Post by Admin/YBB on Jan 7, 2023 7:59:29 GMT -6
Pg 8-9. Q4 earnings season starts with major banks reporting on FRIDAY.
REVIEW. GE spinoff GE Healthcare (GEHC; EV/EBITDA 10; 1/4/23- ) is attractive. (Energy GE Vernova will spinoff in early-2024 and then GE Aerospace will retain the GE ticker)
PREVIEW. ENERGY stocks had a great 2022 but there are valuation disparities among the US companies XOM (fwd P/E 10), CVX (fwd P/E 11) and the European companies BP (fwd P/E 5), SHEL (fwd P/E 5). Analysts point to European windfall profit tax and heavier investments on renewable by BP and SHEL. For longer-term, BP and SHEL are more attractive.
DATA THIS WEEK. Consumer credit on MONDAY; small business optimism index, wholesale inventories on TUESDAY; mortgage applications on WEDNESDAY; weekly initial jobless claims, Treasury budget, CPI (+6.5% yoy, core +5.7% yoy) on THURSDAY; UM consumer sentiment on FRIDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Tesla (TSLA; fwd P/E 21; operating margin 18% (so, room to cut prices); FCF $12.2 billion; Musk’s behavior and haphazard stock sales aren’t helping; the worst may be priced in; new products include Cybertruck; renewable power and battery storage businesses are growing; pg 11);
Phillip Morris International (PM; fwd P/E 17.8; cigarette business is declining, but oral nicotine (acquisition of Match), smoke-free IQOS (also, the US launch), vaping, snuff, chewing tobacco businesses are growing; pg 19).
BEARISH.
Pg 10 (also in Funds Quarterly): Cathie WOOD’s ARKK fell -67% in 2022 but she is mostly sticking with her convictions (EXAS, ROKU, SQ, TDOC, TSLA, ZM, etc). She believes that her holdings in innovative technologies will bounce back. She thinks that the US has been in recession since early-2022 and the Fed is overtightening. There is also a short-ARKK ETF SARK.
Pg 13: Large-cap growth (LC-G) fell sharply in 2022 (^RLG -30%) as interest rates rose. But QUALITY LC-G (ICMPX, etc) has attractive valuation now. A screen with 10% earnings growth, net cash on the balance sheet and PEG < 2 identified ANET, HUM, MSFT, SEDG, etc.
Pg 14: Dave BUJNOWSKI, US Growth Equities, Baillie Gifford. He still likes tech innovations, cloud-computing (SNOW, DDOG, NET, HCP), healthcare (MRNA, ILMN, TXG), EVs (TSLA, RIVN). The Fed rate hikes have changed valuations and there are some other temporary factors hurting the techs, but long-term trends are attractive.
Pg 20, INCOME INVESTING. It’s time to rebuild 60-40 hybrids as bonds do better; 2022 was terrible for stocks, bonds and hybrids. The FED rate hikes may end in Summer; inflation is moderating. DIY hybrids may be formed with SP500 VOO, R1000V VONV, EAFE IEFA, EM SPEM, SC R2000 IWM, total bond market AGG; sprinkle with corporates LQD, HY SPHY, EM bond EMB, muni VTEB (that will be a hybrid with too many things).
Pg 21, TECH TRADER. The CES 2023, LV in-person was alive and well but the tech industry not so much. Things may get worse (if there is a recession) before they rebound. Outlooks were gloomy for semis, electronics, cybersecurity, software capex, EV-makers, metaverse. The best news was free wi-fi on all major US routes by Delta/DAL.
Pg 46: The OIL BUYERS’ CARTEL may be replacing the OPEC (old oil producers’ cartel with Saudi Arabia its de facto leader). Russian invasion of Ukraine caused havoc in the global energy markets initially, as PUTIN guessed, but then the global oil producers (from the US, Saudi Arabia, Europe) joined hands in addressing global energy supplies (the SPR releases by 31 IEA members; adjusting energy logistics), putting sanctions on Russia, the European boycott of Russian oil, and oil price-cap on Russian oil by the US+EU+UK ($60; the idea originated from the US Treasury; enforced through the European shippers and insurers). Brent crude peaked at $127.98 in March but then declined. Demand also fell due to global economic slowdown and gradual shifting to renewables. The OPEC oil production now is about 28 million barrels/day (peak was 34 million barrels/day in 2016); OPEC+ is led by Russia (#3 global producer; #1 US, #2 Saudi Arabia). The US and foreign SPR’s will eventually need refilling and that will provide support for oil prices in future (the US will buy oil for its SPR below $70). Russia shifted much of its European oil/gas shipments to Asia (China is #1 oil importer). The global oil markets have fundamentally changed now.
(EXTRAS from online Friday that didn’t make the weekend paper version)
ECONOMY. The JOBS report showed some weakening with moderation in job and wage growth. However, unemployment rate fell indicating a tight labor market. The Report raised hopes for soft-landing (vs recession) and the stock market reacted positively. As this is just one report, the Fed will likely maintain its course of raising rates (but the CME FedWatch was now showing only 2 25-bps hikes in 2023).
Accessible from Morningstar (M*), PB-Big Bang, Facebook (“at”yogibearbull), Twitter (“at”YBB_Finance).
REVIEW. GE spinoff GE Healthcare (GEHC; EV/EBITDA 10; 1/4/23- ) is attractive. (Energy GE Vernova will spinoff in early-2024 and then GE Aerospace will retain the GE ticker)
PREVIEW. ENERGY stocks had a great 2022 but there are valuation disparities among the US companies XOM (fwd P/E 10), CVX (fwd P/E 11) and the European companies BP (fwd P/E 5), SHEL (fwd P/E 5). Analysts point to European windfall profit tax and heavier investments on renewable by BP and SHEL. For longer-term, BP and SHEL are more attractive.
DATA THIS WEEK. Consumer credit on MONDAY; small business optimism index, wholesale inventories on TUESDAY; mortgage applications on WEDNESDAY; weekly initial jobless claims, Treasury budget, CPI (+6.5% yoy, core +5.7% yoy) on THURSDAY; UM consumer sentiment on FRIDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Tesla (TSLA; fwd P/E 21; operating margin 18% (so, room to cut prices); FCF $12.2 billion; Musk’s behavior and haphazard stock sales aren’t helping; the worst may be priced in; new products include Cybertruck; renewable power and battery storage businesses are growing; pg 11);
Phillip Morris International (PM; fwd P/E 17.8; cigarette business is declining, but oral nicotine (acquisition of Match), smoke-free IQOS (also, the US launch), vaping, snuff, chewing tobacco businesses are growing; pg 19).
BEARISH.
Pg 10 (also in Funds Quarterly): Cathie WOOD’s ARKK fell -67% in 2022 but she is mostly sticking with her convictions (EXAS, ROKU, SQ, TDOC, TSLA, ZM, etc). She believes that her holdings in innovative technologies will bounce back. She thinks that the US has been in recession since early-2022 and the Fed is overtightening. There is also a short-ARKK ETF SARK.
Pg 13: Large-cap growth (LC-G) fell sharply in 2022 (^RLG -30%) as interest rates rose. But QUALITY LC-G (ICMPX, etc) has attractive valuation now. A screen with 10% earnings growth, net cash on the balance sheet and PEG < 2 identified ANET, HUM, MSFT, SEDG, etc.
Pg 14: Dave BUJNOWSKI, US Growth Equities, Baillie Gifford. He still likes tech innovations, cloud-computing (SNOW, DDOG, NET, HCP), healthcare (MRNA, ILMN, TXG), EVs (TSLA, RIVN). The Fed rate hikes have changed valuations and there are some other temporary factors hurting the techs, but long-term trends are attractive.
Pg 20, INCOME INVESTING. It’s time to rebuild 60-40 hybrids as bonds do better; 2022 was terrible for stocks, bonds and hybrids. The FED rate hikes may end in Summer; inflation is moderating. DIY hybrids may be formed with SP500 VOO, R1000V VONV, EAFE IEFA, EM SPEM, SC R2000 IWM, total bond market AGG; sprinkle with corporates LQD, HY SPHY, EM bond EMB, muni VTEB (that will be a hybrid with too many things).
Pg 21, TECH TRADER. The CES 2023, LV in-person was alive and well but the tech industry not so much. Things may get worse (if there is a recession) before they rebound. Outlooks were gloomy for semis, electronics, cybersecurity, software capex, EV-makers, metaverse. The best news was free wi-fi on all major US routes by Delta/DAL.
Pg 46: The OIL BUYERS’ CARTEL may be replacing the OPEC (old oil producers’ cartel with Saudi Arabia its de facto leader). Russian invasion of Ukraine caused havoc in the global energy markets initially, as PUTIN guessed, but then the global oil producers (from the US, Saudi Arabia, Europe) joined hands in addressing global energy supplies (the SPR releases by 31 IEA members; adjusting energy logistics), putting sanctions on Russia, the European boycott of Russian oil, and oil price-cap on Russian oil by the US+EU+UK ($60; the idea originated from the US Treasury; enforced through the European shippers and insurers). Brent crude peaked at $127.98 in March but then declined. Demand also fell due to global economic slowdown and gradual shifting to renewables. The OPEC oil production now is about 28 million barrels/day (peak was 34 million barrels/day in 2016); OPEC+ is led by Russia (#3 global producer; #1 US, #2 Saudi Arabia). The US and foreign SPR’s will eventually need refilling and that will provide support for oil prices in future (the US will buy oil for its SPR below $70). Russia shifted much of its European oil/gas shipments to Asia (China is #1 oil importer). The global oil markets have fundamentally changed now.
(EXTRAS from online Friday that didn’t make the weekend paper version)
ECONOMY. The JOBS report showed some weakening with moderation in job and wage growth. However, unemployment rate fell indicating a tight labor market. The Report raised hopes for soft-landing (vs recession) and the stock market reacted positively. As this is just one report, the Fed will likely maintain its course of raising rates (but the CME FedWatch was now showing only 2 25-bps hikes in 2023).
Accessible from Morningstar (M*), PB-Big Bang, Facebook (“at”yogibearbull), Twitter (“at”YBB_Finance).