a winning record in its core markets. They have also seen tangible improvements in their commercial and supply chain. Canopy is also accelerating its U.S growth strategy because they expect significant cannabis reform with the new administration. Canopy is firmly on the path of profitability, with record numbers coming in and their R&D numbers showing their commitment to growth.

S & P Global

S & P Global reported their earnings, and all indicators showcase the company in a flattering light. Last year was a culmination of the framework of their executive strategy. This development was seen when they reported that all four of their business contributed to its overall revenue growth.

SPGI reported the following:

  • $7.4 Billion organic revenue, 10% growth

  • 23% adjusted diluted EPS

  • $3.3 Billion in free cash flow

  • $1.8 Billion in share repurchase and dividends

  • Operating profit up 18%

Takeaways: 

S & P Global had a phenomenal year and quarter. Their business grew in step with operating margin, which is a tall order. They believe they can carry this forward as their positive outlook is reflected in their adjusted guidance for 2021. Despite this, they neglected to issue full-year guidance due to their upcoming merger with HIS Markit. Although it occurs in the second half of the year, they find it difficult to project the full impact.

Fidelity

Fidelity had a great year and quarter, as we heard in their earnings calls. They beat expectations in every way, although some questions are still left after their report. Fidelity reported that all three business segments ended the year with record annual sales, an impressive feat objectively but even more so with the pandemic in mind.

Fidelity reported the following:

  • $12.6 Billion in revenue

  • $3.5 Billion in new sales for banking solutions

  • Adjusted EPS of $1.62

  • Over $3 Billion in free cash flow, 50% increase YoY

Takeaways:

Fidelity has lived up to investors’ expectations and believes they will do so again, as seen in their guidance for 2021. Their accelerating revenue growth and expanded margins have issued guidance and have received upgraded numbers that leadership believes make them an attractive long-term value for shareholders.

(After Market Close)

Twitter

$TWTR – Twitter announced Q4 and full-year results that show extremely healthy signs for the company moving forward. Twitter has faced severe backlash and lots of support over the last tumultuous month.

  • YoY Total Revenue Growth of 28%$1.29B

  • Average Monetizable Daily Active Usage (mDAU) Growth of 27% to 192M in Q4

  • 2020 revenue $3.72B, an increase of 7% YoY

  • 2020 Costs and expenses totaled $3.69B – an increase of19%

  • Resulted in operating income of $27M – 1% operating margin

  • Net loss of $1.14B, net margin of -31%, and Diluted EPS -$1.44

Twitter released strong earnings and heavy user growth on their platform, a healthy sign for their platform moving forward. Looking forward, we need to see Twitter be able to cut its costs and expenses to become more profitable. In Q4 of 2020, Twitter gained 40 million users compared to the previous year.

Cisco

$CSCO – Cisco offers business products and solutions to Small and Large Businesses and is a service provider to companies worldwide. With extended stay-at-home orders, offices becoming more virtual, Cisco’s services are in high demand.

  • Total product order growth of 1%

  • Dividend increased by 3%

  • Q2 Revenues of $12B – no change YoY

  • GAAP EPS of $.60, decreased -12%

  • Net Income of $2.5B- decreased by 12%

Cisco sees growth in almost all business segments, especially in their web-scale business. Their Webex portfolio has serious revenue strength with stay-at-home orders, and Cisco achieved $3.6B in software revenue with 76% sold as a subscription. They have an ideal base moving forward, and revenue should grow steadily.

Lyft

$LYFT – Lyft, a ride-sharing company, has been heavily affected by the Global Pandemic, and their earnings have reflected that. Lyft has had to develop creative ways to eliminate extra costs and grow its revenue in any way possible.

  • Lyft reported Q4 revenue of $569.9M – compared to $1,071M in Q4 2019 (-44% YoY)

  • Quarterly revenue increase of 14% from $499.7M in Q3

  • Net Loss for Q4 was $458.2M compared to a net loss of $356M in Q4 2019

  • Adjusted Net loss for Q4 2020 was $185.3M compared to $121.4M Q4 2019

  • Revenue of $2.4B versus $3.6B in 2019

  • Net loss of $1.8B versus a net loss of $2.6B in 2019

  • Revenue per Active Rider increased by 19% in 2020

Lyft successfully cut an extraordinary amount of costs and expenses, so their net loss was a lot less harsh than others. Moving forward, Lyft should have a strong revenue bounce back after the country becomes vaccinated from Covid-19.

General Motors

$GM – General Motors is continuously looking to innovate and push the envelope with every new car model they release. They are heavily focused on taking over the Electric Vehicle industry and providing a lot of competition to other Electric Vehicle companies.

  • Full-yearThe full-year income of $6.4B and EBIT adjusted of $9.7B

  • EPS diluted of $4.33 and adjusted of $4.90

  • Full-year EBIT adjusted margin of 7.9%

  • Q4 EPS of $1.93 and EPS Diluted Adj of $1.93

  • Q4 Income of $2.8B and EBIT of $3.7M

  • Q4 Adj Margin of 9.9%

  • Q4 Operating Cash Flow of $5.2B and FCF of $3.4B

General Motors posted substantial revenues throughout the year even when Disposable Income is meager, and no one is driving their car. This is a positive sign moving forward that people are choosing GM for their vehicle even when they have low disposable income.

Wednesday (2/2)

(Before Market Open)

UAA

UAA, home to elite athletes across multiple sports, but perhaps none more recognizable than Tom Brady and Steph Curry. For Q4, they produced a reliable report, but they did experience some setbacks. Like most retailers, they continue to see an increase in e-commerce sales but failed to maintain revenue at previous levels, falling short 3% overall.

UAA reported the following

  • Wholesale revenue decreased 12% to $662 million, and direct-to-consumer revenue increased 11% to $655 million, driven by 25% growth in eCommerce.

  • North America revenue fell 6% to $924 million, and international revenue increased 7% to $448 million.

  • Apparel revenue decreased 4% to $931 million.

  • Footwear revenue declined 7% to $241 million.

  • Accessories revenue increased 32% to $145 million.

Takeaways:

Under Armour is a staple in sportswear, with household star power wearing their products. Although given the decrease of in-store shopping, and the continued expansions of online sales, there is a shift in their revenue streams. Their earnings should come as no surprise to those following the retail sector since last summer. We would not be surprised if they continue to expand their online presence and push more towards direct to consumer, a strategy Nike inc. has been adopting.

(After Market Close)

Uber

Uber showed some progress in Q4 from Q3, but that did not prevent the final year revenue from continuing to bleed compared to the previous year. When most of the world stopped moving around as much to preventavoid the spread of COVID-19, a yearly decrease in ride-sharing revenue was expected. While ride-sharing bookings took a hit, they succeeded in expanding their food delivery services comparatively, with most indoor dining transitioning to food delivery.

UBER reported the following.

  • Delivery Gross Bookings grew 130% YoY.

  • Gross Bookings grew 16% quarter-over-quarter

  • Revenue of $3.2 billion grew 13% quarter-over-quarter (down 16% year-over-year)

  • Unrestricted cash, cash equivalents, and short-term investments were $6.8 billion at the end of the fourth quarter.

  • Delivery Revenue grew 19% QoQ and 224% YoY while Mobility Revenue increased 8% QoQ and declined 52% YoY.

Takeaways:
With the numbers Uber reported, they showed an ability to adjust and switch focus from primarily ride sharing to food delivery. With a 52% rideshare revenue decrease compared to the previous year, it was vital to keep them from becoming another pandemic victim. Suppose they can continue to build their Uber Eats brand and regain some of the lost rideshare business. In that case, they will be in substantially better financial standing moving into the later quarters of the fiscal year. With mass vaccinations on the horizon, travel and ride-sharing may recover some of their lost customers.

Thursday (2/3)

(Before Market Open)

Pepsi

Pepsi produced a Q4 report that beat analysts’ expectations, with shares earning 1.38% more than predicted. While most known for their soft drinks that compete with the Coca-Cola brand, Pepsi also includes Quaker oats and Frito Lay chips under their umbrella. Together, Pepsi grew their revenue again in Q4, keeping up with the fiscal year’s previous three earnings reports.

Pepsi reported the following.

  • Net revenue growth Q4 8.8%

  • Net revenue growth YoY 4.8%

  • Frito-Lay North America operating profit decreased 4%,

  • Quaker Foods North America operating profit grew 17%

  • PepsiCo Beverages North America operating profit rose 19%

Takeaways: 

Pepsi shares were down 7.1% during the fiscal year, but they exceeded expectations this quarter. With revenue and profit increasing as a whole, we can look to Pepsi to regain some of its lost market value in the new year. With the wide variety of staples in kitchen pantries, Pepsi can continue to see theirits revenue expansion and perhaps continue to marginalize any losses from the Frito lay brand losses.

(After Market Close)

Disney

Disney produced a relatively positive 2021 Q1 earnings call given the media giant’s exposure to the pandemic with park closures. Disney+ has continued its hot streak adding more subscribers to its base and producing well-received shows such as The Mandalorian and WandaVision. With more exclusive content on the horizon, Disney hopes to compete with Netflix in the market space.

Disney reported the following.

  • Disney plus subscribers rose to $94.9M.

  • Reported revenue was $16.25B vs. $15.92B expected and $20.86B YoY

  • Disney plus to be raised by $1 starting in March, to 7.99%

  • Disney parks reported a loss of 119M vs. 530M expected

Takeaways:

Disney may not have the market base in subscribers to match Netflix yet, but are hoping to continue drawing in new customers with large amounts of original and exclusive content. With the parks losing less revenue than expected and proper reopenings scheduled to begin for the rest of the Disney parks, we can look forward to a strong rebound year for the happiest corporation on earth.

Kraft Heinz Company: 

Kraft Heinz company finished 2020 strong with numbers exceeding expected growth in Q4. The company is one that benefited from the pandemic, with increased consumer demand for KHC food products.

  • 2020 Q4 adjusted EPS of $0.80 (surpassed the expectation of$0.74 

  • BottomThe bottom line increased 11.1% YoY.

  • Net sales increased 6.2% YoY.

Takeaways:

Looking forward, KHC expects to continue to exceed earnings expectations. With the pandemic reaching 2021, consumer demand remains higher than usual, resulting in better sales. Additionally, the company signed an agreement to sell its nuts business to Hormel Foods Corporation HRL, which is expected to conclude in mid-2021. This cash transaction is worth $3.35 billion, another significant step for Kraft Heinz Company.

Kingston Resources Limited:

2020 was a big year for Kingston Resources, listed as “an ASX listed exploration and development company advancing the 3.6Moz Misma Gold Project in PNG and the Livingstone Gold Project in Australia.”

Their capital structure is as follows:

  • Share Price – US$0.20 

  • Issued Shares – 282M 

  • Market Cap – US$55.8M 

  • Enterprise Value – US$43M 

  • Cash (as of 31 Dec 2020) – US$12.9M

Pre-Tax Net Present Value of the Misma Gold Project:

  • $822M and 33% IRR at US$1,600/oz gold price

Takeaways: 

Kingston Resources believes it is “positioned for growth in 2021 after delivering [Pre-Feasibility Study on 3.6M oz Misma Gold Project, raising $13M and appointing respected industry leader Mick Wilkes as chairman.” They hope to become a significant new gold producer in the Asia-Pacific Region and continue their Australian efforts.

UPCOMING WEEK 2/15 – 02/19

EARNINGS

Tuesday, February 9, 2021

Before Market Open

$PLTR – Palantir creates unique software to help companies store their data isin safe and accessible places. It allows organizations to have their data stored on one platform and bring the data to the right places. Palantir builds platforms to integrate, manage, and secure data for fully interactive human-driven, machine-assisted analysis. Expected $EPS of $.05 and Revenue of $300M.

$CVS– CVS is a one-stop solution for pharmaceutical needs, retail, and hospitality goods. Recently, CVS has been able to perform Covid-19 testing through their drive-through pharmacy, and they offer several goods to combat Covid-19. They have had lots of success throughout Covid-19 by offering PPE products and various other cleaning solutions. Expected EPS of $1.49 and Revenue of $68.67B, with expected quarterly revenue to increase by 2.7%.

$AN – AutoNation is America’s Largest Automotive Retailer, Autonation provides almost all car brands, and they offer a diverse range of automotive repair and maintenance services. They seek to deliver a consistently superior customer experience with a large selection of inventory, transparent sales and service processes, and competitive pricing. Looking into Autonation can provide us with an insight into Durable Goods being purchased and insight into how the economy is recovering from Covid-19. Expected EPS of $2.40 and Revenue of $5.61B, with expected quarterly revenue to increase by 1.1%.

$ECL – Ecolab is a leader in cleaning, sanitizing, food safety, and infection control products and services. Ecolab delivers comprehensive services to the foodservice and hospitality markets. An increase in revenue may show that the hospitality industry is bouncing back, and economies are beginning to re-open. Expected EPS of $1.23 and Revenue of $3.10B, with expected quarterly revenue to decrease by -19%.

Wednesday, February 10th, 2021

Before Market Open

$SHOP – Shopify is a cloud-based commerce platform, they provide merchants with a platform to design, set up, and manage their stores through Web, mobile, social media, and pop-up shops. They offer a full end to the end product, providing live updates from the moment they ship to the product being delivered. Expected EPS of $2.17 and Revenue of $906.82M, with expected quarterly revenue to increase by 80%.

$HLT –  Hilton Worldwide offers a hospitality service; they are engaged in the ownership, leasing, management, development, and franchising of hotels and resorts. They offer a variety of hotels, from ultra-luxury to moderately priced, and a wide array of consumers can stay at their hotels. Looking into Hilton can indicate how the economy is recovering and what hospitality can look for in the next few quarters. Expected EPS of $.04 and Revenue of $1.06B, with expected quarterly revenue to decrease by -55%.

$TSEM –  Tower Semiconductor is a company of interest due to the high demand for Semiconductors, and this can help us have predictions looking forward. Expected EPS of $.22 and Revenue of $340M, and a quarterly revenue increase of 11.2%.

After Market Close

$TWLO –  Twilio is a cloud communication platform that allows developers to build, scale, and operate real-time communications within software applications. ItsIts Programmable Communications Cloud software enables developers to embed voice, messaging, video, and authentication capabilities. They have an expected EPS of -$.01and Revenue of $454.64M, with an expected quarterly revenue increase of 37%.

$BIDU – Baidu is a Chinese-language Internet search provider and is based in Beijing, the People’s Republic of China. The company offers a Chinese language search platform and conducts its operations principally through Baidu Online Network. Expected EPS of $3.06 and Revenue of $4.46B, with an expected quarterly revenue increase of 7.5%.

Thursday, February 11th, 2021

Before Market Open

$WMT – Walmart is of the world’s largest retailers that offer superstores and discount grocery stores. Recently, Walmart has boosted their online, delivery, and pickup sales, which has boosted revenue. Expected EPS of $1.59 and Revenue of $146.42B, with an expected quarterly revenue increase of 3.4%.

$WM – Waste Management is a garbage disposal solution company that serves municipal, commercial, and institutional customers in the United States and Canada. Being stuck at home has caused many people to have tons of waste; this is good for Waste Management as their business relies on trash. Expected EPS of $1.07 and Revenue of $3.98B, and expected quarterly revenue increase of 3.5%.

$MAR – Marriott is the world’s largest hotel company that owns and operates resorts and hotels worldwide. Much like Hilton, Marriot ownsholds a wide array of hotels that can serve a large group of consumers for many different price points. Expected EPS of $.10 and Revenue of $2.42B, with expected quarterly revenue decrease of -55%.

After Market Close

$ROKU – Roku is involved with one of the premier streaming platforms for providing entertainment to the television. Roku has several products, including (Roku 1-4), Streaming Stick, and accessories such as cables, remote controls, power adapters, and headphones. Expected EPS of $.03 and Revenue of $615.84M, with expected quarterly revenue to increase by 50%.

$AMAT – Applied Materials is one of the largest semiconductor companies in the market space. Applied Materials is the leader in engineering solutions to produce virtually every new chip and advanced display globally. Applied Materials offer diverse, flexible service solutions and increase equipment efficiency while lowering cost per wafer. Expected EPS of $1.31 and Revenue of $4.95B, with expected quarterly revenue to increase by 19%, and expected Annual Revenue to increase by 15%.

$DBX – Dropbox is a service company that offers a platform that enables users to store and share files, photos, videos, songs, and spreadsheets. Businesses have heavily used this service throughout the Global Pandemic, and revenue should reflect that. Expected EPS of $.28 and Revenue of $498.12M, with expected quarterly revenue to increase by 11.7%.

EVENTS & TALKS

ECONOMIC CALENDAR

Tuesday, February 23, 2021: S&P/Case-Shiller Home Price YoY DEC 9:00 AM EST

Wednesday, February 24, 2021: New Home Sales MoM JAN 10:00 AM EST
Thursday, February 25, 2021:     Pending Home Sales YoY JAN 10:00 AM EST
Friday, February 26, 2021: Personal Spending MoM JAN 8:30 AM EST

#5: Let the FOMO Begin

“How wonderful it is that nobody needs to wait a single moment before starting to improve the world.” – Anne Frank

 

TABLE OF CONTENTS

  1. TESLA TO JOIN $SPY
  2. BOEING’S 737 RETURNS
  3. REVIEW OF LAST WEEK’S EARNINGS
  4. UPCOMING EARNINGS
  5. UPCOMING EVENTS & TALKS
  6. MERCHANDISE
  7. DISCORD RECAP
  8. STOCKS ON OUR RADAR
  9. EDUCATIONAL LEARNING SEGMENT
  10. BOOK OF THE WEEK
  11. VIDEO OF THE WEEK

tesla GIF

 

MARKET LAST WEEK (11/16 – 11/20)

TESLA TO JOIN $SPY

The world was a very different place in 2003, the year Tesla Motors was founded. The standard in American cars was huge SUVs. Large SUVs at the time were perfect in part because gas was so cheap, and they could fit an extended family. Yet, here came Tesla, a company urging buyers to be sustainable to use electricity instead of gas. Despite a lengthy series of infamous setbacks over the decade, Tesla has arrived. Standard and Poor’s (S&P500)  disclosed Tesla is to be added on December 21st. The addition of Tesla ushers in a new era for the index funds.

Index funds are viewed in part as the safest assets American households seeking to participate in the market can acquire adjacent to Bonds and CDs. This “safe” factor is in part why this new addition to the S&P 500 is a milestone not only for Tesla but the electric vehicle sector as a whole. Fund managers that have been short/bearish on Tesla have constantly critiqued the company for being too overvalued and have accused Tesla of currently not having the proper financials to justify various market price valuations. This inclusion makes Tesla as American as apple pie. Once added, pension funds and retirement accounts alike will own a small portion of Tesla. Consecutive quarters of profitability, reducing production cost, and a successful expansion into Asia have now earned Tesla legitimate entry.

 This inclusion comes when persons like Cathy Wood’s have heavily criticized classic index funds like Standard and Poors for not including companies that she would describe as innovative. Wood has critiqued Wall Street for undervaluing many of tech companies’ intangible assets like intellectual property (i.e., arthrograms, patents). Wood’s who manages $ARK  Invest; the innovation ETF has consistently been a long $TSLA. And has publicly disclosed her PT for $TSLA was $7,000/share (pre-split) or a price of $1400/share post-split.

In the weeks to come, Tesla is likely to rally in anticipation of inclusion into the index. Yet, similar to its rally in anticipation of its stock split, it is unlikely the rally will continue after its inclusion. Historically, companies added to the S&P 500  are likely to experience a run-up after newsies are made public, followed by a pullback once the inclusion is complete.

BOEING’S 737 RETURNING

On March 19 of 2019, the Boeing 737 max was grounded by the FAA post the Ethiopian Airlines crash. The incident happened on March 10, 2019; at this time, Boeing’s share price was trading right around the $400 mark. This was high for the past 12 months. In recent news this week, the FAA has released that the Boeing 737 max is now set to return to the skies. The 737 max’s return provides a lot of clarity for investors. The aircraft has and will continue to be a pivotal piece of technology in mass commercial aviation. With its new MCAS (system dedicated to providing additional sensors to the aircraft to help navigate through unusual weather) system, Validation program, Pilot training, modifications from airline input regulatory review as well as a grueling inspection process, it is safe to say that the 737 max is back and better than ever. However, it would be naïve to say that the 737 max’s return solely will directly correlate to a jump in its stock price. Expect heavy fluctuation In the stock shortly due to several factors.

One of the biggest factors that investors should be aware of is the mass cancellation of 737s on backorder. Due to COVID-19 airlines have taken a gruesome hit, it should be kept in mind that at this point, there are hundreds of 737 orders that are now pending cancellation. The airlines cannot afford to pay for these aircraft due to the lack of business due to COVID-19. As it stands now, 20% of Boeing‘s backorder is now pending cancellation around 780 Aircraft. There is still 3,120 737 max to be sold; this will be monumental for Boeing. With all this being said, it is with no doubt that the airline industry will return as we begin to enter a post-pandemic world. As people begin to travel, more airlines will rely heavily on the 737 Max’s capabilities. Expect the high demand for these aircraft to run parallel to a flux in $BA share price in the long run.

LAST WEEK’S EARNINGS

Tuesday, November 17th

Walmart Logo Tagline
WALMART – $WMT

Like other major brick-and-mortar stores, Walmart has seen a decline in overall foot traffic to both Sam’s Club and Walmart stores. What is important to understand is the increase in online shopping from Walmart. The pandemic has accelerated online grocery and general merchandise shopping for the entire retail sector. These key areas will drive Walmart into 2021.

Walmart:

  • Same-store sales rose 6.4%

  • E-commerce soared 79% and contributed approximately 570 basis points to comp sales.

  • Comparable sales at its discount unit Sam’s Club were up 11.1% 

  • Reduced tobacco sales negatively affected comp sales by approximately 4.2% 

  • Sam’s Club e-commerce sales grew 41%

  • Membership income increased 10.4% at Sam’s Club.

  • Total revenue was $134.7 billion, an increase of $6.7 billion, or 5.2%

  • Walmart International net sales were $29.6 billion, an increase of 1.3% after currency.

  • Consolidated operating income was $5.8 billion, an increase of 22.5%

  • Operating cash flow year to date has been strong and increased approximately $8.3 billion versus last year to almost $23 billion

Takeaways: 

Walmart has had strong all-around growth in Q3. Even after currency exchange expenses, its international sales have grown. Shoppers are spending more at Walmart per visit than pre-pandemic. Its online presence has allowed it to compete with Target and Whole Foods for store pickups, which have expanded to 3600 stores with same-day delivery at 2900. Walmart is one of the largest corporations in the US with good economies of a scale capable of continued growth during and posts this pandemic, and it’s apparent in their report.

   File:TheHomeDepot.svg - Wikimedia Commons

HOME DEPOT – $HD

Due to the closing of malls and stores that were not deemed essential, most of the retail sector at the start of the pandemic experienced a major decline in revenue. $HD Home Depot, however, unlike many other retailers, has seen an increase in revenue in part because it is classified as an essential business and due to many more persons working from home. More persons working from home in a pandemic has led to more homeowners renovating their living space to make it more suitable to work from home.

Home Depot

  • Actual earnings per share $3.18

  • $3.06 expected earnings per share

  • 33.54 billion revenue

  • 32.04 billion expected

  • Net sales increased by 23%

  • 33.5 billion in net sales (Q3 2020)

  • 27.2 billion in net sales (Q3 2019)

  • Average customers sale rose by more than 10% 

Takeaways:

Similar to earnings last quarter Home Depot beat analysts’ expectations. Yet, this beat resulted in a 1%+ decline in the share price. Today Home Depot has beat expectations, but this beat has lead skeptics to question how well $HD will perform in a post-pandemic economy. Will customers still feel the need to renovate their homes in a post-vaccine economy, and if so, will net revenue see an increase or decrease when laborers can ditch their home offices and return to the workspace.

NIO (car company) - Wikipedia
NIO – $NIO

Electric vehicles are gaining popularity globally. Sleek designs and multiple countries publicly announcing their push towards EV to come a hyper-competitive atmosphere in the EV market. NIO is based in China, which is an advantage in terms of potential market share.

  • 31,430 vehicles delivered (10/31) 111% year-over-year growth

  • Adjusted loss per share 12 cents 

  • Expected loss per share 18 cents 

  • Revenue: 666 million v. 663 million expected

  • Actual gross margin: 12.9%

  • Expected gross margin: 11.25%

Takeaways:

Value investors may have difficulty in understanding NIO’s current valuation relative to their current earnings. Nio’s current price is not based on what it is today but is based on what NIO could be in the not-so-distant future. This valuation indicates their current growth as of October 31st; 111% year-over-year growth gives NIO a promising future. NIOs current gross margin is higher than expected, which will likely aid NIO in scaling up to higher production numbers and ensuring profitability on vehicles as demands grow.

Wednesday, November 18th

NVIDIA - NVDA - Stock Price & News | The Motley Fool

Nvidia – $NVDA

Nvidia is the premier GPU producer. Their cards are years ahead of the competition, and that’s evident in their $300 Billion market cap compared to their competitor AMD’s $100 Billion market cap. They are also extremely integrated into the data center sector, which is their best performing division in terms of profits to expenses and growth.

  • Record revenue of $4.73 billion, up 57 percent Y/Y

  • Record Gaming revenue of $2.27 billion, up 37 percent Y/Y

  • Record Data Center revenue of $1.90 billion, up 162 percent Y/Y

  • GAAP earnings per diluted share for the quarter were $2.12, up 46 percent from $1.45 Y/Y and up 114 percent from $0.99 Q/Q

  • Third-quarter revenue was a record $1.90 billion, up 8 percent from the previous quarter and up 162 percent Y/Y

  • Shared news that Amazon Web Services and Oracle Cloud Infrastructure announced the general availability of cloud computing instances based on the NVIDIA A100™ GPU, following Google Cloud Platform and Microsoft Azure (not sure what we want to do about hyperlinks. They do lead to articles with the announcements.)

Extended its lead on MLPerf performance benchmarks for inference, winning every test across all six application areas for data center and edge computing systems

Takeaways:

NVIDIA’s GPU segment is taking off rapidly and better than ever before. As new games come out that utilize ray tracing, the RTX GPU becomes more relevant. Unseen loads of everyday life are being automated, put online, or requiring exact and technical technological inputs from GPUs and CPUs in our society. Of these two, they lead in GPU technology, and the acquisition of ARM will allow NVIDIA to fully compete with AMD in the CPU division with their state-of-the-art processors. CPUs were the only division NVIDIA was not leading in. NVIDIA has excellent growth drivers that continue to accelerate business growth and push the company forward well into the future.

Thursday, November 19th

File:Workday Logo.png - Wikipedia
Workday – $WDAY

Workday has been able to expand throughout the last year due to its ease of use platform.

  • Total revenues were $1.11 billion, an increase of 17.9% from the third quarter of fiscal 2020

  • Subscription revenue was $968.5 million, an increase of 21.3% Y/Y

  • Operating loss was $14.1 million, or negative 1.3% of revenues, compared to an operating loss of $110.3 million, or negative 11.8% of revenues Y/Y

  • . Non-GAAP operating income for the third quarter was $268.1 million, or 24.2% of revenues, compared to a non-GAAP operating income of $142.6 million, or 15.2% of revenues Y/Y

  • Operating cash flows were $293.8 million compared to $258.0 million in the prior year.

Takeaways:

Subscription service growth has led the way for Workday’s growth the past year. Even in the midst of the pandemic, Workday has grown revenue and shrink its operating loss Y/Y from (11.8%) to (1.3%). Workday’s partnership with Accenture will help make an even more ergonomic friendly experience for Workday users through “greater visibility and simplified experiences

UPCOMING WEEK 11/16 – 11/20

EARNINGS

Tuesday:

Best Buy unveils new logo | Fox Business

Best Buy $BBY (Before Market Open)
Best Buy is a massive tech retail company that has posted strong earnings from the last 2 Quarters, and they are expected to continue that trend for the Q3 report. They have an expected EPS of $1.93, and Revenue is expected to be $10.9B. With quarantine orders coming back into effect and schools shutting down, the need for technology at home will come back, and we expect Best Buy to post strong earnings for a long time.

Dollar Tree Bringing 'Snack Zone' Initiative to More Stores | Convenience Store News

$DLTR (Before Market Open)
The largest single price point store in the U.S., as money in the current economic climate is very precious, Dollar Tree will continue to grow. $DLTR expected EPS is $1.24, and Revenue is expected to be $6.11B. For the next several quarter’s Dollar Tree will see growth and revenues steadily increase.

File:Dell Logo.svg - Wikimedia Commons

$DELL (Aftermarket close)
Correlating in the same vein with Best Buy is Dell technologies. More and more people are buying technology to work from home or go to school online. Much like the previous two companies mentioned, the Q2 numbers provided positive insight into how the company performs. Dell is expected to have $1.50 EPS, and revenue is expected to be $21.92B. Continued stay-at-home orders and in-person learning put on pause; we will be on the lookout for their Q3 report.

DISCORD RECAP

This past week we had a total of 24 trades. 20 of which were positive trades and yield an average of 112.7% return on investment. We had losses with an average loss of 60%.

The trade of the week goes to Tesla! 

On Tuesday, we alerted our members about the $TSLA 490calls for November 27 at an average price of $460.

On the 18th, the 490 calls were trading at $2,300, and the 500 calls were trading at 1,950.

A 400% and 500% return on investment overnight!! 

EDUCATIONAL LEARNING SEGMENT

“I didn’t lose money; I paid for a lesson.”

Perspective is an invaluable strength—the ability to look at a situation and discern more than just the negative from it. Perspective has allowed me to view loss differently and find the silver lining. While trading, even when your trade doesn’t have the desired outcome, spend more time trying to understand why you want wrong and adding that information to your tool kit rather than energy being disappointed at the outcome.

Everything is Fucked by Mark Manson
In keeping with the theme of perspective, our book of the week takes a deep dive into hope and the power of perspective. This New York Times bestseller analyzes prominent examples throughout history and the shared human experience. It advocates choosing to enjoy and appreciate what is positive in your circumstances rather than being obsessed with quick wins and never-ending target posts. Those ultimately lead to greed and a lack of fulfillment. In regards to trading, many traders fail to follow their plan by being dissatisfied with their position and hoping for change rather than exercising the discipline to secure the profit they have or minimize the loss they’re experiencing. It’s important to remember that in good times and bad, things can always be worse
..”.

#4: 2021 – Heading Into a New Year in the Market

“Losers quit when they fail. Winners fail until they succeed”.–Robert T. Kiyosaki

 

Thursday, December 31st Closing Price


TABLE OF CONTENTS

  1. STIMULUS
  2. COVID RELIEF
  3. BOEING
  4. ANT-GROUP
  5. ASTRAZENECA
  6. MODERNA VACCINE
  7. NATIONAL DEFENSE AUTHORIZATION ACT
  8. SHIPPING DISRUPTIONS
  9. UPCOMING EARNINGS
  10. MERCHANDISE
  11. DISCORD RECAP
  12. STOCKS ON OUR RADAR
  13. EDUCATIONAL LEARNING SEGMENT
  14. VIDEO OF THE WEEK

 

 

MARKET LAST WEEK (1/4 – 1/8)

MARKET

MONDAY

THE SECOND ROUND OF STIMULUS – WHAT DOES THIS MEAN?

President Trump has officially signed a second round of stimulus checks to citizens as part of the coronavirus relief package. This second round of direct payments does come with a few fundamental changes, though. In the first round of funding, eligible households received $1,200 per adult and $500 per child. This time around, we see a decrease to $600 per adult and an increase to $600 per child. These changes apply to individuals with gross income under $75,000 and married couples under $150,000 based on their 2019 income. All of these changes are expected to happen relatively quickly, as the IRS has started sending out payments via direct deposit as of December 29th. Treasury secretary, Steven Mnuchin, states that all taxpayers who have current banking info with the IRS will receive direct deposits by January 4th. With nearly a third of Americans reporting that they are struggling to pay their bills due to the pandemic, this is undoubtedly welcome news, despite failure to push through legislation to increase direct payments to $2,000 from $600.

 

TUESDAY

COVID-19 RELIEF BILL
House Representatives passed the updated Covid-19 relief bill with increased payments from $600 to $2,000, and the bill now includes college-dependent students. This all seems to be not due to the Senate’s expected vote to decline the increased Stimulus. This re-vote was all based on President Trump initially declining the first round of stimulus funding in favor of the larger package.

BOEING

In other news, Boeing had its first flight with its controversial 737 Max from Miami to LaGuardia after 21 months of being forced aground after two fatal crashes. This comes after nearly two years of the plane being grounded and facing harsh regulations from every aviation agency across the globe. With Boeing able to fly this plane, we can begin to see Commercial Airlines begin to purchase and renew contracts for the 737Max.

ANT-GROUP

Ant group is facing harsher regulations from the Chinese government as they want to hold Ant Group’s finances in a holding company. China is using this as a possible way of increasing domestic consumption by having raised consumer loans. They want to use Ant group finances to provide funding to citizens, which in turn will then increase at-home spending.

ASTRAZENECA

And finally, the United Kingdom approved the third vaccine from AstroZenica to combat the notorious Covid-19. AstraZeneca has partnered with Oxford University to create this vaccine, and it has reached the minimum efficacy needed to push forward for implementation. This approval is only within the United Kingdom and needs to go through trials within the United and be approved by the Food and Drug Administration. The United States is skeptical of the AstroZenica vaccine as they have had several missteps along the way and need to re-prove their credibility to the United States marketplace.

WEDNESDAY

MODERNA’S VACCINE

The head of Ontario’s COVID-19 vaccination program has requested that Health Canada, the department responsible for the country’s federal health policy, delve into the feasibility of administering Moderna’s two-shot vaccine in a single dose. General Hillier (Ret.) cites a desire to increase efficiency in helping citizens. Notable health officials have expressed that there is a lack of evidence to suggest merit to this idea. If this idea gains traction and is proven to be effective, the implications are significant as it will lower the time necessary to inoculate and protect the population, effectively lowering the rate at which coronavirus will spread.

FRIDAY

NATIONAL DEFENSE AUTHORIZATION ACT

The House and Senate overwhelmingly voted to pass the National Defense Authorization Act and override President Trump’s veto. The 740 billion dollar law automatically comes into effect. The bill contains multiple cybersecurity provisions relevant to the Solar Winds hack. It also gives the Cybersecurity and Infrastructure Security Agency at DHS the authority to issue administrative subpoenas that will enhance the agency’s ability to investigate private-sector networks’ hacks. The bill is necessary for strategic programs, cyber, intelligence matters, drug interdiction, and counter-drug activities in appropriations adjustments.

SHIPPING DISRUPTIONS

In other news, there may be major international shipping disruptions in 2021 due to a law signed in 2018 that comes into effect. Over 180 countries and territories are not in compliance with the 2018 Synthetics Trafficking and Overdose Prevention (STOP) Act. The bill’s purpose was to combat the opioid crisis and stop fentanyl shipments through the USPS by providing advanced electronic data, or AED. AED provides USPS and Customs and Border Protection with information about international packages’ contents before reaching the United States. Country waivers are available, but only to countries without the technological and financial capital to properly comply with it, only 10-15% of the total volume.

 

UPCOMING WEEK 1/4 – 01/8

EARNINGS

Thursday (Before Market Open)

Bed Bath and Beyond Logo transparent PNG - StickPNG

Bed Bath & Beyond
In a year when home improvement and retail therapy have run rampant across the United States, Bed Bath & Beyond has a stronghold in that market. Beginning in Q3-2020, $BBBY began to pivot its business model from retail to a digital-first company. They will be closing over 200 stores within the next two years with this strategy to save money. They have an expected EPS of $.31 and revenue of $2.77B and have expected quarterly earnings of -155%.

Thursday (Before Market Open)

Walgreens Logos | Walgreens

Walgreens Boot Alliance Walgreens is a retail drugstore chain that sells prescription, non-prescription drugs, and various household items. With a consistent decrease in in-store visits and pivot to online sales, Walgreens will continue to tumble on its earnings reports. Estimated EPS of $1.02 and Revenue of $34.89B, with expected Quarterly earnings of -25.5%.

Thursday (After Market Close)

Micron Technology
Micron Technology is one of the world’s largest and leading semiconductors and data storage providers. They have shown consistent downtrends in their last three years of annual reports, including lower revenue and net income. They have an estimated EPS of $.80 and Revenue of $5.73B, and their expected quarterly earnings are expected to increase by 42.9%.


EVENTS & TALKS

Thursday: Balance of Trade (NOV) at 8:30 a.m. EST

Jobless claims 4-Week Average at 8:30 a.m. EST 

 

 

DISCORD RECAP

We finished the year strong.

We had a total of 22 trades in the 4 day trading week, with 18 of those trades being profitable.

We will continue to focus on companies in the Electric Vehicles Industry in 2021.

We have also improved our discord experience by adding more bots to the server at no additional cost to our members.

Quant Data Bot –

Provides the team with options sweep. The team’s sweeps are used to note what stocks are getting a lot of attention and have the potential to make a big move towards the upside or downside.

Join the team to see how we will use this information to improve our trading.

 

EDUCATIONAL LEARNING SEGMENT

“Always be ready for the next move.”

 

Straddling is a conservative trading strategy that consists of buying both calls and put option contracts for security with the same strike price and expiration date. Straddling is an attractive option because you don’t need to accurately predict price direction as you are poised to benefit from a sharp move in either direction and can sell your incorrect position at a loss once the direction is confirmed. This strategy provides a built-in hedge, but you do stand to lose on both positions if a move fails to happen. So the next time you find yourself wanting to test your thesis on a big move, consider straddling to protect your investment.

#3 Last Week of the Year: What to Expect

“Act as if what you do makes a difference. It does.” – William James

Thursday, December 24th Closing Price

TABLE OF CONTENTS
  1. STIMULUS SIGNED
  2. PELOTON ACQUISITION
  3. JACK MA AND ANTI-MONOPOLY PROBE
  4. CORONAVIRUS STRAIN
  5. REVIEW OF LAST WEEK’S EARNINGS
  6. UPCOMING EARNINGS
  7. MERCHANDISE
  8. EDUCATIONAL LEARNING SEGMENT
  9. VIDEO OF THE WEEK

MARKET LAST WEEK (12/21- 12/25)

Debt Loan GIF by Resistbot

STIMULUS SIGNED

Just a couple of days after Congress agreed to pass an $892 billion coronavirus relief bill, President Trump surprised many by strongly criticizing the bill and threatening not to sign it until Sunday night. President Trump lambasted the lengthy bill for its billions in foreign aid without focusing internally on the American people. His signature did two things for the US economy: it prevented a government shutdown on Tuesday, and it extends aid to the American people in coronavirus aid. The two key pandemic unemployment programs received their last payment this weekend. Still, due to the bill being signed on Sunday instead of Saturday, the payments could be delayed several weeks. 

The President cites too small of a direct payment in the form of a stimulus to citizens, referring to the proposed $600 stimulus as “ridiculous low. He instead proposed an increased stimulus of $2000 for individuals and $4000 for couples. 

Yesterday, President Trump ended up signing the bill as his club in Mar-a-Lago, with the stipulation that Congress consider implementing legislation to increase direct payments in the future. However, less than timely, the signing of this bill allows approximately 12 million benefit recipients to continue receiving benefits for another 11 weeks and signals an end in the Trump presidency’s latest point of contention.

PELOTON – RIDING MOMENTUM INTO THE NEW YEAR

Peloton, the American exercise equipment, and media company, have struck a deal to acquire Precor. Precor is an industry leader in exercise equipment manufacturing. This deal presents a unique opportunity for Peloton to continue to capitalize on the significant success they’ve had this year boosted by the pandemic. This deal is expected to close early in 2021 and cost $420 million but stands to return far more. Peloton has the great problem of struggling to meet their ever-growing demand for their orders. This, in conjunction with shipping delays due to the pandemic, has led to an increase in canceled orders by frustrated customers. Peloton’s stock had a meteoric ascent this year, up more than 500% on the year. A successful solution to their distribution issues will surely please their investors and pique the interest of many more.

JACK MA AND ANTI-MONOPOLY PROBE

It appears that Jack Ma would have far preferred a lump of coal this Christmas; instead, he received news that Chinese regulators were conducting an anti-monopoly probe into the Chinese monolith. This news led to a massive selloff for the E-Commerce company, with a 13% drop in share value on Christmas eve. This appears to be just the start of the implications from their recent woes, including halting the $37 Billion IPO of their subsidiary Ant Group. As of yesterday, the Zhejiang Provincial Administration for Market Regulation has concluded the probe into Alibaba, reporting that they cooperated with the investigation team promptly. Subsequently, Alibaba has announced a 67% increase in their share buyback program from $6 to USD 10 Billion over the next two years. This may be great timing considering the discount in share price, although the timing has led to speculation amongst investors. In demonstrating their confidence in their outlook, they may have provided a bit of good news. Whether this is reflected in the halting of their tumultuous stock price has yet to be seen. With Alibaba down 26% since its peak in late October, there are certainly several investors tuned in for an answer.

New Coronavirus Strain Induces Widespread Concern

Despite the FDA announcing emergency approval for immediate distribution of Pfizer and Moderna’s coronavirus vaccines, panic is still prevalent. A few new coronavirus strains have been detected in the UK, South Africa, Nigeria, and others in the past few weeks, raising questions about whether the vaccines carry the same macroeconomic implications as before. The effects of each strain are far-reaching. The strain in the UK, for example, does not appear to be more fatal, but it is reportedly 70% more transmittable, leading to dozens of countries banning travel from the United Kingdom. The Public Health Agency of Canada confirmed the first two North American cases in Ontario Saturday night. Japanese officials have announced that their borders will be closed from midnight tonight to January 31st after receiving seven positive results for the new coronavirus strain. BioNTech’s CEO has announced a “relatively high” chance the vaccine they created in conjunction with Pfizer will prove resistant to the new coronavirus vaccine. The importance of this statement’s accuracy cannot be overstated, and we can expect a significant public reaction to the conclusion one way or another.

LAST WEEK’S EARNINGS

Monday

HEICO

Heico Logo - LogoDix

Heico is a company that has seen large declines this year, which is to be expected from any company that is integrated into the airline industry. A pickup in global fleet travel is necessary for the company to continue to grow. It is important to see just how negatively affected the company has been since the pandemic began and how much it’s improved as lockdown restrictions are eased.

  • Net income of $314.0 million down from $327.9 million YoY.
  • FY Q4 net income of $62.3 million down from $85.7 million YoY.
  • Operating income was $376.6 million in FY 2020, compared to $457.1 million in FY 2019
  • Q4 Operating income of $89.1 million down from $120.6 million YoY.
  • Net sales $1,787 million FY 2020 down from $2,055.6 million FY 2019
  • Q4 net sales $326.2 million down from $541.5 million YoY

Takeaways: 

Adversely affected by CoVid. Consolidated net sales for their aerospace segment decreased approximately 32% during FY 2020. Cash flow was only down from $437.4 million FY 2019 to $409.1 million FY 2020. The Pandemic is likely to continue to impact HEICO negatively. HEICO will not issue guidance for FY 2021 for this reason. A lagged return to normalcy can be expected.

TUESDAY

Carmax

CarMax's New Omnichannel Shopping Experience

As the largest used car dealer in the United States, Carmax can give a good insight into consumer spending habits. The ebb and flow of spending will tell consumers’ activity levels and if they are affected by any external factors. Lockdown restrictions are a key factor in this.

 

  • The third quarter’s net earnings increased 35.9%, and net earnings per diluted share increased 36.5% YoY.
  • Total used units sold increased 1.0%, while used unit sales in comparable stores were down 0.8%
  • Gross profit per used unit of $2,151 was similar to the prior-year quarter.
  • Total wholesale units increased 10.8%, driven by a record Q3 buy rate.
  • Wholesale gross profit per unit decreased slightly to $906 despite sharp depreciation in the broader market.
  • CarMax Auto Finance (CAF) income increased 54.7% due to the combined effects of favorable loan loss performance, higher net interest margin, and an increase in average managed receivables.
  • Enthusiastic customer response to omnichannel experience with the majority of customers progressing more of their transaction online.

Takeaways:

Vehicle sales are down to 1% from 11% in total used vehicle unit sales with comparable store unit sales down to (0.8)% from 7.5% YoY. The surge in CoVid cases had a substantial impact on their sales when lockdown restrictions were tightened. Total used vehicle revenue increased mainly due to the average retail selling prices rising almost $700 per unit YoY. Other sales and revenues took a hit in the quarter, decreasing by $6.9 million in other revenues. Much of the business expansion hinges on vaccine distribution and return to normalcy to return to normal growth expectations.

WEDNESDAY

PAYCHEX 

File:Paychex logo.svg - Wikimedia Commons

Paychex is a mostly positive bag when it comes to the pandemic. The pandemic has accelerated the growth of their business due to their online and automated business model. Cloud-based technologies were exceedingly profitable and necessary pre-pandemic, and the need for them skyrocketed as business structures changed overnight. However, a decrease in jobs in the economy is bound to affect the business.

 

  • The Company raises guidance as second-quarter results reflect a sequential improvement in financial performance and key business metrics.
  • Diluted earnings per share and adjusted diluted earnings per share each increased 4% to $0.75 per share and $0.73 per share, respectively.
  • Second-quarter service revenue was consistent with the prior-year period at $968.9 million, compared to a YoY decrease of 6% in the first quarter.
  • Management Solutions revenue increased 1% to $732.8 million.
  • Total revenue decreased 1% to $983.7 million.

Takeaways:
Client base increases, and their suite solutions primarily drove increased revenue YoY in that segment. PEO and Insurance Solutions revenue decreased 3% YoY to $236.1 million due to the mass shift in worksite employment and premium collection. YTD FY 2021 has seen operating income decreased 8% to $638.3 million, which is a significant amount to business operations. Changes in their operating assets and liabilities produced a 24% drop in cash flows from operations YoY. The company expects an overall flat movement in the next six months, but this is subject to change when the economy turns to normal.

 

EDUCATIONAL LEARNING SEGMENT

“Get rich or die trying”- Frank Mercado.

 

Averaging down is an exciting high-risk, high reward investment strategy. Averaging down is the practice of buying more of your original investment (shares or contracts) after the price has fallen for a lower average cost per security. For example, if 100 shares were purchased at $20 per share, and then a further 100 shares were purchased at $18 per share, the average cost per share is lowered to $19. This means that if the share price rises to $19, then the investor breaks even. If the price returns to $20, then a profit is made. This isn’t for the faint of heart and is a quick way to blow up your account. Be sure to strongly evaluate your trade thesis to determine if the risk is worth the reward to you and the timeframe on the reversal that you are predicting.

 

 

 

 

 

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