Wall Street’s Hope Injection; Plug’s Power; McFaceplant
The Hope Inoculum
Positive vaccine results and a president-elect? Take that stock market uncertainty!
Great Ones, we just took two large steps forward in weeding out market volatility.
As you all probably already know, the major U.S. broadcasting networks dubbed Joe Biden president-elect over the weekend. Clearly, this is an unofficial declaration, as there are still some i’s to dot, some t’s to cross and a few legal challenges still in the works.
While Biden may not be your cup of tea — he doesn’t exactly float my boat either — the unofficial end to election season had a calming effect on Wall Street. And that’s good for all of us as investors.
But that wasn’t even the biggest news of the day. No sir! What does it say about 2020 that a new U.S. president isn’t the biggest news?
Pfizer Inc. (NYSE: PFE) and BioNTech SE (Nasdaq: BNTX) announced today that their COVID-19 vaccine was more than 90% effective in Phase 3 trials. 90%!
Let’s put that in perspective. Many scientists hoped for 75% effectiveness. Dr. Anthony Fauci said that 50% to 60% effectiveness is acceptable. But Pfizer’s vaccine is 90% effective according to trial data.
Pfizer and BioNTech said that the results marked “a great day for science and humanity.”
Not to be crass, but it was a great day for your portfolio as well. The markets went gangbusters. Travel stocks rallied massively. I mean, Norwegian Cruise Line (NYSE: NCLH) surged more than 25% and Carnival Corp. (NYSE: CCL) spiked 37%!
Can you say “counting your vaccines before they hatch?”
Solar and cannabis stocks also made massive moves on the day. First Solar Inc. (Nasdaq: FLSR) and Tilray Inc. (Nasdaq: TLRY) gained considerable ground on hopes that President-elect Joe Biden will be favorable to both pot and alternative-energy policies.
But not everything was green: The so-called work-from-home stocks took a real beating. For instance, Zoom Video Communications Inc. (Nasdaq: ZM) plummeted more than 16% — as if everyone will suddenly walk right back into the office after the vaccine rolls out.
There are two major takeaways from today’s news: Start looking for alternative energy and pot stocks to invest in, and start snapping up oversold work-from-home stocks.
Pfizer’s vaccine news offers plenty of hope, but it isn’t here yet. Even when it does arrive, COVID-19 won’t just magically disappear … and neither will the new work-from-home movement. Go ahead … try to convince companies to stop saving costs, and tell happy homebound employees to shuffle back into the beige boardroom bedlam.
The work-from-home seal is broken, and this movement wouldn’t die even if COVID-19 vanished tomorrow. So, keep a close eye on stocks like ZM. They’ll be back. For all your other market-rebounding needs … I have just two words: small caps.
The tiny tech market trounced all today, with the Russell 2000 (aka the small-cap index) up 5.2% versus 4% for the Dow and 2.7% for the S&P 500.
And big tech? Why, the Nasdaq only rose a paltry 1%. Small caps own today’s rebound — and small-cap tech stocks will dominate in the new year. Some of their market caps are as small as $100 million, giving them a lot of room to run.
But you can’t miss out on the small-cap shuffle any longer.
McDonald’s spends millions on research, development, marketing … the works. And the best it came up with is McPlant? Was “McGenericName” taken? Did they ask Led Zeppelin frontman Robert McPlant if he was OK with this name?
McPlant sounds like a street name for a fast-food industry spy.
Jenkins? We had to let him go from Burgers “R” Us — he was a McPlant trying to steal our secret sauce.
I’m McDisappointed. I’m McUnderwhelmed. But then, I’m not McDonald’s McDemographic either.
And apparently, the chain’s doing really well with its core customer base. The fast-food giant reported third-quarter earnings of $2.22 per share on revenue of $5.42 billion. Both figures beat Wall Street’s expectations by a wide margin, driven by strong drive-through sales.
MCD shares started out the day up more than 3%, but gains slipped away after the McPlant announcement. I guess investors would rather see McDonald’s continue its tie-up with Beyond Meat Inc. (Nasdaq: BYND)?
I know BYND investors would’ve liked that. BYND shares dropped nearly 9% on the McPlant news.
Better: Cannabis Growth
The cannabis comeback is on! It’s time to start snapping up pot stocks once again … and it’s not just because the incoming administration favors decriminalization … or that four states just legalized recreational use, either.
One look at Canopy Growth Corp.’s (NYSE: CGC) quarterly report shows that Mary Jane usage is on the rise again. The world’s largest pot producer just reported a narrower-than-expected loss of C$0.09 per share, versus expectations for a loss of C$0.37 per share.
Furthermore, revenue smoked analyst predictions, rising 77% to C$135.3 million.
Remember, this growth was almost solely driven by Canadian pot customers. Canopy still eyes the U.S. market like a 3 a.m. munchie run that’s just out of reach … for now. Should the Biden Administration push through decriminalization, legalization or banking reforms, Canopy will be ready to pounce.
We’re still a bit early in the game for a U.S. cannabis sales boom, but CGC could position your portfolio nicely ahead of any developments.
Best: Plug It in, Plug It in!
Hey Great Stuff Picks readers! How do you like that 40% gain on Plug Power Inc. (Nasdaq: PLUG)?
I recommended buying PLUG back on October 23, and it’s been all upside since. Today is particularly special, with better-than-expected earnings vaulting PLUG more than 12% higher.
- Earnings per share: Loss of $0.04 versus an expected loss of $0.07.
- Revenue: $106.99 million versus expectations for $105.76 million.
But the good times don’t stop there. Plug lifted its full-year guidance, updated its 2021 guidance and issued expectations for 2024. The highlights include gross billing of $450 million for 2021 and gross billing of $1.2 billion for 2024.
That’s some impressive growth! And, since you already bought into PLUG, it sets you up nicely to benefit from the coming shift toward renewable and green energy.
If you didn’t get in on PLUG’s rally, you haven’t missed it all: Just wait for today’s enthusiasm to die down a bit. Look for consolidation into the $20 region. Any pullback to this area or below could be your chance to join Great Stuff Picks readers in the future of alternative energy.
PLUG and Mickey-D’s aren’t the only earnings excitement hitting the wires this week — we still have loads of quarterly reports on tap and ready to pour up.
When you look at today’s chart, you’ll notice it’s the same deal as last week: Lots of recognizable names here, but just as many lesser-known industry-specific snapshots to take a peek at … if you know where to look.
Let’s dig in:
Of course, longtime Great Stuff Picks fans will get updates on a few of our holdings: the semiconductor specialist Applied Materials Inc. (Nasdaq: AMAT), which has some exposure to the solar sector, and web-builder WIX.com Ltd. (Nasdaq: WIX), up about 19% and 75% respectively.
Unless anything outlandish happens with either company’s report, keep holding!
Otherwise, it’s on to the big-name headline stocks. Lyft Inc. (Nasdaq: LYFT) is fresh off a win in the California vote for gig economy workers, but how well the ride-hailer has held up in the changing COVID-19 clime — and if it’s prepared to last through a pandemic winter.
Though we’ve long since sold the bugger, you bet I’ll still watch for Nikola Corp.’s (Nasdaq: NKLA) report post-Trevor Milton … though the stock didn’t get a bump with the rest of the alt energy market today.
Vaccine buzz aside, reports from Norwegian Cruise Line today will see how long the company’s cash runway stretches, while I expect Walt Disney Co. (NYSE: DIS) to report serious Disney+ growth to add on to its run-up from today’s travel stock tango.
Earlier in the pandemic, we saw a boom in DIY-suppliers like Home Depot and Lowe’s. But not lost upon the locked-down market was Advance Auto Parts Inc. (NYSE: AAP), which beat both revenue and earnings expectations in August.
This week, we’re watching if Advance continues its trend or stalls out in the driveway. (Oil changes at home, people — you’ll never go back!) And in other hobbyist circles lands Corsair Gaming Inc. (Nasdaq: CRSR), purveyor of PC accessories and parts for DIY computer builders.
If you missed out on Logitech International’s (Nasdaq: LOGI) boon as everyone snatched up mice, keyboards and webcams to work from home, recent IPO Corsair could be one to watch for both the PC enthusiast and the “yes boss, I’m totally working right now…” crowd.
Last but not least come a flock of new-ish, growing businesses with vague titles that don’t tell you what the company even does. This week will also see reports from:
Revolve Group Inc. (NYSE: RVLV), which is an online shop for designer clothes, accessories and everything that’s video-call chic (or so I hear). Lemonade Inc. (NYSE: LMND) — think “insurance,” but now through an app with much less human contact! Groovy.
Purple Innovation Inc. (Nasdaq: PRPL) — a bed, pillow and blanket company trying to power through the sleepy sector’s competition with Casper, Sleep Number and that one guy from MyPillow. The Purple secret? Gel grids.
Gel grids, Mr. Great Stuff?
Gel. Grids. As to whether or not Purple power can propel another profitable quarter of earnings remains to be seen.
And finally, if you feel confident about the wintertime turnout for restaurants and other small businesses — especially with how often I keep hearing “winter won’t be bad, bro, we’ve got heaters, duh” — have a go at Suburban Propane Partners (NYSE: SPH) if it lights your fire.
Because nothing keeps you warm like propane, propane accessories and speculative seasonal gains.
With Great Stuff Comes Great Responsibility
Welcome to a whole new week, Great Ones!
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Until next time, stay Great!
Editor, Great Stuff