Boeing: Trade Me Deadly
I went to a party last Saturday night. I didn’t get picks … got in a fight. Uh-huh … it ain’t no big thing.
Ryanair killed an order; Boeing prices are bad. Can’t borrow ten bucks from your old man?
Uh-huh … it ain’t no big thing.
But I know what I like. I know I like trading with you, Great Ones. And I know what you like. I know you like trading with me.
Okay … that’s enough Lita Ford for one day.
But Mr. Great Stuff … there’s never enough Lita Ford!
I hear you, but we have to talk about Boeing (NYSE: BA) and Ryanair (Nasdaq: RYAAY). I mean, Boeing is a Great Stuff Picks holding after all.
So, BA stock fell more than 2% today after Ryanair canceled a 737 MAX 10 order reportedly worth billions. According to Ryanair, it canceled the order because it was unable to agree on price:
That was Ryanair CEO Michael O’Leary, who also speculated that high prices were the reason customers such as Delta Air Lines (NYSE: DAL) and others were moving to Airbus in recent months.
And that may be true … or it could be that Boeing still has a bit of a PR problem given the 737 MAX issues and the 787 Dreamliner delays.
But I’m pretty certain that none of these issues are why Ryanair just canceled its 737 MAX 10 order. I don’t think Boeing’s pricing is even the issue for Ryanair.
During the same announcement where O’Leary bemoaned Boeing’s pricing, he also said that Ryanair had “more than sufficient order pipeline” to meet its growth plans for the next five years.
So, here’s a question: Why would you buy more planes if you already have enough for your growth plans for the next five years? Throw in COVID-19 uncertainty over the short term, and … you have your answer: There’s no reason for Ryanair to buy more planes.
Sure, Ryanair would love to pick up a couple planes here or there … if the price is right. But it already has its needs met for the next half-decade.
What I believe Ryanair is really saying here is that it won’t grow enough to use or need those extra Boeing 737 MAX 10s. It just doesn’t want to come out and tell investors that directly. Telling investors that you won’t grow enough is bad news bears — even if it’s to tell investors you thought about buying more planes but decided you didn’t need them.
So, why not blame Boeing’s pricing? After all, Boeing is everyone’s whipping boy lately. Who’d notice that you’re not growing fast enough to need the planes you thought you needed?
It’s the perfect smokescreen for Ryanair.
So, fear not Great Stuff Picks readers. Boeing will be just fine. Remember, we’re in this one for the long haul. Boeing is a blue chip. It will gain more ground.
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Good: I SPOT A Bull Rally?
Don’t call it a comeback, but remember when I said Spotify (NYSE: SPOT) might’ve finally caught a break with investors? When the sheer exuberance of a billion-dollar share buyback sent SPOT shares up 5%?
Well, at long last … a whole two weeks later … analysts on the Street are coming around to the music-streaming stock. SPOT is up 4% today because Keybanc analysts Justin Patterson and Sergio Segura upgraded the stock from sector weight to overweight, since suddenly they think Spotify’s business “is in a stronger position.”
Wow, it took two of you to come up with that?
Keybanc also backed up its equivalent of a buy rating by pointing out Spotify’s improving user growth, which is a valid point. As much as I’ve complained about Spotify and its constantly changing and boneheaded user interface … it’s really the only game in town for music streaming.
Apple Music has its walled garden that Android users typically couldn’t care less about, and YouTube Music gets some subs on both sides of the mobile OS aisle. But Spotify gets them all … no matter how bad its app-building is.
I agree with Keybanc’s thoughts on user growth, and this is usually the part of the Spotify conversation where I remind you that the company has yet to turn that user growth into substantial earnings growth.
But in a surprising turn of events, let’s forget all of that fundamental nonsense and get technical. I know, math after a long weekend? It’s inhumane — torture!
But is now the right time to buy SPOT stock, like Keybanc recommends? After the stock’s 25% rally off of those share buybacks? I mean, jeez, even Spotify timed that buy better, Keybanc…
SPOT shares just broke out of a downtrend of lower highs and lower lows and are now heading toward resistance at $270. What this sets up is another short-term peak for SPOT. So, while analysts might be right about Spotify’s sub growth, which will be good for the company … right now is far from the best time to buy in.
If you were bullish on SPOT, I’d wait until it pulls back to $250, see if buying support is really there after all … and then look to buy in.
Better: I Got Bugs … Bugs In My Room
Spotify isn’t the only stock jumping higher on that ever-elusive analyst attention. No, today’s other top dog on the Street is pest-control expert Terminix Global (NYSE: TMX). If you couldn’t tell, this week is starting sloooow.
This might be the first time we’ve talked about Terminix in Great Stuff — frankly, what is there to say? It kills bugs. That’s it. And I try and avoid thinking about the creepy crawlies myself until I’m called to the domestic front line for bug or spider duty.
BofA Securities Analyst Gary Bisbee believes that TMX’s recent 20% post-earnings sell-off makes the stock a buying opportunity. Bisbee double upgraded TMX from underperform to buy and raised his price target from $47 to $49.
TMX is up 7% on the news, and while a double upgrade is all nice and dandy, none of this is what I wanted to talk about today with Terminix. BofA rates Terminix higher as a turnaround play, which is fine … but what if there was a more interesting angle to investing in Terminix?
Surprise: It’s climate change.
Hotter temperatures mean more bugs … in your house. And personally, I’m a bit tired of being the resident exterminator. (Shout-out to my palmetto-bug-killing Great Ones out there — everybody’s a gangster until the roach flies at your face.)
Terminix will face increasing demand as bug problems get worse. You can try to DIY pretty much every other home improvement or repair situation … but pest control? Leave it to the brave and willing.
You don’t have to be an ultra-prepper, getting your bunker ready, to start thinking about climate change plays. I’m sorry we had to get all apocalyptic today, but what are you gonna do. Some say the only things left after the world ends will be the roaches and Ozzy running Terminix. Whether Keith Richards is on Ozzy’s side or the roaches’ side remains to be seen.
So, short of snatching up property around the Great Lakes, what else can you do to keep making bank as the Earth burns to a crisp? Buy pest control stocks, apparently. At least we’re not getting into water futures … or pulling a Nestlé.
Best: Love Is All You Need
Once upon a time — way back in the olden days before the internet took over everything — you actually had to leave your house and participate in the real world to date someone outside of your immediate social circle. Oh, the horror!
Sure, dating wasn’t all chance romantic encounters in bookstores and coffee shops like ‘90s rom-coms would have you believe … but there was a certain je ne sais quoi in not knowing when Cupid’s arrow might strike.
But now, thanks to online dating companies like Match Group (Nasdaq: MTCH), you can find your future life partner from the comfort of your own home … or at least someone to go see the new Spider-Man: No Way Home movie with. (Seriously, this movie looks amazing!)
For all you Great Ones blissfully avoiding the online dating scene, Match Group is the parent company of dating pioneer Match.com. But the brand has grown to include popular dating apps Tinder, Hinge, Plenty of Fish and OkCupid, among others.
Investors of Match Group were feeling the love this morning after the company’s stock rose 7% following news that Match will be added to the S&P 500 Index on September 20.
Apparently, the COVID-19 pandemic was particularly kind to Match Group, as the dating conglomerate saw a surge of new users while people were stuck in lockdown. And here we’ve all been whining about the ongoing chip shortage — love is in the air, Great Ones!
But won’t Match’s business slow down now that people can go outside again, Mr. Great Stuff?
Not according to Match Group. In fact, the company expects business to boom now that people can go outside and meet their matches at bars and restaurants again. And here I thought love was dead.
What about you, Great Ones? Have you ever used an online dating app? Or do you prefer to do things old school and meet potential beaus out in the wild? Let us know at GreatStuffToday@BanyanHill.com.
Nvidia (Nasdaq: NVDA) is this close to becoming a fully ARMed and operational battle station. This close, I tell you.
But NVDA investors (that’s all y’all Great Stuff Picks readers, mind you) know that the company’s mission to buy out chip designer ARM looks less and less like the Death Star we wanted … and more like the remnants of Alderaan.
Last we checked in on the chipmaking couple, it was up against a battery of regulatory scrutiny in the U.K. Yes, it’s been literally a year since Nvidia first entered the antitrust limelight … and we didn’t even get to the EU’s approval yet.
So, how’s that U.K. approval going? To shreds, you say?
Approval in the U.K. has been anarchy (I wanna beeeeEEE). The U.K.’s Competition and Markets Authority — aka the CMA, a regulatory watchdog — isn’t keen on passing the buyout. Or, as one person with direct knowledge of the deal puts it:
And here I thought the deal was already down to the wire. Clearly, Nvidia’s “18-month timeline” ain’t happening. Especially not with fresh fury now brewing among European regulators.
And the EU approval … oh, to shreds, you say.
Yeah … Nvidia is filing for approval in the EU this week, but it looks as dubious as the U.K. hassle, unfortunately. According to one unnamed EU official:
The EU filing is the only “new” news here: If you’ve held NVDA this long, you’ve heard the same doubtful spiel before.
Antitrust critics still think that Nvidia will cut off licensees’ access to ARM’s chip tech once the deal is signed, sealed and delivered — essentially making Nvidia “uncompete-able,” if you will, and screwing over the many other chipmakers and tech companies that use ARM’s chip designs.
For its part, Nvidia denied that it would ever do such a malicious, monopolistic thing — the nerve of you to assume that!
But now there are two regular unknowns hanging over Nvidia’s head today: the U.K. and the EU regulators. And you know how much Wall Street loves unknown variables, antitrust issues and the ensuing uncertainty…
Anyway … the good news, Great Ones, is that we know Nvidia’s chipmaking prowess is strong enough to keep driving solid earnings without the extra ARM. Should the buyout get struck down by the EU or U.K., Nvidia would keep chugging along as it was before … just not as dominantly.
With how much Wall Street hates uncertainty, the biggest risk for NVDA investors might not be whether the deal is blocked … but how long the regulatory thumb-twiddling rhetoric drags on.
We’ll keep you looped into the NVDA situation, Great Ones. And while we’re at it, you should keep me in the loop of all the greatness happening in your own portfolio.
Got any new trades in your sights this week? Or any burning investing questions you want answered? Don’t be a stranger, now — write to us whenever the market muse calls to you!
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Until next time, stay Great!
Joseph Hargett
Editor, Great Stuff
