Fed Pirate Booty; Tesla’s Battery Beauty; (Sub)Urban Outfitters
A Trader Looks at 40-Something
Mother, mother market. I have heard you call. Wanted to trade upon your waters since I was three feet tall.
You’ve seen it all.
You’ve seen it all.
I’m feeling a bit sentimental today, dear reader. By the end of the week, I’ll have completed another revolution around the sun. In the grand scheme of things, it’s not all that much.
Quite a few of you probably scoffed at the “40-something” in the header up there. Well, bully for you. This is the oldest I’ve ever been.
Ah, that explains the cheesy Jimmy Buffett lyrics!
Now, before the “I’m not your freaking pen pal” crowd gets too irate, I do have some investment knowledge to drop today. While I’m looking at the backside of 40-something, there’s one thing that every good pirate knows … especially Wall Street pirates.
That’s the golden rule. He who has the gold rules.
Gold prices fell from their early August highs north of $2,000. We have vaccine wishes and stimulus dreams to thank for that one.
However, there is a catalyst this week that may send gold prices soaring once again. I’m talking about that little Federal Reserve economic summit in Jackson Hole, Wyoming. (Jackson Hole? No comment.)
Fed Chairman Jerome Powell, the savior of Wall Street, is scheduled to speak on the U.S. economy and the Fed’s approach to monetary policy. Typically, these things are as dry as day-old burnt toast. But this summit could be extra toasty.
Powell is expected to push for his so-called “asymmetric inflation target.”
His asymmetrical what?
Don’t worry about the highfalutin language.
Unless you’re a currency trader or some Wall Street big shot, all you need to know is that the Fed wants to let inflation move in a range surrounding its stated 2% annual target, instead of pegged to a hard number. That means that inflation could rise above that 2% target, and the Fed wouldn’t immediately dive in with adjustments.
This is why you need to be a pirate hunting golden booty. When inflation rises, that’s bullish for gold.
Fawad Razaqzaqa, market analyst at ThinkMarkets, came to the same conclusion. “If I am correct, then yields and the dollar should resume lower, which in turn will likely support gold and silver,” Razaqzaqa wrote.
As you can see it’s time to stop wishing. You’ve got to go fishing, down at gold bottoms again. And I’ve got just the ship to get you sailing.
A rare event is unfolding in the gold markets. Yes, another one. But this one only happens once every 20 to 30 years…
Good: Cannot Stop the Battery
Smashing through the boundaries. Lunacy has found me. Cannot stop the battery!
Jimmy Buffett into Metallica? Talk about whiplash…
While pounding out his aggression — which has turned into obsession — Houchols bumped his price target on TSLA to $2,500 this morning, roughly two months after he lifted it to $1,200.
So, Houchols is excited about Tesla, that much is clear. But it’s more than just the company’s electric vehicles (EVs). In fact, he hopes that Tesla’s edge in cars shrinks. Blasphemy!
According to Houchols, the real market opportunity for Tesla lies in batteries, car software, self-driving capabilities … and more batteries. (Battery!)
“Nothing matters more on Battery Day than understanding how the million-mile batteries could profoundly change the auto business model,” Houchols said in a research note. He believes that batteries are where it’s at for Tesla, especially third-party sales and reused and reconditioned batteries.
Now, I’m still not convinced that TSLA isn’t overvalued right now.
However, Houchols battery case makes a much better argument for justifying the stock’s meteoric rise that those analysts focusing on just the EV angle. I wouldn’t sell Tesla right now, but I also wouldn’t be chasing the shares.
Why? Because we know a better way in on the great battery race, with one powerhouse of energy whipping up a fury. Click here for more!
Better: You’re Welcome
At least, that’s what I’d like to say. Urban’s stores were practically a home away from home for my daughters this summer. I’m literally on a first-name basis with a couple Urban sales reps. Hi Amy! You’re probably not reading this, but “Hi!” anyway.
Anyhoo, let’s look at Urban’s Hargett-family juiced numbers:
- Earnings: $0.35 per share, versus expectations for -$0.40 per share.
- Revenue: $803 million, versus expectations for $672 million.
The company also made headway in digital sales, which saw double-digit growth on the quarter.
However, before we get too excited about another retail success story, Urban Outfitters’ revenue was down 16.5% year over year and same-store sales were down 13% for the same period.
In short, Urban benefits from those lowered expectations we talked about yesterday.
The trend is positive for URBN shares, and if Wall Street’s economic expectations aren’t too off the rails, the stock should continue to move higher … especially if my girls have anything to say about it.
Still, I wouldn’t chase today’s rally. URBN is up more than 20% on the news. Wait for these gains to consolidate if you’re looking to add the stock to your portfolio.
As for existing URBN shareholders: What can I say except “you’re welcome!”
Best: May the Salesforce Be With You
And also with you! Wait…
If you were among those wondering if SalesForce.com Inc. (NYSE: CRM) deserved to be in the Dow Jones Industrial Average … today’s earnings report should make you reconsider those doubts.
This is the Dow component you are looking for. Move along.
Here are the numbers:
- Earnings: $1.44 per share, versus the $0.66 per share expected.
- Revenue: $5 billion, versus $4.9 billion.
Doubling earnings expectations? Nice. But the real fun begins with guidance. Salesforce now expects per-share earnings of $3.72 to $3.74 for the year on revenue in a range of $20.7 billion to $20.8 billion. Both figures were well above Wall Street’s targets.
And if those numbers don’t excite you, maybe this article by Stephen Guilfoyle will. Seriously. You can expect phrases such as “Wowzers” and “Has there ever been a stronger quarter reported?” and “There is so much good in these numbers, I almost do not know where to begin in my enthusiasm.”
Stephen, maybe lay off the spice a bit? Kessel won’t go anywhere.
But Salesforce stock certainly is. CRM made the jump to lightspeed today, surging more than 25% — and that’s after yesterday’s 8% gain on news that it’s joining the Dow.
That said, don’t buy CRM here — it’s frothier than blue milk. Wait for a pullback or some profit-taking and then buy in … if you’re still interested, that is.
If you’re keeping track of the days by our feature section, it’s Wednesday, which brings with it heaping gulps of our sacred bean water.
Oh, and our Poll of the Week as well!
Many of you already wrote in about yesterday’s write-up on TravelCenters of America Inc. (Nasdaq: TA), one of the reigning kings of the full-service truck stop biz. That’s right, it’s not all Tesla and vaccines around here (except when it is).
Every now and then, we like to stray from your run-of-the-mill energy, banking and health care stocks to sail the high market seas, scouting for quote-worthy and portfolio-worthy stories.
That brings us to today’s poll and your vote: Is there a sector that you’d like us to cover more often? Now, we’re keeping this very broad here, you see. Every single one of the sectors below is made up of more subsectors and subindustries than you can shake a milkshake at.
So, if you’ve got another idea, hit us up at GreatStuffToday@banyanhill.com. We’d love to hear from you, day and night.
Click below to answer today’s poll!
By the way, if you need a “bull or bear” gauge on your fellow Great Stuff readers, just check out last week’s poll. We asked if readers are still gunning for gains or prepping for a pullback as the markets reach all-time highs.
We’ve got a divided crowd here, with about 36% of readers taking gains off the table when they can, and the other 64% just letting it all ride out.
What’s your own personal plan? To cash out or not to cash out? Let us know!
Great Stuff: Gold … It’s in the Inbox
Thanks for catching up with us today! I know, we covered a lot of ground today. From can’t-miss gold rushes (seriously, click here!) to rolling with Tesla’s punches, it takes all kinds of greatness to make one issue of Great Stuff for you to read.
But what we like reading most of all is your emails — yes, even yours! Don’t doubt yourself; we’d love to hear from you for tomorrow’s edition of Reader Feedback. You can reach us anytime at GreatStuffToday@banyanhill.com.
Until next time, stay Great!
Editor, Great Stuff