LYFT

There Will Be Volatility

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By Brian Nelson, CFA Last year, 2022, was a big test for equity investors, and the downside volatility that we witnessed during the year wasn’t comfortable, to say the least. Following the COVID-19 crash and rebound during 2020, and then the market surge in 2021, it wouldn’t be a stretch to say many investors’ heads are probably still spinning from all the volatility witnessed to start this decade. That said, part of what we’ve been warning about the past few years with respect to the equity market, especially in Value Trap, is that the proliferation of price-agnostic trading (e.g. quant, machine/algorithmic trading, etc.) will only lead to more and more market volatility, so while we were somewhat surprised by last … Read more

Walmart Warns: “Prices Are Still High and There Is Considerable Pressure on the Consumer”

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  Image Source: Mike Mozart By Brian Nelson, CFA As we wrote in “The Fed ‘Can’t Stop, Won’t Stop” in early January, the trade-down trends that we’re seeing in big box retail and with groceries, more generally, are interesting. Inflation started to accelerate with food-at-home prices moving aggressively higher in early 2022, and consumers have been trading down to better value. It probably wasn’t until egg prices soared, however — driven in part by a shortage of egg laying chickens (not just inflationary pressures) – that tipped everyday consumers to budget more cautiously, and the largest big box retailer in Walmart (WMT) is seeing this impact first-hand. Here’s what’s happening on the ground, per Walmart’s CEO Doug McMillon on the … Read more

The Fed ‘Can’t Stop, Won’t Stop’ Until Labor Market Feels More Pain

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  Image: Prices for private label brands at Aldi are considerably lower than those of branded products. The consumer staples sector, however, remains fully-priced with a 21+ forward earnings multiple, and many constituents hold large net debt positions. We believe the sticking point for the Fed is not groceries or gasoline prices, but rather the labor markets, which remain very strong, despite layoffs. Image Source: Valuentum By Brian Nelson, CFA We’ve yet to see the worst of job cuts, in our view. The rapid shift in the global economy mid-2022 was profound, as many companies were still building in anticipation of increased demand during the first half of the year to the point where demand growth started to dry up, … Read more

Union Pacific Outperforming North American Rail Traffic Trends But Facing Inefficiencies and Inflation Hurdles

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Image Source: Chuckcars By Brian Nelson, CFA On November 30, the Association of American Railroads reported that North American rail traffic is down 1.9% on a year-to-date basis through November 26. Carloads of chemicals, coal, motor vehicles and parts, nonmetallic minerals, and petroleum products were strong, but weakness in farm products, forest products, grain, and metallic ores and metals weighed on overall strength. Rail remains among the most economical way to ship goods over long distances. The railroads were front and center in the news recently about a potential work stoppage over the issue of paid sick leave. President Joe Biden, however, was able to put an end to the potential for a strike by signing “into law a joint … Read more

Serious Question: What Are You Looking At?

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Image: Stocks with the largest 52-week losses, according to YahooFinance. By Brian Nelson, CFA Thank goodness that you’re subscribed to a service that didn’t include any of the above as top ideas in their simulated newsletter portfolios. Many were chasing returns in 2021 and are now left holding the bag this year, but we stuck to our methodology and processes, and we didn’t expose members to tremendous risks. That’s what it’s all about.  With that said, let’s talk about how we successfully navigated a number of these terrible ideas in the Exclusive publication, a monthly resource that includes an income idea, a capital appreciation idea, and a short idea consideration, released to members each month on the 8th. Exclusive Long Ideas … Read more

FedEx Beats Estimates, Raises Guidance

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Image Source: FedEx Corporation – Second Quarter of Fiscal 2022 Earnings Infographic By Callum Turcan On December 16, the logistics giant FedEx Corporation (FDX) reported second quarter earnings for fiscal 2022 (period ended November 30, 2021) that beat both consensus top- and bottom-line estimates. The firm also moderately raised its earnings guidance for fiscal 2022 in conjunction with its earnings update after previously reducing its full fiscal year guidance when reporting its fiscal first quarter earnings update. FedEx noted in its fiscal second quarter earnings press release that “higher revenue per shipment at all transportation segments” positively benefited its operating income performance and helped offset headwinds from labor shortages and related supply chain constraints. The company also recently announced a … Read more

Large Cap Growth Has More Room To Run

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“The stylistic area of large cap growth has been one of our favorite areas because of the strong net cash rich, free cash flow generating, secular growth powerhouses that make up much of the space. The image is a rundown of the key Valuentum statistics for the top 15 holdings of the Schwab U.S. Large Cap Growth ETF (SCHG). We believe where large cap growth goes, so does the broader market, considering the hefty weightings of some of these stocks in other broad-based indices. Based on the high end of our fair value estimate range for this group of bellwethers, the broader U.S. markets still have room to run, to the tune of 7%+, despite the many highs already reached … Read more

Update on Best Idea Alphabet’s Self-Driving Taxi Upside

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Image Shown: Shares of Alphabet Inc Class C have boomed higher year-to-date as of early-September 2021. We see ample room for additional upside. By Callum Turcan We are enormous fans of large cap US equities because these entities then to be tremendous free cash flow generators, generally have net cash rich balance sheets, and their promising growth outlooks are underpinned by secular growth tailwinds. Alphabet Inc (GOOG) (GOOGL) fits the bill, and we include Alphabet Class C shares as a top-weighted idea in our Best Ideas Newsletter portfolio. Let’s provide some updates on the company’s self-driving taxi ambitions in this note concerning its Waymo spinoff. Self-Driving Taxi Upside Alphabet announced that it was spinning off Waymo, the company’s self-driving unit, … Read more

New Issue Airbnb’s Shares Pricing In Strong Recovery and Then Some

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Image Shown: Airbnb is losing money hand over fist while as it grows into its substantial market opportunity. Source: S-1. By Brian Nelson, CFA Rental platform Airbnb (ABNB) has been a part of the latest series of IPOs that have soared out of the gates recently. Shares went public at $68 per share December 10, and now the equity is trading at more than $148 per share at the time of this writing. For those that don’t know the story of Airbnb (AirBed & Breakfast), the concept started in 2007 when, after discovering that every hotel was sold out during an international design conference in San Francisco, the founders started renting airbeds in their apartment to conference attendees. Thirteen years have now … Read more

3 Speculative Stocks for Your Radar

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By Valuentum Analysts Etsy operates the online marketplace Etsy.com, which connects creative entrepreneurs with consumers looking to find unique crafts and goods. Stitch Fix was founded in 2011 and provides customers with personalized shipments (‘Fixes’) of apparel, shoes and other items that are hand-picked by the company’s stylists. Uber Tech first started in 2010 to make it easy for people to get a ride from point A to point B with the simple touch of a button. All three are breaking out to new highs, and we wanted to put them on the radar of risk-seeking investors. ETSY, Inc. (ETSY) Image: ETSY’s shares are up more than 270% year-to-date so far in 2020. The company continues to put up sizzling … Read more