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Recent Articles
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Visa’s High Margin Business Reveals Consumer Spending Remains Resilient
Oct 25, 2023
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Image: Visa has been a strong performer thus far in 2023.
On October 24, Best Ideas Newsletter portfolio holding Visa reported excellent fourth-quarter results for its fiscal 2023. Net revenues advanced 11% on a year-over-year basis, while non-GAAP net income and non-GAAP earnings per share leapt 18% and 21% year-over-year, respectively, in the period. For the fiscal year, Visa generated an impressive 64.4% operating margin. Payments volume increased 9% and cross-border volume advanced 16%, showcasing that the consumer remains very healthy thanks in part to low unemployment rates, despite concerns over higher mortgage costs, student loan repayments, and general economic uncertainty as savings accrued during the COVID-19 pandemic wane. We continue to be big fans of Visa as our top payments-related idea.
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Brief Take: Microsoft Blows Past Expectations in Q1 Fiscal 2024
Oct 24, 2023
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Image: Mike Mozart.
Microsoft hasn’t been a tech dinosaur for many years now, and its first-quarter fiscal 2024 (calendar third quarter 2023) results continued to show just how well the tech giant has adapted to the new economy--from the cloud to gaming to personal computing and, of course, to getting a lead in artificial intelligence [AI] with its investment in OpenAI (ChatGPT). During its fiscal first quarter, Microsoft’s revenue advanced 12% in constant currency, while operating income leapt 24% holding foreign exchange constant—breakneck levels of expansion. Azure and other cloud services sales advanced 28% on a year-over-year basis holding currency constant. The high end of our fair value estimate for shares stands at $368, and we wouldn’t be surprised if Microsoft’s equity returns to those levels in the near term.
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2 Stocks to Watch: Tesla and Chevron
Oct 23, 2023
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Image: Tesla.
Tesla’s third-quarter report could have been a lot better, and Elon Musk’s comments that they “have dug (their) own grave with the Cybertruck” weren’t reassuring. Nonetheless, the company continues to generate free cash flow, and its balance sheet remains pristine with a very nice net cash position. We won’t be adding shares of Tesla to any newsletter portfolio, but given the price drop in its equity during the past week, we think most of the bad news is already embedded in the stock. As for Chevron, the company was once a darling stock in the newsletter portfolios, but we’ve moved beyond this big winner in both the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio after the huge “gains” the past 12-18 months. Shares still yield an attractive 3.6%, however, and we'll have more to say about its tie-up with Hess as more details come to light.
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Lockheed Martin Represents Key Aerospace & Defense Exposure
Oct 23, 2023
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On October 17, Dividend Growth Newsletter portfolio holding Lockheed Martin reported decent third-quarter 2023 results with the firm growing revenue roughly 1.8% on a year-over-year basis, and the firm beating the consensus estimate for non-GAAP diluted earnings per share. We like Lockheed as our aerospace and defense exposure more than Boeing, given the latter’s long list of troubles and deteriorated financial health, punctuated in part by troubles during the height of the COVID-19 pandemic and loss of life related to its 737 MAX platform. We think Lockheed offers a much better risk/reward and a healthy dividend to boot. Lockheed Martin yields ~2.8% at the time of this writing.
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