Bookkeeping. I made Nike Pick No. 3 in my Special Report A New World for Dividend Investors. You can find the pick and write up i nmy long Special Report post. But I wanted to flag the pick here so no one would miss it. Dividend Pick #3: Nike (NKE)
Today’s Hot Button Moves NOW video is Buy Chipotle Mexican Grill (CMG). Chipotle announced it will be spitting 50 to 1. With the stock , currently trading at $2800 the split will bring in a new group of investors. The stock popped about 3.5% the day following the announcement and continued to go up in the following days. It’s contrary to modern capital market theory that a stock announcing a split should go up, but it does need happen. Chipotle has a great long term story. It not only survived the COVID pandemic, but the company drove its digital loyalty membership up to 36 million people and added digital drive-thru lanes, leading to extraordinary growth. Chipotle had a 38% increase in earnings in 2023 and an 8% increase in comparable store sales. That, along with a 26% operating margin, continues to make Chipotle one o the most compelling consumer stocks to own,. I think owning this before the split, which will likely be approved in June, will get you appreciation from the pop on the split, as well as long term gains from this well-run company. Tomorrow I’ll be adding these shares to my lot-term 50 Stocks Portfolio.
After the close yesterday, Visa (V) reported earnings of $2.41 a share (after adjusting for one-time items) for the December 2023 quarter. (That the company’s fiscal first quarter.) Analysts had been looking for $2.34 a share in adjusted earnings. Revenue grew 8.8% to $8.63 billion, again beating analyst forecasts for $8.55 billion in revenue. Visa said payments volume grew 8%, and that its processed transactions rose 9% in the period. And yet the stock was down $4.70 a share, or 1.72%, to $267.91 at the close today, Friday, January 26. Why?
There’s a pattern here: If you’re a big enough consumer goods company with the ability to raise prices and not hurt sales, then the just-ended quarter was a pretty good quarter. Today, October 18, Proctor & Gamble reported fiscal first quarter net sales of $21.9 billion, up 6% from the prior year vs.a Wall Street consensus projection of $21.62 billion.
Clearly, inflation isn’t bad for everyone. Not if you have pricing power, anyway. Today, PepsiCo (PEP) reported earnings and sales that a beat Wall Street estimates, and raised its guidance for the next quarter.
Chipotle Mexican Grill (CMG) missed comparable sales and profit expectations for the fourth quarter. Comparable store sales rose 5.6% in the period. Wall Street had expected a 7.1% increase. Earnings rose 48.6% to $8.29 a share. But analysts had expected earnings of $8.90 a share. Revenue climbed to $2.18 billion in the quarter. That was below analyst estimates of $2.23 billion. Shares fell 5.2% in after-hours trading on the news. A couple of red flags for the entire consumer sector
After a big week of tech earnings news, stocks and investors will move onto fourth quarter 2022 earnings for consumer stocks, health care, and a little taste of fintech.
This morning before the stock market open Coca-Cola reported earnings of 69 cents a share for the third quarter. That was up from 65 cents a share in the third quarter of 2021 and was above the 64 cents a share expected by Wall Street analysts. Revenue of $11.1 billion was higher than the $10.5 billion projected by Wall Street.
Walmart (WMT) cut its profit outlook after the market close on Monday, July 25. The company isn’t scheduled to report July quarter earnings until August 16. Walmart shares dropped 9.94% in after-hours trading. Adjusted earnings per share will fall as much as 13% in the current fiscal year as U.S. shoppers take a pass on big-ticket items and focus on buying groceries (with their lower profit margins.) This is Walmart’s second warning this year
In June Starbucks and Dunkin’ saw a year-over-year drop in monthly visits of 7.8% and 4.1%, respectively.
It’s not surprising given the greater than expected decline in U.S. first quarter GDP reported on Wednesday, which followed on the slump in consumer confidence reported Tuesday, that stocks in the consumer staples sector outperformed both consumer discretionary stocks and the market in general. The Consumer Staples Select Sector SPDR ETF (XLP) gained 0.63% on Wednesday, June 29. By contrast the Consumer Discretionary Select Sector SPDR ETF (XLY) lost 0.08%.
I’m seeing growing negativity on the U.S. economy and on the timing and depth of a U.S. recession. I think it’s important to note that the stock market and the economy aren’t perfectly correlated. Stocks can go up even as the economy weakens on things like sentiment about the pace of Federal Reserve interest rate cuts, for example, or just in reaction to an oversold condition in the financial markets. But an increase in negative sentiment about the economy certainly increases the odds of a downturn in stocks. And makes stocks more risky. And right now I’m seeing the emergence of very negative sentiment on consumer spending on services ranging from restaurants to hotels to travel. I think the summer rally in segments such as airlines that I’ve been looking for is becoming less likely. I’m going to begin trimming the positions I put on for just such a move.
