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Please Watch My New YouTube Video: Quick Pick Iron Mountain
Today’s Quick Pick is Iron Mountain (IRM). Iron Mountain has been around since the 1950s. It started off as a corporate document storage repository and has gradually moved into shredding, security and digitalization (they digitize and store important documents) and a full cloud storage and management offering. The company has 93 million square feet of storage around the world in 56 countries. It acquired about 29 companies in the last three years as the company looks to consolidate a still rather fragmented industry. It has had an average 5.6% revenue growth over the last three years. Morningstar calculates the shares trade at a 3% discount, with a PE of 31, and they pay a 4.2% dividend. I think Iron Mountain is riding a number of o-gern The long-term trends that include corporate and cyber security, as well as the need for document backup in a age of climate change. I’ll be adding this to my JubakPicks and Dividend portfolios on Monday, July 24..
Tesla drops today on earnings–it’s all about falling margins
Tesla (TSLA) delivered a big beat over Wall Street estimates when the company reported second quarter earnings after the close yesterday. The company reported earnings of 91 cents a share, well above the Wall Street projection of 80 cents a share. But in after hours trading, the stock still fell by 4.20%. Today, July 20, the shares are down 7.17% as of 10:45 a.m. New York time. And this comes despite another record quarter of unit sales. The problem?
Please Watch My New YouTube Video: Earnings It’s All About Surprise
Today’s video is Earnings: It’s All About Surprise. Good news is good, but it doesn’t necessarily move markets. On Friday, July 14, JPMorgan Chase came out with a stellar earnings report–but other stocks in the sector moved down on a belief that these banks wouldn’t match JPMorgans good news. However, SURPRISE! On July 18, Bank of America came out with a very good earnings report, and the stock popped by 4.2%. Bank of America surprised the market with a big bump from its Wall Street trading operations. On the surprise, Bank of America actually moved the entire banking index up 2.29%. On the negative side, regional bank PNC Bank surprised negatively with a cut to its full year guidance from 6-8% to 5-6%, and the stock, of course, fell. (Early in the day although it recovered by the close.) Keep all this in mind as we head into earnings season for technology companies, where expectations are often very high. Apple is one of the first to report and will set the tone for the second quarter which is typically a weaker quarter in the technology sector.T
Please Watch My New YouTube Video: Trend of the Week Consumers are Skipping Essentials
Today’s Trend of the Week is Consumers are Skipping Essentials. The impact of high inflation has consumers moving down the price point ladder, and we’re now seeing people skip purchases for essentials. Unit purchases for essentials like toothpaste, laundry detergent and toilet paper are falling. It’s only inflation that keeps retail sales in dollars from dipping. From an investing perspective, this means there isn’t anywhere to hide. Target, which is a relatively inexpensive retailer, is reporting negative growth. Walmart and Costco are still positive, but that could change if this trend continues. In May, inflation adjusted household spending stalled and was essentially flat. Unit sales are down 3% to 4% in the 52 weeks through June 24. This is a sure sign that consumers are cutting back on spending. This all before consumer incomes take a hit with the resumption of college loan payments in October. My advice: be careful out there.
Please Watch My New YouTube Video: Quick Pick Nvidia Hold Through Earnings on August 23
Today’s Quick Pick is Nvidia (NVDA)–Hold Through Earnings on August 23. Nvidia reports late in this quarter’s earnings season, and this report is expected to be very good. Wall Street’s expectations range from a low of 75 cents a share to a high of $1.75 but the consensus is $1.66 a share, up from 32 cents last year. Nvidia has been reporting 30% positive surprises in recent quarters, so there’s a good chance the results may be even better than expected. My suggestion is to hold the stock through this report in August, and then think about selling. I know, I know. Sell Nvidia!? That’s crazy! Here’s the thing. At some point, Nvidia’s growth rate is going to start to slow. When it does, people will look at the stock and decide the slower growth rate may not
Please Watch My New YouTube Video: Remember the Quiet Period
Today’s video is Remember the Quiet Period. Don’t panic. There have been a lot of announcements coming from the Fed recently but it’s not because there’s a new crisis or a huge event brewing. It’s simply that the window of time when the Fed can speak is about to close. The Fed has to go quiet twelve days before the July meeting, so right now, they’re trying to make it very clear to the market that a 25 basis point raise is likely in July. On Monday, three Fed officials, Michael Barr, Mary Daly and Loretta Mester discussed the need for another rate hike–possibly two. We’ll be entering the Fed’s quiet period on Saturday, July 15. Looking at the CME FedWatch, on July 11, the market believed there was a 92.4% chance we’ll get a rate hike on July 26. On the same date, the market thought the odds were only at 22.2% for a 25 basis point increase at the meeting on September 20. It sounds like the Fed has made their intentions clear for the July 26 meeting, and the market won’t be shocked by a rate hike on that date. September 20? Hmmm.
Yesterday’s CPI inflation report created a huge dilemma for the Federal Reserve (and your portfolio)–here’s what to watch
Yesterday, the Bureau of Labor Statistics reported that all-items inflation rose at just a 3% annual rate in June. That was a huge drop from the 4% annual rate reported in May. The inflation numbers immediately prompted Wall Street to, again, declare that the Federal Reserve’s cycle of interest rate increases would end “soon.” “Soon” is now defined as after the Fed’s July 26 meeting. Fed officials have been so adamant in recent days about the need for more interest rate increases that the odds of 25 basis point increase at the July 26 meeting barely budged after the June CPI report. Today the CME FedWatch Took, which calculates the odds of a Fed move by looking at prices in the Fed Funds Futures market (and is, thus, a measure of investor sentiment rather than speculation on Fed thinking) puts the odds of a July 26 25 basis point increase at 92.4%. That’s down only slightly from the 94.2% odds before the CPI inflation report. The big move has been in the odds for a second 25 basis point increase at the Fed’s September 20 meeting. Today, the odds are just 11.1%. That’s down from 13.2% odds of a 25 basis point move in September on July 12. And down big from 27.5% odds of another interest rate increase in September on July 6. And there’s the Fed’s problem.
Special Report: Finding the Next Nvidia: My 10 Picks–Pick #2 ESS Technology
Two keys to finding a stock capable of racking up Noida-like gains over the long term: Finding a cheap entry point. And finding a stock from a company with a fast-growing (over the long term) addressable market. (Just as a refresher Nvidia (NVDA) shares are up an average of 61% a year over the last 10 years.) My second pick to meet this challenge: ESS Technology (GWH)
Consumers finally start to buckle; time to sell Procter & Gamble
U.S. consumers are reducing spending on staples such as toothpaste, laundry detergent, and toilet paper. The bad news for investors is that consumer staples stocks, seen as a safe haven as the economy slows and inflation continues above 3%, aren’t a safe as assumed in so many portfolios.
Please Watch My New YouTube Video: Trend of the Week India is the Next China
Today’s Trend of the Week is India is the New China–in investing terms. Companies are looking to India for better prices and as a means of side-stepping the China and U.S. technology trade wars. For example, Apple is openly looking for suppliers in India, or asking suppliers to move from China to India, and other companies are following the path as well. Moody’s forecasts India’s GDP growth at 6% to 6.3% this year. I have two suggestions to get in on this trend. The first is the iShares MSCI India ETF, (INDA), which is up 5% year to date, but up 10-11% in the last three months. The other option is HDFC Bank, (HDB), much more volatile that the ETF, but also up 5% year to date and up 8% in the last three months. HDFC Bank is the biggest credit card issuer in India, with 28-29% market share. As wealth in India grows, more and more consumers are getting credit cards for the first time. HDFC also offers alternative platforms and payment technology that will also let the bank ride the technology wave in India’s financial sector. I don’t feel overly enthusiastic about investing in India as a whole. The country has an incredible, increasing reliance on coal, and the economy is riddled with special deals that favor family-run conglomerates with ties to the government. Buying the whole Megillah makes me a little leery, but I like INDA and HDB to get in on sentiment that sees India as the new China for investments.
China nears deflation–and it doesn’t look like the standard policies will work
China’s consumer inflation rate was flat in June with the consumer price index unchanged year over year, according to data release by the National Bureau of Statistics today. That was the lower inflation rate since February 2021 when slumping pork prices dragged the index into deflationary territory. Aside from that brief period of deflation, China hasn’t experienced prolonged consumer price deflation since 2009 during the global financial crisis. The fall in what are called factory-gate prices, the equivalent of producer prices in the United States, says there aren’t inflationary pressures ready to ride to the rescue. Producer prices fell 5.4% from a year earlier, the deepest pace since December 2015. Core inflation, which excludes volatile food and energy costs, slowed to a year-over-yrar rate of 0.4% from 0.6%. The problem is falling consumer demand
Saturday Night Quarterback (on a Sunday) says, For the week ahead expect…
Look for big news on inflation and earnings this week. But I think the news is baked into stock prices so I don’t expect much of a move on the news.
Solar cell breakthrough as 30% efficiency barrier falls
This breakthrough in solar power isn’t enough to stop global warming by itself, but it sure is enough to upend the entire energy sector within the next five years. Multiple research groups (and “multiple’ is important here because it means there’s more likelihood that the lab results will hold up to scrutiny. Two groups published the details of their efficiency breakthroughs in the journal Science on Thursday, and at least two others are known to have pushed well beyond 30%.) have reported a breakthrough that will push the efficiency with which solar cells convert sunlight to electricity through the 30% level that has been thought to mark the maximum conversion of sunlight to electricity.
No jobs follow through on yesterday’s huge jump in June ADP survey, but enough wage pressure to keep the Fed on track for a July 26 interest rate increase
Total nonfarm employment rose in June by 209,000, the Bureau of Labor Statistics reported this morning. That was above the 200,000 projected by economists. But way below the 497,000 jobs added in June according to the ADP Research Institute in its report yesterday. The result is a mild uptick in stocks as of 2 p.m. today with the Standard & Poor’s 500 up 0.46%, the Dow Jones Industrial Average ahead 0.16%, and the NASDAQ Composite higher by 0.73%. Why not a stronger response?
Exxon Mobil guides to huge drop in earnings; just one example of revenue and earnings problems across the sector
On Wednesday, July 5, Exxon Mobil (XOM) told investors that second quarter earnings could drop by 50% from earnings in the second quarter of 2022. On Thursday, July 6, shares of Exxon Mobil closed down 3.73%. Remember, we’re talking about Exxon Mobil here, one gigantic oil company. So while earnings could fall by half in the quarter, the company is still looking at quarterly earnings of $6.2 billion. Exxon’s news has implications across the energy sector.
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