Tag: stimulus

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

 

Discord Logo And the History of the Business | LogoMyWay
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

#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

#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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