Alpha Coverage - 7
Weekly Stock Market Newsletter - News/Articles/Podcasts/YouTube/Books
This is the 7th edition of Alpha Coverage - A weekly newsletter to bring you a summary of critical, thesis changing stock market news. We cover news articles, opinion pieces as well as podcasts to help you stay informed.
We cover over 250 tickers across US Equities, Emerging Market equities, Equity ETFs, Commodities ETFs, Income ETFs, Leveraged ETFs, Crypto & REITs & mREITs.
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Must Read/Listen (Editor’s Pick Across All Sections):
SPY 0.00%↑ AAPL 0.00%↑ TSLA 0.00%↑ $BTC $ETH
BofA boosts S&P 500 target but sees double the returns in the equal-weighted index
BofA Securities is raising its year-end target for the broader market based on the five measures it uses to gauge equities.
It now predicts the S&P 500 (SP500) (NYSEARCA:SPY) (IVV) (VOO) will finish at 4,300, up from 4,000. That's a little more than 100 points from where the index sits currently.
Link to Seeking Alpha News Article - Monday, May 22nd, 2023
NVDA 0.00%↑ GOOG 0.00%↑ GOOGL 0.00%↑
Nvidia looks unstoppable over next three years, says Breyer Capital’s Jim Breyer
Link to CNBC Clip - Wednesday, May 24th, 2023
ENPH 0.00%↑ TSLA 0.00%↑ FSLR 0.00%↑ RNW 0.00%↑
Global solar power investment to surpass oil for the first time
Solar is emerging as an energy superpower with this year's investment in the sector ($380B) set to surpass spending on oil production ($370B) for the first time.
Link to Seeking Alpha News Article - Thursday, May 25th, 2023
Nvidia: The One-Stop AI Shop
By leveraging its AI expertise, NVIDIA has developed a unique portfolio of not only hardware, but also software offerings aimed at democratizing AI, making the company well-positioned to benefit from the adoption of AI workloads.
While we expect to see new entrants, it is very difficult to replicate the AI ecosystem that NVIDIA built over the past 10 years. Consequently, we expect that the company will be able to capture a meaningful part of the white space. The TAM estimates above were provided by the company, and our assessment is that they are directionally correct based on AI industry reports and our channel checks.
Link to Seeking Alpha Opinion Piece - Thursday, May 25th, 2023
News, Facts, Analyst & Market Commentary - Short Reads
CMG 0.00%↑ SHAK 0.00%↑ DPZ 0.00%↑
Large-cap restaurant stocks may be more appetizing than they appear
Over the last ten years, large-cap restaurant stocks have generated a 17% CAGR total return to outperform the 13% CAGR return for the S&P 500 Index, per data from Evercore ISI. The outperformance has been due to EPS growth and not valuation, according to analyst David Palmer.
Link to Seeking Alpha News Article - Saturday, May 20th, 2023
Novo Nordisk Ozempic sales expected to reach $17B in 2029
Ozempic, Novo Nordisk's (NVO) best-selling drug, will achieve annual sales of $17B by 2029 as it will continue its dominance in the diabetes market, according to a new report.
Although the report doesn't mention it, Lilly's Mounjaro (tirzepatide) could put some pressure on the semaglutide franchise. While it is currently only approved for type 2 diabetes, Lilly is pursuing a weight-loss indication for it, which could come as soon as later this year.
Link to Seeking Alpha News Article - Saturday, May 20th, 2023
China says Micron products failed its cybersecurity review (update)
China said it found that Micron Technology's (NASDAQ:MU) products have "relatively serious" potential network securities issues and warned that operators of critical information infrastructure should stop purchasing the goods.
Link to Seeking Alpha News Article - Sunday, May 21st, 2023
Micron rises off Monday lows as analysts weigh impact of China ban
Bernstein estimated the "worst but unlikely" damage to 11% of revenues, with a more realistic impact of low-single digits, and "only in the near term."
Link to Seeking Alpha News Article - Monday, May 22nd, 2023
Confusing electric vehicle tax rules may be cutting into demand in the U.S.
Notably, Tesla (NASDAQ:TSLA) and General Motors (GM) are the two exceptions to the disruption and may end up with extra market share due to the EV tax reset.
Link to Seeking Alpha News Article - Monday, May 22nd, 2023
AAPL 0.00%↑ PIN 0.00%↑ INDA 0.00%↑ INQQ 0.00%↑
Can India become a new China for Apple? - Bernstein
"The bull case -- of course -- is that India becomes the next China for Apple," Sacconaghi said. "If so, our analysis suggests that India could grow 40%-plus annually and add 200 bps-plus to annual iPhone unit growth and company revenue growth over the next five years."
And economists are careful to note that it may be harder for India to reach the sustained 7-9% economic growth that China pulled off, for reasons including a less centrally planned economy, accompanying low manufacturing jobs, and low female employment (24% vs. China's 61%).
Link to Seeking Alpha News Article - Monday, May 22nd, 2023
UBER 0.00%↑ GOOG 0.00%↑ GOOGL 0.00%↑
Uber and Waymo will team up on robotaxi service in Phoenix area
Rivals Uber Technologies (NYSE:UBER) and Alphabet's (NASDAQ:GOOG) Waymo will work together on autonomous rides in the Phoenix, Arizona region.
Phoenix is the only major metropolitan area where a robotaxi service operates on its own, although San Francisco is getting very close. At over 180 square miles, Waymo’s Phoenix operations are noted to currently be the largest fully autonomous service area in the world.
Link to Seeking Alpha News Article - Tuesday, May 23rd, 2023
$BTC
Bitcoin climbs as Hong Kong OK's crypto trading for retail investors
Hong Kong's Securities and Futures Commission laid out new guidelines as part of the region's broader effort to become a crypto hub for the globe. Recall China banned crypto trading two years ago, and other countries, chiefly the U.S., have increasingly scrutinized the space after the collapse of crypto exchange FTX.
Link to Seeking Alpha News Article - Tuesday, May 23rd, 2023
Google infuses its ad business with new AI tools
At its 10th Google Marketing Live event, the company rolled out a chatbot to help advertisers build campaigns -- an extension of its work on the Bard chatbot, which is primarily consumer-facing.
It's also offering help with images via its Product Studio, tapping AI to help fix image content and resolution and perform text-to-image generation. And another tool offers help with generation of voice-overs.
Link to Seeking Alpha News Article - Tuesday, May 23rd, 2023
Netflix brings password crackdown home to America
The company on Tuesday started mailing members urging them to restrict usage to their household, and buy extra memberships (at a lower rate) for those outside.
Link to Seeking Alpha News Article - Tuesday, May 23rd, 2023
Uber will add electric vehicles to its fleet in India during June
In addition to the 25K electric cars slated to be added to the Uber (UBER) platform in India, the company also wants to roll out 10K electric two-wheelers in Delhi by 2024 along with EV startup Zypp Electric.
Uber Technologies (UBER) has an overarching goal to be carbon neutral by 2040, with adding more than one million EVs in India and South Asia a key piece of the strategy. Meanwhile, India Prime Minister Narendra Modi has set a goal for the nation to be net-carbon zero by 2070.
Link to Seeking Alpha News Article - Wednesday, May 24th, 2023
Nvidia approaches $1T market cap as Wall Street praises 'jaw dropping guidance'
Bernstein analyst Stacy Rasgon, who likened the results and guidance to "The Big Bang," reiterated his outperform rating and boosted his per-share price target to $475 from $300.
J.P. Morgan analyst Harlan Sur reiterated the firm's overweight rating on Nvidia, while doubling the price target to $500 from $250, noting the guidance is the first "massive wave" for the demand for generative AI.
Nvidia (NVDA) said it expects second-quarter revenue to be $11B, plus or minus 2%, well above the $7.18B analysts were expecting.
Link to Seeking Alpha News Article - Thursday, May 25th, 2023
Acting FAA chief to exit agency, join Archer Aviation - report
The acting administrator of the Federal Aviation Administration, Billy Nolen, is in talks to join Archer Aviation (NYSE:ACHR), per a report from Reuters.
Citing sources familiar with the situation, the report indicates Nolen will depart his current position atop the FAA in the next few weeks and will then look to transition to a role at Archer (ACHR)
Link to Seeking Alpha News Article - Thursday, May 25th, 2023
#Neuralink
Elon Musk's Neuralink gets FDA nod to start human trial of brain implant
Elon Musk's brain-implant company Neuralink said in a tweet that it received approval from the U.S. Food and Drug Administration to conduct human clinical trials of the device.
The company is developing a device, which is to be implanted in the skull, and will link the brain to the computer.
The brain-computer interface is fully implantable, cosmetically invisible, and designed to let the person control a computer or mobile device anywhere they go, according to the company.
Link to Seeking Alpha News Article - Friday, May 26th, 2023
Rocket Lab launches second batch of weather-tracking satellites for NASA
While the TROPICS launches were Rocket Lab's (RKLB) 36th and 37th launches, they were noted to be unique from most of the company’s other missions to low Earth orbit due to the 30 degree inclination requirement. To reach the low inclination from Launch Complex 1, Rocket Lab used Electron’s second stage to place the Kick Stage and TROPICS satellites into a circular orbit, and the Kick Stage’s Curie engine carried out a plane change maneuver to position the TROPICS satellites at 30 degrees.
The total number of satellites launched to orbit by Rocket Lab (RKLB) is up to 163.
Link to Seeking Alpha News Article - Friday, May 26th, 2023
Opinion Pieces - Facts & Opinions - Long Reads
Enovix: Shorts Could Be Playing With Dynamite
A good analysis on Enovix which covers details about the management team, gets into the weeds about the technology as well as financial projections.
Link to Seeking Alpha Opinion Piece - Friday, May 19th, 2023
Arbor Realty Trust: Low Price, High Dividend Yield, And Risks
ABR’s 2Q 2023 results may be weaker than in 1Q 2023. However, the company’s distributable earnings can be high enough to cover quarterly dividends of between $0.40 to $0.42.
At prices below $13, even with a quarterly dividend of $0.40 in the upcoming three quarters, ABR’s 1-year forward dividend yield is 12.5%.
Link to Seeking Alpha Opinion Piece - Sunday, May 21st, 2023
Hims & Hers Stock: The Gift That Keeps On Giving
As per management's commentary, online revenue growth was primarily driven by robust subscriber growth [net addition of 169k subscribers in Q1] and improved retention generating 70% more Net Orders y/y with a 15% higher Average Order Value.
With nearly 75% of its subscriber base now using multi-month (longer duration) subscriptions, Hims & Hers is realizing economies of scale as evidenced by the Q1 gross margin of 80% (+661 bps y/y).
Link to Seeking Alpha Opinion Piece - Monday, May 22nd, 2023
Freeport-McMoRan: The Pain May End Soon
I see a distinct possibility of FCX's price action bottoming out at the current levels if buyers could return strongly.
While I would prefer a steeper pullback, my analysis of the underlying copper futures suggests a possible near-term bottoming, which should bolster the buying sentiments in FCX.
Link to Seeking Alpha Opinion Piece - Monday, May 22nd, 2023
Blade Air Mobility: Building A Global Brand
Blade Air Mobility, Inc. stock only has a minimal market cap of ~$225 million here. Blade has a current cash balance of $179 million. The stock shouldn't trade at 1x sales with this cash balance and a small quarterly cash burn rate running in the $10 million range.
Link to Seeking Alpha Opinion Piece - Monday, May 22nd, 2023
INDA And SMIN: Why It's Time To Bet On India
INDA holds 70 companies, with a heavy allocation to India's top 10 companies like Reliance Industries, Infosys, and ICICI bank. This provides a concentrated bet on India's overall economy. It's also the lowest cost fund on the table.
However, in a growth environment, small cap companies are poised to offer the best returns as they have the greatest potential upside vs. their market cap. For this, SMIN is the best fund. Offering exposure to 240 smaller cap Indian companies, the fund is poised to outperform in the expected future economic conditions.
In terms of portfolio construction, we like a 65-35% INDA/SMIN exposure ratio best, in order to maximize reward and cap volatility.
Link to Seeking Alpha Opinion Piece - Monday, May 22nd, 2023
TPI Composites: Too Early To Be Bullish
In a nutshell, TPI Composites' 2023 guidance and related management commentary imply that TPIC's top line will continue to be under pressure in the near term, but its operating profitability is expected to reach a trough in the second quarter of the current year.
Link to Seeking Alpha Opinion Piece - Tuesday, May 23rd, 2023
Netflix Didn't Start The Fire, But It May Have Fanned The Flames
The issue is that Netflix’s changes to the traditional model have now largely been adopted by other streamers/studios leading to a decrease in overall earnings for creatives.
For now, the studios/streamers aren’t in a rush to be flexible because the strike could eventually allow them to shed unprofitable long-term deals - but that’s also a dangerous long-term game.
Link to Seeking Alpha Opinion Piece - Tuesday, May 23rd, 2023
IonQ: The Quantum Computing Stock To Watch, With Rapid Growth
At the time of its Q4 2022 report, IonQ guided Q1 2023 revenues to reach $4 million at the high end. And not only did IonQ surpass this revenues target, with Q1 2023 reporting $4.3 million in revenues, but IonQ didn't waste time and immediately raised its full-year 2023 outlook from $18.8 million at the high end, to $19.2 million.
Link to Seeking Alpha Opinion Piece - Tuesday, May 23rd, 2023
Solid Power: Still Too Many Unknowns
Solid Power, Inc. seems to be making some progress on myriad fronts. It has a solid balance sheet as well. However, it is quite challenging to come up with an accurate production timeline given all the unknowns on when full scale production will be achieved or what the sales ramp will look like.
Link to Seeking Alpha Opinion Piece - Tuesday, May 23rd, 2023
$VWDRY
Vestas Wind Systems: One Of My Favorite Options, A 'Hold'
As of the latest year of 2022, it has resulted in gross margins of 1.92%, with every other profit margin negative. This makes the company one of the least profitable businesses in the entire industrial space, which is not kind. It also means that warning signs are flashing across the spectrum, with OI at a loss, assets growing faster than revenues, a low safety score, and new issuances of debt. It also has a poor record of stock buybacks, and rev/share in decline, and despite this, the price for the stock is relatively high.
Link to Seeking Alpha Opinion Piece - Tuesday, May 23rd, 2023
Redwire: Q1 Earnings Were A Pleasant Surprise
Redwire reported $58 million for the quarter, which soared past the analyst consensus of $48 million.
Gross margin jumped from 16% in Q1 2022 to 25% this past quarter.
Redwire's cash position fell to $11.3 million as of March 31, down sharply from $28.3 million at the end of 2022. As the company is making investments, it is consuming a significant amount of capital at the moment.
Link to Seeking Alpha Opinion Piece - Thursday, May 25th, 2023
YouTube:
How Much SCHD to Live off Dividends? (Retire on SCHD)
The Intelligent Investor’s Road to $1,000,000
To win the race to Mars, NASA is prepared to go nuclear
Another great Episode from The Compound & Friends:
Here are a few clips I created for you guys:
NVIDIA is potentially not expensive at all if AI grows for Decades - Clip
We are underestimating how strong AI already is - Clip
AI <> Crypto - Clip
Soft Launch of Our YouTube Channel:
As a quick reminder, you can find all these videos, anytime, on YouTube, where we’ve neatly put them in Playlists for you to learn leisurely.
Link to Youtube Channel - Subscribe Now!
Disclosure: We own positions in some/all of the tickers mentioned in this newsletter.
