Weekly Roundup: February 21-24, 2023 (Week 8/52)
Market Review:
The stock market was closed on Monday, to recognize President's Day. However, what a downturn and disappointment for the stock market this week. Our economic indicators came in way higher than expected. The battle with inflation may be around a lot longer than anticipated. The consensus, was that the first part of the year would be hikes by The Fed. Then, they would ease on hikes and inflation would be taken care of. That doesn't seem to be the case, as things were looking up in January, February has been a different story. The Fed minutes showed that they would be continually raising interest rates. Inflation is still way above where The Fed wants it to be, with their blame on the labor markets being "too tight" and ongoing upward pressures on wages and prices. All of the PCE indicators came in a lot hotter than anticipated. Most people like to use the PCE indicator to give a good lead-way to where we are at, because it excludes food and energy prices (extremely volatile). It didn't matter in this case because both including and excluding the food and energy, the indicator both increased 0.6%.
In terms of business news, we didn't get a whole bunch. United Airlines announced that for families, it would be making booking seats together easier. Home Depot announced a plan to spend $1B to give its hourly workers a raise, and make the minimum wage $15. Bentley has announced its end of producing the 12-cylinder engine, as they shift their focus to EVs. Starbucks has launched an olive-oil coffee in Italy, and plans to release it in the U.S. soon. Nikola is expecting to offer a driving-assist systems beginning next year. Adidas announced that it will be renewing its contract with MLS this year. Ford suspends F-150 Lightning for another week. Pretty short and sweet for the business news this week, but a lot of pivotal information in the automobile industry.
Stock of the Week:
Molson Coors Beverage Company ($TAP)
The company manufactures, markets, and sells beer and other malt beverage products under various brands all over the world. The company was founded in 1774 and is currently headquartered in Golden, Colorado. The company went public in 1975.
I used our DCF calculation to assess the valuation of the company. I have came to the conclusion that the company is overvalued. Coors is overvalued, but not at an unreasonable point. The company would need to achieve a 9.13% growth rate per year, with your expectations of the stock returning 11% a year. This is not a bad idea, as the expectations of the stock returning you 11% may be a little high for the kind of company Coors is. I would consider them a staple and a company that has been around for a while. I wouldn't be too opposed to getting into a position here, but you could always wait for it to drop down a tiny bit.
*Disclaimer: This is based off of my own research and not to buy or sell the stock solely off my recommendation. I highly encourage you to do your own research before taking action on this stock.
*Financials were pulled from Coors website and Yahoo Finance.
Company Earnings:
Tuesday:
- Walmart ($WMT)- Walmart had a strong holiday quarter. However, they gave a weak outlook for the quarter to come. One noticeable thing that came out with the report, was that the company saw a lot more higher income shoppers come to shop at the stores. With inflation causing fear for consumers, a lot of people are trying to look for low prices. However, this isn't the case for the average consumer. It's still a struggle for many with high grocery prices. This was the main reasoning behind Walmart giving such a weaker outlook for the year ahead. Walmart is a solid stock to own, its more of a income stock then a growth stock. They pay a solid dividend and still have growth.
- Home Depot ($HD)- Home Depot disappointed this past quarter. They broke the streak of beating revenue expectations. The company had beaten revenue expectations in every quarter since 2019. Growth looks to be pretty flat for the next year, which is a little disappointing for investors. The stock tanked on this report and has fallen since then. The company blamed a shift from goods to services from consumers, which limits the growth the company can see. Home Depot is still an essential business and will be around for a lot longer. Its upside may be limited compared to other companies, but it still has a solid dividend and increases that all the time.
- NVIDIA Corporation ($NVDA)- NVIDIA beat expectations for both revenue and earnings compared to Wall St. expectations. However, the company saw year-over-year declines in both of these categories. The company was driven by its Data Center revenue. This segment includes its AI chips, which NVIDIA is one of the leaders in this category right now. AI has become a huge topic and a lot of it runs on chips. This is huge for NVIDIA and gives them a bright future in this aspect. The gaming segment for NVIDIA disappointed, but investors didn't seem to be too weary about that. The semiconductor sector is very cyclical, so it is important to look at noticeable trends when it comes to this. NVIDIA looks to be in a good position here, I personally love this company.
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