Born to Run
In the day, we sweat it out on Wall Street. It’s a runaway American dream.
At night, we’re locked in mansions of glory, no more suicide machines.
But all that might be about to change…
Sprung from Phase 3 on highway nine, Moderna’s new injection is stepping out over the line. (Woah!)
Baby, this pandemic rips the bones from your back. It’s a yield trap. It’s an investing rap.
We gotta get in while the rally’s young. ‘Cause traders like us, baby, we were born to run!
I hope you’re ready to run, Great Ones, ’cause Moderna Inc.’s (Nasdaq: MRNA) latest vaccine news has Wall Street in a tizzy. Now, you might think: “We already have Pfizer’s vaccine; what do we need Moderna for?”
Good question! I’m glad you asked.
First, Moderna’s COVID-19 vaccine has an efficacy rating of 94.5%. In other words, nearly 95% of patients who received the vaccine showed a strong immune response. We may be splitting hairs at this point, but that’s up from 90% for Pfizer Inc.’s (NYSE: PFE) vaccine.
Both vaccines are well above the hoped-for efficacy rating of 75% needed to bring about herd immunity.
Second — and this is the biggie — Moderna’s vaccine can be stored at temperatures between 36 degrees Fahrenheit and 46 degrees. That’s the average temperature of a standard medical refrigerator. Heck, it’s the standard temp for my refrigerator.
Why’s temperature such a big deal?
Because, Pfizer’s vaccine needs to be stored at minus 94 degrees. That’s flippin’ cold. It’d take special freezers just to transport and store the vaccine. That’s quite the distribution logistics problem for everyone involved.
Moderna’s temperature breakthrough means that its vaccine can see easier and wider distribution. That fact wasn’t lost in Wall Street’s trading pits today.
The Dow flirted with 30K. The S&P 500 was up more than 1%. Heck, even the lagging Nasdaq was in rally mode. The real winners on the day, however, were small caps. The Russell 2000 led the way with a gain of roughly 2% following Moderna’s vaccine news.
Great Stuff Note: If you read our interview with Banyan Hill guru Ian King, you know that small caps are poised to lead the next market surge. Click here to find out how to take advantage of this budding small-cap rally … before it’s too late.
Together, Great Ones, we can get through this sadness, and I’ll help you with all the madness in my soul. (Woah!)
We have a bit of time before the vaccine truly puts this pandemic in its place. But someday, Great Ones, I don’t know when, we’re gonna get to that place where we really wanna go. And then we’ll walk in the sun.
Because traders like us, baby, we were born to run!
Good: Nio Unlimited
Those are the words of the infamous short-selling hedge fund Citron Research. Clearly, Citron doesn’t think Nio Inc. (NYSE: NIO) is the one. I didn’t either until I talked with Morpheus. But that’s a different movie altogether…
In addition to the harsh words, the hedge fund also set a price target of $25 on NIO — about 48% below Friday’s close.
It’s true: I remain a bit skeptical of Nio myself. But it’s not Citron’s doubt that makes me question the company’s stance on NIO — it’s the hedge fund’s reasoning.
According to Citron, Tesla Inc. (Nasdaq: TSLA) will cut the price of its Model Y … and that’s a threat to Nio’s ES6 hatchback. For comparison, ES6 prices range from $54,350 to $82,000 in China. Tesla’s website lists the Chinese Model Y at $73,895.
Citron is right on one thing: Tesla could cut the Model Y price to be more competitive with the Nio ES6. But Citron is dead wrong if it thinks that Nio doesn’t have the leverage to cut prices as well. The company is government-backed, after all … and Tesla is not.
Advantage Nio.
Furthermore, price isn’t all that matters to Chinese consumers. While American consumers will often opt for the lower price when faced with equivalent products, Chinese consumers are fiercely loyal to national brands.
Advantage Nio.
So, if a price war is all Citron has, it’s pretty weak sauce. If you wanted a buying opportunity on NIO, this may be your chance.
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Better: Take It Easy
Uber Technologies Inc. (NYSE: UBER) is runnin’ down the road tryin’ to loosen its load. It’s got $7.25 billion on its mind.
The Eagles? Nobody likes the Eagles.
Well, I tried…
According to an article over on TechCrunch, Uber is in talks to sell Uber Advanced Technologies Group (ATG) — the division responsible for Uber’s self-driving vehicle technology.
The interested party? Privately held Aurora Innovation — an autonomous vehicle startup founded by three artificial intelligence veterans who used to work for Google, Tesla and Uber.
Uber and Aurora have reportedly been in talks since October, and a deal is supposedly near. Uber ATG was valued at $7.25 billion last year when it received $1 billion in funding from Toyota, DENSO and SoftBank.
The news is good for short-term UBER investors, and the stock responded by jumping more than 4% on the news. The move will allow Uber to focus on its ride-hailing and food delivery businesses, for sure.
However, I think Uber is taking it too easy. As more states and countries pass worker protection laws, driverless taxis are really the only way forward for profitable ride hailing.
By selling off Uber ATG, the company gives up on that future and sells the only interesting (and potentially profitable) part of the company. Sure, this would be good for UBER investors over the short term, but I think we’ll find out that Uber is cutting off its nose to spite its face here.
Best: Oh, Susquehanna
We’re still in the thick of earnings season — more in a sec — but that didn’t stop the brokerage bunch from naming their favorites … even ahead of quarterly reports.
Susquehanna joined the fray this morning, lifting its price target from $560 to $610 on Nvidia Corp. (Nasdaq: NVDA) just two days ahead of the company’s third-quarter report.
I’d typically go with a quote from the research note here, but it’s filled with stuff like “near-term supply disruption” and “multi-dimensional growth stories” and yada yada yada… You get the picture.
The gist is that Susquehanna realizes that there could be issues with supply lines and production for a bit. Global pandemic much? But, the firm believes that once this passes in 2021, Nvidia is poised to excel on all fronts well into the future.
As for Nvidia’s quarterly report, analysts expect a profit of $2.57 per share on revenue of $4.41 billion. EarningsWhispers.com puts Nvidia’s whisper number at $2.70 per share. As you can see, expectations are running kinda high heading into Wednesday’s report.
NVDA is already up more than 125% in 2020, so I wouldn’t be surprised to see a little profit-taking even with a strong quarterly report. Should that happen, it’d be an excellent buying opportunity for any of you looking to add NVDA to your portfolio.
Now, for the rest of the week in earnings land…
It’s time to check in with our pals at Earnings Whispers on Twitter for the latest Chart of the Week.
In contrast to past weeks’ tech blowouts, retail runs this week — along with a smattering of Chinese tech stocks and e-commerce platforms. The semiconductor sector’s big cheese stands alone: Nvidia. But take a look below at what other stocks report this week:
Across the board, this week’s earnings might be our best insights at how the American consumer stands today. (Well … over the last three months, at least, but you get the gist.)
These reports are where we’ll see other pandemic indicators — trends changing amid the new-lockdown climes. With winter ahead and case counts soaring, did people ramp up their stockpiling like back in March?
Are people buying more? Less? Better still, what exactly are people buying — bulk supplies and food staples en masse or random impulse crapola?
In the center ring to answer these and other questions … Target Corp. (NYSE: TGT) faces off against Walmart Inc. (NYSE: WMT) in the battle for the weekly shop. Their reports will flesh out one side of the consumer confidence picture, while both TJX Cos. Inc. (NYSE: TJX) and Ross Stores Inc. (Nasdaq: ROST) are in the discount-shopping limelight.
Discounters like T.J. Maxx and Ross usually thrive in economic downturns and other times when cash-strapped consumers look for savings. Meanwhile, true bargain hunters and preppers alike might’ve favored buying bulk at BJ’s Wholesale Club (NYSE: BJ) this quarter, and we’ll find out if that’s the cases in Thursday’s report.
Kohl’s Corp. (NYSE: KSS) fits in the retail roundup too, to an extent — mostly just proving its existence as usual. Ditto for Macy’s Inc. (NYSE: M).
Then, there’s the home improvement side of retail, with Home Depot Inc. (NYSE: HD) and Lowe’s Cos. Inc. (NYSE: LOW) in the spotlight.
Last earnings season, everyone and their contractor hit up the dueling DIY duo, as the stuck-at-home market spruced up their digs … or started a handful of unnecessary projects just to feel an iota of productivity.
Advance Auto Parts Inc. (NYSE: AAP), which also defied analyst expectations during last quarter’s DIY ditty, already released beat-em-up earnings last week. We’re looking at Lowe’s and Home Depot to see if their quarters continued the trend as well.
As far as non-retail offerings go, this week is scatterbrained: Nio and Canadian Solar Inc. (Nasdaq: CSIQ) have the new energy front somewhat covered. And just as I noted above, Nio will have more attention on its earnings report than in any quarter before.
I’m also looking out for anything interesting (understatement, I know) from Aramark (NYSE: ARMK). If you want to hear about pandemic-influenced changes in food service, Aramark is your eyes and ears in nearly every type of public place, facility and venue you can think of.
Stay sharp as you read these reports, and keep your stock-sleuthing wits about you.
We’re still looking for year-over-year growth in each and every one of these reports, but the market will be satiated by any and all growth. And the yearly comparisons will only increase as we gatecrash deeper into the holiday season.
Great Stuff: Wait … It’s Almost Thanksgiving?
You bet — and we here at Great Stuff headquarters already started talking about what we’re extra great-ful for this year. Sappy as it sounds, it starts with you.
From your many messages, heartfelt wishes, trading stories, eager questions and sometimes-unwholesome rants, we appreciate each one of you who have shares your ‘Stuff with us this year. But that’s no reason to stop now!
Another week, another edition of Reader Feedback beckons before us (this Thursday, in case you didn’t know). And we’d love to feature your email in this week’s issue.
Share what’s on your mind with GreatStuffToday@BanyanHill.com night or day. We’ll be back tomorrow, so check us out on social media for now: Facebook, Instagram and Twitter.
Until next time, stay Great!
Joseph Hargett
Editor, Great Stuff
