Post by Admin/YBB on Jul 24, 2021 7:24:48 GMT -6
Pg 10-11. FOMC Statement and POWELL’s press conference on WEDNESDAY.
REVIEW. PG&E (PCG) announced that it will spend billions to bury power lines underground after acknowledging that some past fires were caused by overhead power lines. At $1.5-2.0 million/mile, it may cost $15-20 billion over 10 years. Stock fell sharply. After 2019 bankruptcy filing in 2019, company emerged from bankruptcy in 2020.
PREVIEW. Elon MUSK tweeted that Tesla/TSLA will share its charging stations with other EVs. Of course, this won’t be free, will accelerate EV adoption and provide good publicity for Tesla.
DATA THIS WEEK. New home sales on MONDAY; consumer confidence index, home price index, durable goods on TUESDAY; Q2 GDP on THURSDAY; personal income on FRIDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Small-cap Evoqua Water Technologies (AQUA; fwd P/E 35.7; volatile but growing earnings; it is the old water treatment and hazardous site cleanup (chemicals PFAS, etc) business of Siemen’s/SIEGY that was sold to private-equity and then was a late-2017 IPO; also growing via M&A; pg 16);
Tripadvisor (TRIP; fwd P/E NA (2021), 27.5 (2022); EV/EBITDA 40.0 (2021), 13.5 (2022); online travel reviews; new Tripadvisor Plus subscription service will offer discounted rates for hotels; O’Hara (Certares Management) serves as a board member; pg 26).
BEARISH. See other stories.
Pg 13: FOLLOWUP. Stay clear of the Robinhood/HOOD IPO at P/S 26 on Thursday even though 1/3rd of the IPO shares will be offered to its customers. Almost 75% of its revenues are from payments for order flow and substantial revenues are from crypto trading, both under investigations by regulators. Median funded account balance is only $240. Its efforts to branch out into consumer banking and lending have backfired, sometime even mocked (who can forget SPIC insured deposits fiasco?).
Pg 15: ECONOMY. New daily Covid-19 cases are rising in the US. They are up +180% in 2 weeks from a low base. This is bad going into the FALL when offices and schools will reopen. Hospitals are at full capacity in several parts of the US. Some areas are bringing back some Covid-19 related restrictions. High vaccination rates in the US should offer good (but not full) defense from Covid-19-Delta. Breakthrough cases (i.e. those among fully vaccinated) tend to be milder. This makes the economic outlook uncertain, especially as previous stimulative measures run out; the federal unemployment benefits will end in September (several states have already stopped those).
Pg 17: INCOME. Regional bank stocks for dividend income: CFG, MTB, KEY, FITB. Bank ETF is KBE, regional bank ETF is KRE. Banks have come out of pandemic in good shape and all big banks passed their recent stress-tests easily.
Pg 18: FUNDS. John NEFF and Chris CERRONE of Akre Focus AKREX have about 20 quality large-cap stocks. Exposure to techs is moderate. Higher interest rates with higher inflation are OK. Pandemic has accelerated progress in e-commerce, but some such as auto-part stores are less impacted.
Pg 21: TECH TRADER. Netflix/NFLX is moving into mobile GAMING by providing free option/upgrade; its goal is to make membership sticky. But this will put pressure on others that charge $5-10 from games (AMZN, GOOGL, AAPL). Subscriber growth has slowed – the pandemic pulled forward many subscriptions and it wants to hang on to those. Competition in streaming has also grown (Disney+, HBO Max, etc).
Pg 27: Brian CHESKY, Airbnb/ABNB (December IPO). Airbnb was hit very hard with its business collapsing by 80% in a sequence around the globe as Covid-19 spread. A huge issue was full refunds for cancellations ($1 billion) and providing 25% in lost revenue assistance to hosts ($250 million). All marketing was stopped as 80% of the business disappeared. Executive salaries were slashed. Huge layoffs were announced. Funds were raised by issuing debt (not dilutive equity). Noncore businesses were paused (transportation, travel content, partnerships with hotels, etc; 9 of its 10 divisions were paused). Longer stays in nearby locations were promoted. Work from home started another trend – people renting suitable homes long-term to work remote. This may be a future alternative to owning large, expensive homes and long commutes. Business has now rebounded quite strongly from 20% level, and revenues are already ahead of 2019.
Pg 29: RETIREMENT, 100 BEST ANNUITIES for Today’s Market. There are too many details to summarize here. Several types of annuities are discussed with sample vendors and quotes provided for most types. Check the link if you have access to Barron’s online or get hold of paper copy at newsstand ($5) or local library. www.barrons.com/articles/best-annuities-51627068402?mod=hp_LATEST
Pg 37: FUNDS. Aggressive/moderate-allocation fund DGIFX (ER 0.78%, AUM $352 million) has growth orientation in its equity portfolio of 45-50 stock, mostly mid-caps. The bond side is simple with those from large blue-chip companies. Fund is not available at any 3rd party brokerage platform and must be bought directly from the Minneapolis-based firm; it does heavy local advertising. Neutral allocation is 65-35 and equity range can be 55-70%.
Pg 38: FUNDS. Mentioned are 3 INTERNATIONA VALUE funds KGIIX, QUSOX, OAKIX that have different sizes/AUMs and flavors.
Pg 39: ECONOMY. Federal moratorium on EVICTIONS will expire at the end of July. Many landlords have suffered from unpaid rents and are looking to replace delinquent tenants with new higher rent paying tenants. Housing prices have also gone up and rents tend to follow with 12-18-month lag. This RENT INFLATION will show up in inflation indices (CPI, PCE) and it may persist.
(EXTRAS from online Friday that didn’t make the weekend paper version)
None
REVIEW. PG&E (PCG) announced that it will spend billions to bury power lines underground after acknowledging that some past fires were caused by overhead power lines. At $1.5-2.0 million/mile, it may cost $15-20 billion over 10 years. Stock fell sharply. After 2019 bankruptcy filing in 2019, company emerged from bankruptcy in 2020.
PREVIEW. Elon MUSK tweeted that Tesla/TSLA will share its charging stations with other EVs. Of course, this won’t be free, will accelerate EV adoption and provide good publicity for Tesla.
DATA THIS WEEK. New home sales on MONDAY; consumer confidence index, home price index, durable goods on TUESDAY; Q2 GDP on THURSDAY; personal income on FRIDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Small-cap Evoqua Water Technologies (AQUA; fwd P/E 35.7; volatile but growing earnings; it is the old water treatment and hazardous site cleanup (chemicals PFAS, etc) business of Siemen’s/SIEGY that was sold to private-equity and then was a late-2017 IPO; also growing via M&A; pg 16);
Tripadvisor (TRIP; fwd P/E NA (2021), 27.5 (2022); EV/EBITDA 40.0 (2021), 13.5 (2022); online travel reviews; new Tripadvisor Plus subscription service will offer discounted rates for hotels; O’Hara (Certares Management) serves as a board member; pg 26).
BEARISH. See other stories.
Pg 13: FOLLOWUP. Stay clear of the Robinhood/HOOD IPO at P/S 26 on Thursday even though 1/3rd of the IPO shares will be offered to its customers. Almost 75% of its revenues are from payments for order flow and substantial revenues are from crypto trading, both under investigations by regulators. Median funded account balance is only $240. Its efforts to branch out into consumer banking and lending have backfired, sometime even mocked (who can forget SPIC insured deposits fiasco?).
Pg 15: ECONOMY. New daily Covid-19 cases are rising in the US. They are up +180% in 2 weeks from a low base. This is bad going into the FALL when offices and schools will reopen. Hospitals are at full capacity in several parts of the US. Some areas are bringing back some Covid-19 related restrictions. High vaccination rates in the US should offer good (but not full) defense from Covid-19-Delta. Breakthrough cases (i.e. those among fully vaccinated) tend to be milder. This makes the economic outlook uncertain, especially as previous stimulative measures run out; the federal unemployment benefits will end in September (several states have already stopped those).
Pg 17: INCOME. Regional bank stocks for dividend income: CFG, MTB, KEY, FITB. Bank ETF is KBE, regional bank ETF is KRE. Banks have come out of pandemic in good shape and all big banks passed their recent stress-tests easily.
Pg 18: FUNDS. John NEFF and Chris CERRONE of Akre Focus AKREX have about 20 quality large-cap stocks. Exposure to techs is moderate. Higher interest rates with higher inflation are OK. Pandemic has accelerated progress in e-commerce, but some such as auto-part stores are less impacted.
Pg 21: TECH TRADER. Netflix/NFLX is moving into mobile GAMING by providing free option/upgrade; its goal is to make membership sticky. But this will put pressure on others that charge $5-10 from games (AMZN, GOOGL, AAPL). Subscriber growth has slowed – the pandemic pulled forward many subscriptions and it wants to hang on to those. Competition in streaming has also grown (Disney+, HBO Max, etc).
Pg 27: Brian CHESKY, Airbnb/ABNB (December IPO). Airbnb was hit very hard with its business collapsing by 80% in a sequence around the globe as Covid-19 spread. A huge issue was full refunds for cancellations ($1 billion) and providing 25% in lost revenue assistance to hosts ($250 million). All marketing was stopped as 80% of the business disappeared. Executive salaries were slashed. Huge layoffs were announced. Funds were raised by issuing debt (not dilutive equity). Noncore businesses were paused (transportation, travel content, partnerships with hotels, etc; 9 of its 10 divisions were paused). Longer stays in nearby locations were promoted. Work from home started another trend – people renting suitable homes long-term to work remote. This may be a future alternative to owning large, expensive homes and long commutes. Business has now rebounded quite strongly from 20% level, and revenues are already ahead of 2019.
Pg 29: RETIREMENT, 100 BEST ANNUITIES for Today’s Market. There are too many details to summarize here. Several types of annuities are discussed with sample vendors and quotes provided for most types. Check the link if you have access to Barron’s online or get hold of paper copy at newsstand ($5) or local library. www.barrons.com/articles/best-annuities-51627068402?mod=hp_LATEST
Pg 37: FUNDS. Aggressive/moderate-allocation fund DGIFX (ER 0.78%, AUM $352 million) has growth orientation in its equity portfolio of 45-50 stock, mostly mid-caps. The bond side is simple with those from large blue-chip companies. Fund is not available at any 3rd party brokerage platform and must be bought directly from the Minneapolis-based firm; it does heavy local advertising. Neutral allocation is 65-35 and equity range can be 55-70%.
Pg 38: FUNDS. Mentioned are 3 INTERNATIONA VALUE funds KGIIX, QUSOX, OAKIX that have different sizes/AUMs and flavors.
Pg 39: ECONOMY. Federal moratorium on EVICTIONS will expire at the end of July. Many landlords have suffered from unpaid rents and are looking to replace delinquent tenants with new higher rent paying tenants. Housing prices have also gone up and rents tend to follow with 12-18-month lag. This RENT INFLATION will show up in inflation indices (CPI, PCE) and it may persist.
(EXTRAS from online Friday that didn’t make the weekend paper version)
None