Forget FOMO, Plug’s Full Power and DraftKing’s Gambit
Forget FOMO, Don’t Get FOGK’d
Dedicate one to the interest rate hawks…
Now interest rates are here, babe, need somethin’ to keep you cool.
Ah now, interest rates are here, babe, need somethin’ to keep you cool.
Better look out now ‘cause Joe’s got something for you. I’ll tell you what it is…
I’m your Great Stuff man, stop me when I’m passin’ by. Oh, my my…
Are all your flavors guaranteed to satisfy? And what’s this about interest rates and that weird headline? Did I miss a Fed thing?
Ain’t talking ‘bout the Fed. (The Fed is rotten to the core.) You didn’t miss anything from the Fed. No, we’re talking ‘bout Treasurys. (Just like I told you before.)
You see, the market has seen higher volatility lately due to rising yields on Treasurys, i.e., bonds … government debt … you know the drill.
When Treasury yields rise, two things happen: Investors are tempted by nonvolatile guaranteed returns, and companies with minimal cash flow see their stocks fall.
The first point is a no-brainer. Guaranteed nonvolatile returns in the Treasury market are always tempting, and they become more so when yields rise. Since the year began, the 10-year Treasury yield has surged from 0.93% to 1.54%. Not excellent, but not too shabby either.
The second point is a bit more concerning. For the past — what, decade? — Wall Street has faced FOMO, or fear of missing out. Low interest rates and easy money put corporate spending concerns on the back burner.
It led to a boom in speculative growth plays, IPOs and SPACs and cloud-everything. With low rates, startups could borrow and spend without much concern about lending costs eating away at the bottom line.
This year’s surge in Treasury yields, however, was a bit of a wake-up call. It’s why the tech-laden Nasdaq Composite dropped more than 7% in the past two weeks. It also prompted Baird technology strategist Ted Mortonson to coin my favorite term of 2021 so far: FOGK, or fear of getting killed.
Just like the headline says, Wall Street is in the process of shifting from FOMO to FOGK.
So, what’s an investor to do to combat the specter of rising interest rates? How do we get the FOGK out of your portfolios?
Well, I’m your Great Stuff man; just stop me when I’m passin’ by. The thing to do here is to be careful with all those high-flying cloud and speculative tech stocks like Zoom, DoorDash and Airbnb right now.
Focus on the Microsofts, HPs and Microns — those long-term tech giants with solid cash flow and steady revenue growth. You know the value plays I talked about heading into 2021?
They’re the investments that should help you weather any market turmoil, especially FOGK.
But that’s not all. If you let me cool you one time, you’ll be my regular stop. I’ve got interest rate advice from Ted Bauman — “Interest Rate Fears” — dixie cups. All flavors and push-ups, too.
They say all my flavors are guaranteed to satisfy. I don’t know about “guaranteed,” but I can give you exciting and potentially profitable alternatives to FOMO and FOGK.
By now, I hope you’ve seen Ted Bauman’s Profit Switch Summit (and if you haven’t, go here now while you can). After 18 months of hard work, my colleague Ted Bauman finally unveiled the greatest breakthrough of his career — the Profit Switch.
And since Ted is an expert economist, well versed in topics such as interest rates and Treasurys, you know he’s got you FOGK’ing covered.
He’ll walk you through the Profit Switch strategy, step by step, so you can see how he’s crushing the market. He’s found some top gains like 150% on EXPI in three and a half months … 110% on half a position in ROKU in three months … 92% in SQ in four and a half months.
Now find out how this breakthrough could help you uncover an average of one winning trade each week — or even better! Click here to learn more and kiss FOGK goodbye.
Good: Coster? I Barely Know Her…
Well, I hope you Great Ones took advantage of that dip — whether you already owned PLUG or not — because the stock is up more than 18% since. And there are more gains to come, according to JPMorgan Analyst Paul Coster.
This morning, Coster reiterated his $65 price target and upgraded PLUG to overweight. He also noted that Plug is “attractively priced” and has many “long-term growth opportunities.” One specific catalyst mentioned in Coster’s research note was the potential for a new “pedestal” customer arriving in May.
Last week, Plug CEO Andrew March hinted that the company will roll out its first large-scale backup deployment with “one of the largest data center customers.”
We’ll have to wait to see just who this customer is, but any truly big-name data center company could give Plug quite a sentiment boost for investors and raise the company’s credibility in the green energy market massively.
And you thought PLUG’s rally was over … pshaw!
Better: Pure NRG
It’s snowing down in Texas. All of the power lines are down. I said it snowed down in Texas. All of the power lines are down. I’m tryin’ to call my broker. Lord, I can’t get a single sound.
Well, dark clouds are rollin’. But NRG Energy (NYSE: NRG) isn’t standing out in the cold … at least not according to the company’s full-year report. For 2020, NRG banked revenue of $9.1 billion with earnings of $2.07 per share.
The results were down year over year but above the consensus estimate … which is nice.
But the real story is the Texas snowstorm’s impact (or lack thereof) on NRG’s guidance. The company said that “Winter Storm Uri’s financial impact is expected to be within NRG’s current guidance range.”
That range? Earnings of $2.5 billion in 2021, about $100K above the consensus target. In other words, Wall Street anticipated that the Texas winter storm would drive poor investors insane.
That isn’t the case, and now investors don’t have to go back home to stay.
On a final note, while NRG’s energy portfolio is clearly dominated by old-world energy sources, the company is moving into renewables. What’s more, its natural gas operations could be a potential way into the hydrogen market, which could supplement its growing nuclear and solar operations.
If you’re not ready to fully devote your portfolio to green energy, NRG Energy could be a nice transitional investment. For everything else, there’s Mastercard — er, the master of batteries, I mean.
Imagine a “superbattery” that charges in eight minutes (not hours), lasts 9,200 miles between charges and has a lifespan of 12 MILLION miles. It’s not fiction: This technology already exists, and it’s rolling out to manufacturers at this moment.
The one company behind it is on the cusp of a potential 20,300% market surge over the next decade. Click here to learn the full story.
Best: You Better You Bet
I call you on the telephone, my voice too rough from sporting bets…
DraftKings (Nasdaq: DKNG) continues our earnings chat with a double-beat big enough to make it today’s “Best.”
The sports betting company posted a per-share loss of $0.24, which still beat expectations for a loss of $0.42 per share. Revenue also blew away expectations, growing to $322 million for the quarter and beating estimates for $235 million.
But, like with any good digital platform, we need to forget about revenue for a sec — the nerve, I know — because it’s all about subscriber counts. DraftKing’s monthly unique users erupted like Van Halen in ’78, jumpin’ 44% on the quarter.
I knew sports betting was popular but not this popular — even with many of my fellow degenerate gamblers taking up the Robinhood reigns amid the pandemic. Honestly, I reckon betting on the Super Bowl felt a lot safer with the GME debacle top of mind…
Yet DKNG’s hoopla hasn’t waned since the company gained SPAC superstardom last year, but nothing’s boosted the stock as much as bang-up earnings (and marketing costs out the wazoo). The only hitch I see for any of you in DKNG right now is the caveat the company added to its otherwise stellar guidance.
Even though DraftKings bumped up its fiscal 2021 guidance by a few hundred million dollars, this projection “assumes that all announced professional and college sports calendars go forward as planned.”
That’s a big “if” in the COVID-19 clime, but rising optimism about vax rollouts and reopenings pushes bullishness on DKNG even higher.
A most merry Monday to you all, Great Ones!
Welcome back to the earnings corner, where it’s another busy week in the revolving door of financial expectations. The March madness starts much like February ended: a smattering of recognizable consumer names and a smorgasbord of industry leaders.
Take a look below, courtesy of Earnings Whispers on Twitter:
Off the bat come the early pandemic-market faves: Zoom Video Communications’ (Nasdaq: ZM) report will be in the books by the time you’re reading this, followed tomorrow by cloud storage company Box (NYSE: BOX).
For this pair, remember our key phrase this earnings season, say it with me: Corporate! Subscription! Revenue!
That’s the secret sauce for every one of these cloud-based techies reporting this week, and especially so for Splunk (Nasdaq: SPLK), the data company’s data company, sorting through data like an oil refinery refines … oil.
Splunk targets big-name corporate clientele — the same kind that might reduce such spending during a pandemic.
Similar in its corporate dependency, there’s also Slack Technologies (NYSE: WORK) on Thursday, which is still entering the earnings confessional solo until its merger with Salesforce (NYSE: CRM) finalizes.
Salesforce just disappointed the Street last week with poor guidance, so any of you following this buyout deal (aka, the Slackquisition) might want to watch Slack for some growth hope.
In the supermarket space, Target (NYSE: TGT) joins Wally World’s (NYSE: WMT) recent ho-hum earnings romp to give further insight on the common consumer’s health. But it’s really the mega-shop matchup that I’m waiting for: BJ’s Wholesale Club (NYSE: BJ) versus Costco (Nasdaq: COST).
Like Zoom, the big box bunch got an early lead in the pandemic market (you know … the TP stampedes), but then COVID-19 costs caught up. That said, the retail oddball I’m most focused on is AutoZone (NYSE: ZON), which has, in fact, been in the zone all pandemic long.
Like its DIY brethren Lowe’s and Home Depot, I expect one of two scenarios for AutoZone’s earnings. The first is what the ZON posted earlier in the pandemic: extraordinary growth from everyone looking to save a buck and take care of simple car stuff at home.
Scenario two is where said home-stuck people are saying: “Screw replacing that thingamajig; I’m not driving anywhere anyway…”
That said, why don’t you let me know what you’re watching this week?
GreatStuffToday@BanyanHill.com. Drop us a line anywhere, anytime with your earnings thoughts and any burning questions on your mind.
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Until next time, stay Great!
Editor, Great Stuff