Shesa's AUGUST 2022 Investment Blog
AUGUST 2022 - INVESTMENT BLOGBy Shesa Nayak
Welcome to my investment blog!
U.S. Stock Market Commentary
What an incredible week it was for the U.S stock market! Stocks roared back with best week since April 2020. Nasdaq had an excellent week bouncing back a spectacular 9%. A quick market recap - after my last blog was published, we further saw a significant pull back in the stock market resulting another new lows for all U.S stock indexes (DOW, S&P and NASDAQ). The second quarter earnings are in full swing. We saw huge number of S&P 500 companies reported their earnings last week, including the tech titans like Apple, Amazon, Google, Microsoft etc. Thus far, earnings have been a mixed bag but much better than what Wall Street expected. However, king dollar (USD) is hurting the exports and the bottom line of major corporations as strong dollar make export expensive.
Meanwhile, Fed raised another 0.75% interest rate consecutively two times which is first time since 1994. I further expect 0.75% or 0.5% rate hike on September 21 during next FOMC meeting. As a matter of fact, we saw home sales plunged 20% comparing to last year. The U.S GDP grew -0.9% in Q2 making it second consecutive quarter of negative GDP growth. Hence technically speaking we are in a recession. Having said that, let me clarify that we are NOT in an earnings recession. Because we have not seen many negative earnings from corporate sector. The Consumer Price Index (Inflation) went up 9.1% in June, most since Nov 1981. The IMF announced 3.2% revised downward forecast to global growth in 2022 and 2.9% for 2023.
On some positive news, the House passed $52 billion bipartisan legislation to boost U.S. competitiveness with China by allocating billions toward domestic semiconductor manufacturing and science research. The senators are also negotiating on a “Inflation Reduction Bill” which includes $369 billion bill to fight climate change, $288 billion for drug price reform and $64 billion for affordable care. If approved, it will be a huge catalyst for the green energy industry and overall economy. The job market is healthy despite many layoffs, and more importantly consumers are still spending keeping the economy alive!
From the second-quarter reports, it’s evident that inflation, supply chain, strong dollar and Covid are major headwinds for the corporate America. With these doom and gloom, I am seeing some historical pattern wherein we may see some turnaround of the stock market in next few months and it’s possible that the market could bounce back as high as 40-50% in next 12-18 months. Please note that this is just my assessment based on my research, so readers’ discretion is warranted. Also, one must be extremely careful because AUGUST and SEPT are not investor's friendly month. Before I discuss on that, let’s take a quick look at the stock market indexes.
Indexes | 1/31/2021 (Close) | Close FRI 7/29 | Change in 2022 | % Change in 2022 | All Time High | From All Time High | % from All Time High |
DOW | 36,338.30 | 32,845.13 | -3,493.17 | -9.61 | 36,952.65 | -4,107.52 | -11.12% |
S&P 500 | 4,766.18 | 4,130.29 | -635.89 | -13.34 | 4,818.62 | -688.33 | -14.28% |
NASDAQ | 15,644.97 | 12,390.29 | -3,254.68 | -20.80 | 16,212.23 | -3,821.94 | -23.57% |
BTK | 5,518.45 | 4,785.88 | -732.57 | -13.27 | 6,376.77 | -1,590.89 | -24.95% |
NBI | 4,728.94 | 3,902.90 | -826.04 | -17.47 | 5,517.77 | -1,614.87 | -29.27% |
S&P 500 Earnings
Earnings: For Q2 2022, 56% of the S&P 500 companies have reported earnings, 73% companies reported positive earnings surprise and 66% companies reported positive revenue surprises.
Earnings Growth: Q1 earnings growth is 6% better than expected 4%. This is lowest earnings growth rate reported by the index since Q4 2020 which was 4%.
Valuation: The forward 12-month P/E ratio for the S&P 500 is 17.1% which is below the 5-year average of 18.6 and above the 10-year average of 17.
Source: Factset.com
Economy News
FED interest rate
The Federal Reserve hiked interest rates by 0.75% for second consecutive time. The benchmark overnight borrowing rate stands a range of 2.25%-2.5%. This is first of that magnitude that Fed raised since 1994.
U.S GDP: Second quarter had a negative GDP growth of -0.9%, less than 0.3% gain expected by the economists. It follows a -1.6% decline in the first quarter. So technically we are in recession though it’s not officially declared. However, we are not in an earnings recession because we have not seen many negative earnings from corporate sector.
Interest Rate: 2.5%, expect another 0.5 - 0.75% rate hike on September 21.
US Total GDP/Economy: 22.996 trillion, 20.937T in June.
U.S COVID Cases: 91.1 million, Death: 1.03 million
COVID Vaccination: 223 million or 67.8% of the U.S population are fully vaccinated
Retail Sales: Jun retail sales was up 1%, July numbers are awaited
Unemployment rate: 3.6% in March 2022, lowest since Feb 2020
Inflation rate: 9.1 in Jun, 8.6% in May, July numbers are awaited
Consumer Confidence: 51.5% in July, 50 in June.
Business Confidence: 53% in Jun vs. 56.1% in May.
U.S Crude Oil: $98.30 a barrel, continuous 6 weeks of decline
Non-farm payrolls: Economy added 372,000 in June
Economy Positives and Negatives
Positives
- Lowest Unemployment in 40 years stands at @3.6%
- Retail sales were up 1% in June
- Strong dollar making import cheaper but Export becomes expensive, so it’s +ve and -ve as well
- Consumer spending increased 1.1% in June: Retail Sales + Services viz. health care, education, entertainment, transportation etc. This is the greatest strength of the economy.
- Continued strong business investment despite challenging environment
Negatives
- Higher Inflation: 9.1% in June, highest since NOV 1981
- FED Rate Hike: FED will keep raising interest rate Interest Rate till there is cooldown in inflation. The 30 Years Mortgage Rate rises to 5.94% impacting home market.
- Negative GDP growth: GDP declined to -0.3% in the second quarter following -1.6% in Q1
- Geopolitical crises: Russia and Ukraine war continues. Recession in Europe is very much in the card as it faces of a full-blown energy crisis this winter
- Revenue/Earnings are decelerating, Q2 earnings were up only 6%
- Global slow down very much on the card due to many of the aforesaid facts and China lock down
Stock Market Doom and Gloom going to continue?
We saw continuous 13 years (2009 – 2021) of positive returns for the stock market indexes except a small hiccup in 2018. Investors are not used to the current environment as many folks have not seen such major inflation or higher interest rates. This this year has been a different story altogether. Whenever we saw any market correction those were short-lived but this year investors are feeling the pain as market has been consistently going down since late November 2021. We all know inflation is at 41 years high and interest rates went beyond 6% for 30 years fix mortgage. We saw Nasdaq went down as low as -35% and S&P 500 went down -25%. It was a “rolling crash” for the stock market. Please note that Nasdaq is still in bear market territory, down more than 20%. Many companies are laying off or they are in a “wait and watch” approach to get more clarity on the economy. Hence, we are in a very uncertain environment.
All of this doom and gloom has resulted in the worst first-half performance for stocks since 1970. There were numerous negative headlines on many media about higher inflation, gas prices, food prices, Federal reserve’s resolve to continue hard landing and so on. I do not want to sound pessimistic because I am a bull. However, it’s not about what I feel or what we feel. Market has to take its own course of action until some better picture emerges on the following:
- Inflation subside: As the oil/gas prices have come down in last few weeks we may see the inflation cool down a little bit. Also, let’s not forget that summer will be gone and we will enter to seasonally weak period for oil/gas due to reductions in traveling. Furthermore, Fed raising interest rate has put a big impact on the real estate and vehicle market which should help mitigating inflation. But still inflation is a major concern.
- Federal Reserve: stop raising interest rates or market get a sense that tightening policy is coming towards its last phase or done
- Q2 earnings and future forecast: The earnings so far has not been as ugly as expected. In fact, the big technology companies like Apple and Amazon were very good. Google and Microsoft earnings were OK. Some of the chip companies, financials, energy companies came with good earnings. In my view, market may remain volatile but as I said in my WhatsApp group, my feeling is that bottom for Nasdaq may be behind us.
- Investors gain confidence: This is mostly dependent on above three factors. Visualizing the current Q2 earnings investors may be gaining some confidence particularly on tech stocks.
- Mid-term election gets closer: I will write extensively on this because this seems to be very consequential for our investment.
We all would love to see that market bounces back. But it’s not going to happen until the above conditions are met. When will it happen? Nobody knows and nobody can predict with certainty. However, in my view, we may see turnaround in the later part of this year, possibly after September/October timeframe. This is just my assessment but I do not know the future. Having said that why do I feel about the turnaround after September/October? In my opinion, these factors may contribute to the bounce:
Fed raining Interest Rate may get a pause or end altogether or there may be easy landing again. Fed has been raising rates like never before. The current rate is 2.25-2.5%. I expect another 0.75% interest rate hike on the FOMC of 9/20 – 9/21. After that, I feel Fed may give a pause. It’s very unlikely that they will raise rates in 11/1 – 11/2 FOMC meeting because there is mid-term election in November. If needed, they may raise 0.25% rate in December and that may be the end of interest rate hike. Having said that, if the inflation comes down -or- we get into a recession -or- there will be big layoffs then they may pause rate hikes and tilt towards soft landing. This should bring jubilation into the stock market. But please note that, market may bounce back even ahead of that, probably around October or so, because market factors-in ahead of time. Now let me discuss why I wrote above that the stock market could bounce back as high as 40-50% in next 12-18 months. This brings me to discuss my analysis on mid-term election.
What to expect for Stock Market as Mid-Term Election Looms?
I did some extensive research on this topic for the benefits of my readers. If history is any evidence, then we may see a huge turnaround in the stock market. This year mid-term election will be held on Tuesday, November 8, 2022. During this midterm election, all 435 seats in the House of Representatives and 34-35 of the 100 seats in the Senate will be contested. So, I wanted to see if there was any discernible pattern to how stocks performed during midterm election years throughout history. First of all, what is mid-term election? It refers to a type of election where the people can elect their representatives and other officeholders like governor, members of local council etc. So, it’s extremely important for the investors to know how does the stock market behaves during such a mid-term election. As an investor, we must have some strategies built around it to get better return on investment (ROI). I did some research to track back to July 30, 1914 and is what I found which is really important to note - 23 out of 27 or 85% of the time in past midterm election years stock market have ended the year higher. But if we see the mid-term year’s low to next year’s high then the stock market has NEVER gone negative. The average return has been astronomical 46.9%. The lowest return was 14.6% in 1946 and highest return was 88.1% in 1914. So, hypothetically saying, let’s assume that this 2022 mid-term election year low was on June 16, when S&P 500 and Nasdaq had a low of 3636.87 and 10,565 points respectively. So, the high of next year on/before Dec 31, 2023 should go anywhere from 14% to 88% from the lowest to highest point based on past metrics. Now, if we consider from the lowest of mid-term election i.e 2022 and assuming that the lowest point for S&P is 3636.87, then till the end of next year (in this example Dec 31, 2023), the average return has been 15.9%, lowest being -52.7% in 1931, the great depression. In this year, the market had a great run till mid-February but from late February to early June DOW fell -37%. The highest return till the end of next year, in this example Dec 31, 2023 should be 38.5%. Please note that every four years, stocks make an important low in the midterm election year. And this year, we are facing so many challenges of inflation, Fed rate hikes, supply chain constraint, Covid etc.
Now let me take another research conducted by U.S Bank for pre-midterm election stock market performance. The S&P 500 Index has historically underperformed in the year leading up to midterm elections. The average annual return of the S&P 500 in the 12 months before a midterm election is 0.3%—significantly lower than the historical average of 8.1%. But post-midterm election period is a very different story. The S&P 500 has historically outperformed the market in the 12-month period after a midterm election, with an average return of 16.3%. For 3 month (Nov 1 - Jan 31) it has returned 7.3%, 6 months (Nov 1 - Apr 30) it has returned 15.1% and 1 year (Nov 1 - Oct 31) it has returned 16.3% respectively.
Here are some of the pattens identified for the Mid-Term Election Years:
- Stocks usually have a bad start to the year: This year we saw worst beginning since 1970.
- Stocks makes an important low: This is we saw Nasdaq shattered 35% and 25% for S&P 500
- Stocks turnaround and soar about 50% in next 12-18 months: The 50% is average, hence it could be less or more. I won’t eliminate the possibilities market going more than 50%.
Source: chaikinanalytics.com
The stock market has been phenomenal in some of the years, so I won’t be surprised if we see the repetition of those performances later this year and next year. It’s too early to write about that because I still see some turbulence in the stock market but it may not be a bad idea to start accumulating some good stocks when they are extremely cheap. It may be a great opportunity ahead and as an investor I would not like to miss a possible great bull run. Having said that, I do not expect it to be like a rocket launch for the stock market that we saw in April 2020.
My final thoughts: In general stock market has/had an excellent return just around the mid-term election time to the next one year. Hence, I won’t be surprised if the index goes up 50% or more. In that case, let’s say if Nasdaq’s low on June 16 was 10,565 points and if it goes up 50% from there then potentially it can go up to 15,850 by end of next year 12/31/23. Please do NOT take it as my prediction. What I am saying is based on the past historical data, if that repeats then the above possibilities can’t be ruled out. However, it does not necessarily mean that history will always repeat. But there is a high probability that it may repeat. We may still see some turbulent in the stock market due to many ongoing macro and some micro economic factors and stock market may remain volatile for a foreseeable period. Having said that, I will take this opportunity to keep accumulating good stocks on the weakness and remain invested. But it’s for each individual investors to determine their own investment framework, do their risk assessment and act according to their comfort level. I do take calculated risk and mostly remain invested rather than sitting on the sidelines and keep watching. I can plan to present the details of mid-term election during my next investment meet!
A word of caution: some industries and stock may do much better, while others may underperform. It’s almost impossible to nails the exact bottom, but one thing is certain - if we wait for the perfect moment, we may most certainly miss it. So, the choice is our. But it’s alway important to remember to have a strategy on how to invest our money, not just jump in and buy any stock. If an investor has to play in the stock market then understanding the risk and controlling the emotions (greed & fear) is the essence. There may be many more turbulence ahead, hence we must cautiously plan and execute accordingly because nobody can predict the future with certainty. Also, one must be extremely careful because AUGUST and SEPT are NOT investor's friendly month. So, caution is warranted!
Inflation Reduction Bill
The senators are negotiating for another important bill known as “Inflation Reduction Bill”. It includes the following:
- Lower Healthcare & Prescription Drug cost
- 15% Corporate minimum Tax
- $300 billion deficit reduction
- $369 billion bill to fight climate change & energy: It includes tax incentives to increase clean energy industry, Tax credit for Electric Vehicles (EVs) - up to 7.5K, reduce carbon emission by 40% by 2030.
This is still under negotiation. If approved it will be a huge catalyst for the green energy industry and overall economy. Congress is looking to vote this week. Let’s see how it goes..
Revenue & Profit (2021, 2022, 2023) - updated 7/31/22.
|
Quarter |
Earnings % |
Revenue % |
|
FY21 |
49.2 |
15.4 |
|
Q122 |
9.2 |
13.6% |
|
Q222 (projected) |
5.4 |
12.3 |
|
Q322 (projected) |
9.2 |
8.7 |
|
Q422 (projected) |
11.6 |
N.A |
|
FY22 (projected) |
9.8 |
9 |
|
FY23 (projected) |
9.9 |
8 |
N.A: Not Available
Sectorial Stock Market Performances (TOP 5 sectors for 2022)
|
Sector |
YTD Performance in %age |
|
Energy |
41.63 |
|
Utilities |
3.28 |
|
Consumer Staples |
-3.87 |
|
Health Care |
-6.21 |
|
Industrials |
-9.69 |
Please click below link to view complete sectorial performances:
Source: Fidelity.com
Now let me discuss this month’s inclusion to my Blog Portfolio.
The Walt Disney Company (DIS)
The Walt Disney Company, together with its subsidiaries, operates as an entertainment company worldwide. It has a very wide business segments viz. Disney Media and Entertainment Distribution, Disney Parks, film and episodic television content production and distribution activities, television broadcast networks under the ABC, Disney, ESPN, Freeform, FX, Fox, National Geographic, and Star brands; and studios that produces motion pictures under the Walt Disney Pictures, Twentieth Century Studios, Marvel, Lucasfilm, Pixar, and Searchlight Pictures banners. It also offers direct-to-consumer streaming services through Disney+ Hotstar, ESPN+, Hulu, and Star+; sale/licensing of film and television content to third-party television and subscription video-on-demand services; theatrical, home entertainment, and music distribution services; staging and licensing of live entertainment events; and post-production services by Industrial Light & Magic and Skywalker Sound. In addition, the company operates theme parks and resorts, such as Walt Disney World Resort in Florida; Disneyland Resort in California; Disneyland Paris; Hong Kong Disneyland Resort; and Shanghai Disney Resort; Disney Cruise Line, Disney Vacation Club, National Geographic Expeditions, and Adventures by Disney, Disney resort and spa in Hawaii; licenses its intellectual property to a third party for the operations of the Tokyo Disney Resort; and provides consumer products, which include licensing of trade names, characters, visual, literary, and other IP for use on merchandise, published materials, and games. Further, it sells branded merchandise through retail, online, and wholesale businesses; and develops and publishes books, comic books, and magazines. The Walt Disney Company was founded in 1923 and is based in Burbank, California.
Looking Back Disney & Why do I like the stock?
Disney is one of the world's largest media and entertainment companies of the world and in the top four most admired companies. Disney also leads the entertainment industry for 2021, the 18th consecutive year it has ranked number one. I wanted to own Disney share but always thought that it was expensive. But the current bear market has taken a tool on most of the companies irrespective of how great they may be. Disney stock started tumbling when COVID started as many theme parks got closed. However, during the lockdown the stock bounced back because of its streaming services and market upturn during 2020 presidential election. However, investors lost interest in Disney stock because of stiff competition in streaming services, theme parks were closed, movie theaters were non-operational and so on. Since then stock has been going down and this month it marked its 52-weeks low. Wall Street is struggling with recession fear and main worries for investors are that its theme parks and TV network advertising businesses are cyclical and those may suffer. Investors also fear the impact of poor consumer sentiment which may impact their services and theme park. Furthermore, COVID cases are again rising particularly in China and Europe bringing the concerns that attendance at theme parks in the U.S., France, Hong Kong and China as well as the company’s cruise-line business. Subscriber growth at Disney+ streaming services has been good, particularly after acquiring Indian channel “Hotstar” and “StarTV”. However, the costs have also gone up resulting in missing Q1 earnings estimates.
Disney+ has launched in just over 100 countries and plan to roll out to many more countries in the coming months. It has planned to spend about $32 billion for 2022 but yet to disclose its spending plan for 2023. Live streaming for the live sports through its ESPN+ has already around 22 million subscribers. Till Q1 2022, Disney has 87.6 millions subscriber excluding 50.1 million international subscribers for Disney Plus “Hotstar”. The Q2 earnings are expected to come on Wednesday, August 10. We will get a better picture after the earnings release. I am hoping it to be a reasonable quarter. The share price has already taken a big hit, unless they miss earnings badly I do not expect a significant downside for the stock from here.
Now let’s see company’s fundamentals
|
Market Capitalization |
$191.07B |
Total Cash |
$13.27B |
|
Trailing P/E |
70.88 |
Total Debt |
52.02B |
|
Forward P/E |
19.49 |
Book Value per share |
50.27 |
|
Price/Sales |
2.50 |
52 weeks high |
187.58 |
|
Revenue |
$76.62B |
52 weeks low |
90.23 |
|
Quarterly Revenue Growth (YOY) |
23.30% |
52 weeks change |
-39.56 |
|
Gross Profit |
$22.29B |
Held by Institutions |
64.89% |
|
Net Profit |
$2.7B |
Held by insiders |
0.15% |
|
Quarterly Earnings Growth (YOY) |
-47.80% |
Float |
1.82B |
|
EPS |
1.50 |
Dividend |
N/A |
My View and Strategy
If we see above table, Disney is still a fundamentally superior stock despite its negative earnings growth in the last few quarters. It’s just trading 19 times forward earnings and P/S of 2.50. The company is still growing, hence its expenses has also grown up. I think in next few months to one year the stock price should bounce back. I can expect to see a new high in next 12-18 months unless we get into a long term recession which I do not except contemplating current economy condition though nothing can be ruled out. This is a great long terms investment which fits into both value and growth. Currently, the stock is trading at $106.10. It had a 52-week high of $187.58, so it sells at a discount of 43% from its 52-week high. As a strategy, I never buy any stock at once. Now the market is extremely volatile, hence we may see many ups and downs. I have been accumulating this stock slowly during this downturn. In my view, the best strategy would be to buy gradually on the down days and keep accumulating over a period of time, and possibly hold for several years. Occasionally, it can be trimmed and again it can be added at lower price. Disney stock is promising and hence it can be part of the core portfolio. Unless something goes terribly wrong, I intend to buy and hold this stock for long term. I can remain invested as long as there is no major red flag on its fundamentals or business.
Risks
Currently, the stock market going with very uncertain time despite some bounce in last couple of weeks. Though, Disney is a great stock still no stock is immune to market downturn. Disney is growing but cost is also going up because growth do not come free. If we get into long term recession then it may get into trouble because people may cut their subscription, visitors to Theme Parks will get reduced. In addition, there is a huge competition in the streaming space primarily Netflix, Amazon Prime and Roku. We saw the debacle of Netflix and Roku in the streaming space. All these factors could impact Disney’s top and bottom line. I need to see how Disney comes with Q2 result on August 10. But loss of Netflix and Roku is expected to be a gain for Disney which may further strengthen.
My final thoughts
The stock has started bouncing back little bit in last couple of weeks. I look for bottom fishing of great companies, good stocks which are cheap and there is an opportunity of future growth. I think Disney is one of the best of the breed looking to its current stock price and future prospects. So, I believe Disney will bounce back in next few months. Disney is a great brand, highly diversified in media space and a growing company. Once sentiment improves this stock may bounce hard and fast, barring any major miss in earnings. In that case, I may reanalyze my positions and re-strategize based on the fundamentals. I feel that this is a great company and a great stock and a good entry point for long term investment. So, I am invested!
Shesa’s Blog Portfolio (As of JULY 31, 2022)
Equity | Suggested Price | Current Price | Suggested Date | % Change | My View (see disclaimer) |
STOCK (All prices are in USD) | |||||
12.9 | 162.51 | 1/25/13 | 1160% | HOLD | |
META | 47 | 159.10 | 11/13/13 | 239% | HOLD |
77.18 | 353.79 | 12/12/13 | 358% | HOLD | |
15.58 | 134.95 | 4/12/14 | 766% | Accumulate - Long term. Amazon did split 20-1 on 6/6/22. | |
13.48 | 34.83 | 11/25/18 | 158% | Accumulate - Long term. Amazon did split 10-1 on 6/28/22. | |
54.59 | 108.64 | 5/25/20 | 99% | HOLD | |
45.3 | 284.18 | 6/28/20 | 527% | Accumulate | |
27.98 | 21.34 | 4/25/21 | -24% | Accumulate | |
8.11 | 6.48 | 8/27/21 | -20% | HOLD | |
51.49 | 16.33 | 10/10/21 | -68% | Accumulate | |
55.21 | 18.25 | 11/21/21 | -67% | SOLD on 8/5/22 @18.23 | |
118.24 | 64.76 | 1/2/22 | -45% | HOLD | |
239.49 | 181.63 | 2/13/22 | -24% | Accumulate | |
18.44 | 15.11 | 3/20/22 | -18% | Accumulate | |
870.76 | 891.45 | 5/1/22 | 2% | Accumulate | |
67.7 | 49.82 | 6/5/22 | -26% | Accumulate | |
106.1 | 106.1 | 7/31/22 | 0% | NEW ADDITION | |
ETF | |||||
139.1 | 276.57 | 8/16/15 | 99% | HOLD | |
70.23 | 62.33 | 1/3/21 | -11% | HOLD | |
MUTUAL FUND | |||||
59.45 | 130.36 | 12/20/14 | 119% | HOLD | |
9.05 | 17.07 | 1/15/16 | 89% | HOLD | |
43.66 | 63.32 | 9/24/17 | 45% | HOLD | |
A few earning reports for Q2 FY2022
Apple (AAPL): Q3 - Beat top and bottom line.
* EPS: $1.20 vs. $1.16 estimated (Beat).
* Revenue: $83 billion vs. $82.81 billion estimated, up 2% year-over-year (Beat)
* iPhone revenue: $40.67 billion vs. $38.33 billion estimated, up 3% YOY. (Beat)
The company did not provide any guidance. Shares were up 3% in the AH trading.
My view: This tech giant keeps beating the estimates even under a challenging business
environment, particularly because of China lockdown and strong USD. Any correction could be
a buying opportunity.
Amazon (AMZN): had a solid quarter despite miss on the bottom line. Because of Rivian write
down, Amazon had an overall loss of $2 billion in the current quarter.
* EPS: Loss of 20 cents (Miss).
* Revenue: $121.23 billion vs. $119.09 billion expected. (Beat).
* AWS Revenue: $19.7B vs. 19.56 billion. (Beat).
The company also provided upbeat guidance for next quarter (Q3), revenue between $125
billion and $130 billion, representing growth of 13% to 17%. Analysts were expecting revenue of
$126.4 billion. Shares were up 13.6% in the AH trading.
My View: When all major retailers are struggling Amazon has/had a blast!! This is a stock for the
generations. It had some bad period but every company go through that cycle. Those companies
who falls and bounces back thrive!! It may look expensive on P/E basis but P/S looks very
lucrative. Amazon still a good long term buy.
Enphase Energy (ENPH) is one of my blog holding came with another spectacular quarter beating top and bottom line and guiding higher.
- EPS: 1.07 vs. 85 estimated, up 101%.
- Revenue: 530M vs. 316M, up 68% YOY.
My View: This is one of my top pick. Though the stock is little expensive, it’s a stock to be hold for years to come, at least based on current business performance and future potential.
Alphabet (GOOG): missed both top and bottom line but it was not a major miss in my view.
- Earnings per share (EPS): $1.21 vs $1.28 expected. (Miss)
- Revenue: $69.69 billion vs $69.9 billion expected, up 13% YOY. (Miss)
- Google cloud growth also missed the expectations.
Microsoft (MSFT) reported Q4 earnings after the bell. Here are the results.
- Earnings: $2.23 vs $2.29 per share expected. (Miss)
- Revenue: $51.87 billion vs $52.44 billion expected, up 12% YOY. (Miss)
- Azure cloud growth also missed the expectations.
On valuations basis, I prefer GOOG over MSFT which seems to be little overvalued in the current market environment.
Mastercard (MA) earned $2.56 a share in the quarter, up from $1.95 a share last year. Analysts were projecting $2.36 a share. Revenue rose to $5.50 billion from $4.53 billion and came in above the FactSet consensus, which was for $5.27 billion.
Meta
Missed both top and bottom line and guides lower.
* Earnings: $2.46 per share vs. $2.59 (Miss)
* Revenue: $28.82 billion vs. $28.94 billion (Miss)
* Guidance: $26 - 28.5B vs. $30.3B expected. (MISS).
* Daily Active Users (DAUs): 1.97 billion vs 1.96 billion
My take: I hold a very small position and no plan to add. This company is going through tough
time. It may be cheaper but at this time I will stay away!
Texas Instruments, VISA, GE and 3M: All came with good earnings beating top and bottom line.
McDonald beat the bottom line but missed the top line.
GM beat the top line but missed on the bottom line.
Intel (INTC) - again it had a terrible miss.
EPS: 0.29 vs. 0.70
Revenue: $15.32B vs 17.92B expected.
Shares were down 8.3% in AH trading.
This company has a terrible time. What it proves is that cheaper stock price is not necessarily
better! I will stay away!!
ROKU: Missed both top and bottom line.
EPS: -0.82 vs. -9.71 estimated.
Ford (F) had a strong quarter and smashed the analyst’s estimates for Revenue and Profit.
* EPS: 0.68 vs. 0.45 mins estimated.
* Revenue: $37.91 billion vs. $34.32 billion expected.
A few weeks ago, I had added Ford at around $10.50.
ETSY: Beat both top and bottom line.
EPS: 0.51 vs. 0.19 estimated
Rev: $585.1 million beat by $28 million.
Note: I had added little bit a few weeks ago.
Qualcomm (QCOM) beat both top and bottom line. But guided lower for next quarter.
Note: I don’t have QCOM.
Best Buy (BBY) warned of sales to decline 14% for Q2 and for the whole year company expect 11% sales decline.
Note: I don’t have BBY.
Positions Closed since last Blog
NONE.
That’s all for today. Wish you great investing! Stay tuned for my next blog. Thanks for your time!
Disclaimer: This blog is meant to provide my opinion only. The information provided is to the best of my knowledge but may not be accurate. I do NOT provide any professional recommendation to buy/sell any stock, ETF, mutual fund, or any other security(s). As an investor, it’s your hard-earned money and you decide what is best for you. The above are merely my own opinions on what I do. Please contact a professional money manager to buy/sell any security. I do not charge any fees or commission by writing the blog except anything from Google AdSense. I have position(s) on whatever security I put on my blog portfolio and avoid including any security that I do not own or follow. Anybody buying or selling the equities mentioned here is their own risk.
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