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Mining giant BHP Billiton makes $39 billion bid for Anglo American to expand copper operations 2024-04-25 18:05:32+00:00 - LONDON (AP) — Shares in U.K.-based mining giant Anglo American surged Thursday after it received a 31 billion-pound ($39 billion) takeover approach from rival BHP Billiton, a deal that would create the world’s biggest copper miner, with around 10% of global output — a hugely lucrative market in the transition to clean energy. Anglo American’s share price closed up 16% in London after revealing that BHP, the world’s biggest miner, had put forward the “unsolicited” and “highly conditional” takeover proposal. The prospective all-share offer from BHP, which is based in the U.K. and Australia, values each Anglo share at 25.08 pounds. Anglo American, which owns a majority stake in the world-famous De Beers diamond company, said its board was reviewing the approach from BHP. BHP said the deal would boost its presence in the copper market, which is seeing demand soar amid the shift towards clean energy, as well as giving it greater access to potash, and coking coal in Australia. Copper is particularly sought after as the metal is used widely in electric vehicles, batteries and charging stations. Anglo, which has big copper plants in Chile and Peru, said that under the deal being proposed by BHP, it would have to spin off two units — its platinum arm, Anglo American Platinum, and Kumba Iron Ore, which are both listed in South Africa. BHP added that following any deal, Anglo’s other “high quality operations, including its diamond business” would be subject to a strategic review. “The combination would bring together the strengths of BHP and Anglo American in an optimal structure,” it said. Under U.K. takeover rules, BHP has until May 22 to make a formal offer. “The deal would represent the biggest shakeup of the global mining industry in more than a decade,” said James Whiteside, metals and mining corporate research director at Wood Mackenzie in London. However, he said other companies may look to buy Anglo American themselves, especially if the company’s shareholders hold out for a higher price. The prospective deal, Whiteside added, “is all about copper.”
What is Labour’s plan for rail travel and will it make tickets cheaper? 2024-04-25 18:03:00+00:00 - Labour has made one of its most radical proposals yet in the run-up to an election campaign: to fully nationalise the train network within five years of coming to power. The party has pledged to guarantee the cheapest fares as part of “the biggest reform of our railways for a generation”, bringing all passenger rail into national ownership under the Great British Railways (GBR) body. So, how difficult would the plan be to enact and what does it mean for passengers? How would Labour’s plan for Great British Railways change the way the trains are run? The headline change is nationalisation: the ambition that all passenger train operations, at least, should return to public ownership. But the wider aim is that control of trains and tracks – “wheels and steel”, as some put it – is brought back under one unified structure, at arm’s length from the government. The actual railway infrastructure is already managed by the state-owned Network Rail, since the disastrous tenure of Railtrack in the early days of privatisation, and train operations in Scotland, Wales and a large chunk of England are in public ownership. So a fully renationalised railway (bar the rolling stock and freight) is not as big a step as it may once have sounded – and arguably the pragmatic extension of the plans drawn up by the Conservatives in 2021, to end the fragmentation and waste in the system. How long will the changes take? Labour said it would get the ball rolling on day one. Given the years it has taken for the Conservatives’ GBR plans to crystallise into a draft bill that has scant chance of passing before an election, supporters of the changes would be forgiven for not holding their breath for legislation. But some of the spadework has been done by the GBR transition team, and Labour will be hoping for a more stable tenancy in Downing Street to see the policy through. It is, it stresses, a long-term plan. As far as nationalisation of the train operators goes, most of the contracts of remaining operators will expire naturally within the next term, while the government can exercise break clauses in others, such as Avanti West Coast and Cross Country. What would the trains look like? Eventually, they would all be GBR-branded trains rather than the individual liveries and logos of different operators. Labour hopes that this will make things simpler for passengers, avoiding confusion over ticketing, as well as cutting costs. Would it make train travel cheaper? Possibly, but not for a while yet. Labour says it wants to make the railway more affordable but has definitively avoided any pledges to cut or even freeze the overall level of fares. However, it believes that its plans will eventually save £2.2bn a year by avoiding the duplication and bureaucracy brought on by the current system, where the Department for Transport tightly controls and specifies contracts for the private firms, and reams of staff are employed in back-end roles. That could give ministers some scope to use more of the billions in annual taxpayer subsidy to bring fares down long-term. What about this best-price guarantee? Make that an “ambition”, according to the policy document. It’s testament to the complexity, or occasional absurdity, of UK rail fares that even after years of industry focus on improving the system, renationalising looks an easier promise than telling a passenger they’ve paid the right amount. Things can be improved, Labour says, as contactless tap-in and tap-out payments extend through more and more of the country, opening up the possibility of a Transport for London-style system, where fares are streamlined and automatically capped or refunded. The shadow transport secretary, Louise Haigh, pointedly chose the headquarters of Trainline in central London to launch her plans on Thursday, paying tribute to the travel app firm’s “relentless focus on passengers [and] improving their experience”. Trainline shares fell 10%, even though Labour says it has no plans to replace the private firm with a single state retailer. But given that the app’s business depends on people paying extra to cut through the railway’s confusing fares, fragmentation and lack of a decent central ticketing site, Trainline shareholder nerves might be taken as a vote of confidence that GBR will improve the industry’s own offering. How else might passengers benefit? Labour says it would leave the running of the railway to the experts – but the transport secretary would set strategy and take on the role of passenger-in-chief, and the industry would not be “marking its own homework”. The plan aims to strengthen the voice of passengers by rolling together the various bodies currently meant to be standing up for them – the watchdog Transport Focus and the little-known Rail Ombudsman, as well as a few divisions of the Office of Rail and Road. What will happen to the private operators? Their representatives at Rail Partners warn that it will be “messy” and the railway will lose their expertise. But the people actually running train operators, right up to the managing directors, have typically stayed in post with a different coloured badge when the owning groups moved on, and passengers at say, Southeastern or LNER may not feel life is very different. Firms once regarded as pillars of privatised rail such as Stagecoach, National Express (now Mobico) and Virgin have long exited UK rail already, pursuing business elsewhere.
BHP’s takeover bid for Anglo American is clever but far too low | Nils Pratley 2024-04-25 17:50:00+00:00 - In theory, Anglo American has been a sitting duck for a takeover bid for about a decade. Its share price has lagged behind that of other big miners and successive efforts to sharpen a sprawling portfolio have underwhelmed. The last news, at the end of 2023, was production delays that sent the shares down 20% in a day. In practice, the same complexities, plus deep entanglement in South African politics, have served as a deterrent to a bid. Anglo was seen as too fiddly. But here comes BHP, the Australian giant of the sector, with a proposal to cut through the noise and get to the assets it would like to own, primarily Anglo’s copper mines in Peru and Chile and, to a lesser extent, its iron ore projects in Brazil and metallurgical coal in Queensland. The takeover idea is certainly clever. Anglo would have to demerge its two big South African units that already have separate listings in Johannesburg, Anglo American Platinum and the local iron ore producer Kumba, by distributing the shares to its own shareholders. Then BHP would buy the rest of Anglo via an all-share offer. Add it all up and BHP presented its £31bn proposal as being pitched at a 31% premium for the Anglo assets that don’t have their own listings. In reality, few will look at the numbers that way. BHP’s own description of the “total value” of its proposal as being £25.08 a share (with the listed parts included at £8.26) implied only a 13% premium to Anglo’s closing share price on Wednesday of £22-ish. Indeed, the offer was a bit less than £25 because BHP’s own shares fell slightly. Thus the many Anglo shareholders, including Legal & General Investment Management (LGIM) and Abrdn, who called BHP’s offer “opportunistic” are correct. A £25 offer is clearly too mean. For all its calamitous recent history, Anglo should be able to get back £30 under its own steam via self-improvement. Its shares stood at £36 as recently as January last year. Note, too, that BHP has made its move when the price of diamonds (Anglo owns 85% of De Beers) and platinum are at cyclical lows. One must assume BHP expected such a reaction from the ranks of Anglo shareholders, so its first shot was probably a sighter. It will need to go higher if it wants to continue the pursuit. But, if the target is up for grabs, all sorts of possibilities come into play. There’s nothing to stop Anglo breaking itself up, for example. And, if it were prepared to let go of the prized copper mines on their own, there’d be a queue of potential bidders. BHP couldn’t be surprised by such a development either: if you make a proposal that amounts to “we’d like to buy you, except for the bits we don’t like”, others are free to riff on the idea. The other consideration here is the non-financial one: would a BHP purchase of two-thirds of Anglo be desirable for the rest of us? That is really a copper question since the metal is critical to electrification, and thus to the transition of the world’s energy system towards lower-carbon generation. “The [mining] industry is extremely concentrated today, and further consolidating it will not contribute to accelerating investment in the way we believe is needed,” said LGIM. Again, that’s a fair point. BHP is currently number three in copper globally and would become number one with the addition of Anglo’s mines. A global market share of 10%-ish may not sound enormous, but a BHP-Anglo deal would probably spark consolidation elsewhere. In the end, you get fewer but larger miners – especially of the type that are western-facing and can be vaguely held to account by virtue of having a stock market listing. skip past newsletter promotion Sign up to Business Today Free daily newsletter Get set for the working day – we'll point you to all the business news and analysis you need every morning Enter your email address Sign up Privacy Notice: Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Privacy Policy . We use Google reCaptcha to protect our website and the Google Privacy Policy and Terms of Service apply. after newsletter promotion That competition question, though, is the one after the current one. On the first day of a takeover tale that probably has a long way to run, the jump in Anglo’s share price to £25.60 told the story: BHP needs to improve its offer.
The TikTok law kicks off a new showdown between Beijing and Washington. What’s coming next? 2024-04-25 17:22:05+00:00 - WASHINGTON (AP) — TikTok is gearing up for a legal fight against a U.S. law that would force the social media platform to break ties with its China-based parent company, a move almost certainly backed by Chinese authorities as the bitter U.S.-China rivalry threatens the future of a wildly popular way for young people in America to connect online. Beijing has signaled TikTok should fight what it has called a “robbers” act by U.S. lawmakers “to snatch from others all the good things that they have.” Should a legal challenge fail, observers say Chinese authorities are unlikely to allow a sale, a move that could be seen as surrendering to Washington. Beijing may not want the U.S. action against the popular short-form video platform to set a “bad precedent,” said Alex Capri, senior lecturer at the National University of Singapore and research fellow at Hinrich Foundation. “If Beijing capitulates to the U.S., where does it end?” The legislation that U.S. President Joe Biden signed this week could allow Washington to widen its scope to target other China-related apps, such as the popular e-commerce platform Temu, and embolden U.S. allies to follow suit, said Hu Xijin, a former editor-in-chief for the party-run newspaper Global Times. With 170 million American users, TikTok should “have more guts to fight to the very end and refuse to surrender,” Hu, now a political commentator, said Wednesday on Chinese social media. TikTok vowed to challenge the new U.S. law, which requires its Beijing-based parent company, ByteDance, to divest its stakes within a year to avoid a ban. The company has characterized the law as an infringement on the free speech rights of its users, most of whom use the app for entertainment. “We believe the facts and the law are clearly on our side, and we will ultimately prevail,” the company wrote on the social platform X. The fight over TikTok has increased tensions between the U.S. and China, with both vowing to protect their economic and national security interests. U.S. lawmakers are concerned the Chinese ownership of the app could allow Beijing to exert unwanted influence in the U.S., especially on young minds. The law has followed a string of successes by Washington in curbing the influence of Chinese companies through bans, export controls and forced divestitures, drawing protests from Beijing that the U.S. is bent on suppressing China’s rise through economic coercion. The U.S. has forced other Chinese companies to divest before, including in 2020, when Beijing Kunlun, a Chinese mobile video game company, agreed to sell the gay dating app Grindr after receiving a federal order. But TikTok, created by a Chinese company only for the overseas market and evidence of the nation’s tech powers on the global stage, is a high-profile case that Beijing does not want to lose. National dignity is at stake and could “take precedence over the financial interests of ByteDance investors,” including global investors who own 60% of the company, said Gabriel Wildau, managing director of the New York-headquartered consulting and advisory firm Teneo. A legal challenge from the company is expected to lean on First Amendment concerns and could drag on for years. Beijing is betting on a legal win, analysts say. What to do if TikTok doesn’t prevail is likely still being debated with the Chinese leadership, said Dominic Chiu, an analyst with Eurasia Group. President Xi Jinping, who will have to sign off on whether to permit or prohibit the sale, probably has not made the final decision, Chiu said. Luckily for Xi, there is no urgency for Beijing to decide, said Sun Yun, director of the China program at the Washington-based Stimson Center. “A lot of things could change,” she said. If lawmakers get their wish and a sale does occur, it’s likely to be a challenging and messy process for TikTok, which would have to disentangle its U.S. operations from everything else. For one, the price tag for TikTok’s U.S. business — which is unknown — is expected to be high enough to severely limit the pool of investors and companies who’d be able to afford it. Some investors — including former Treasury Secretary Steve Mnuchin — have already positioned themselves as potential buyers of a U.S. version of TikTok. ByteDance, which is privately held, is valued at $220 billion, according to market tracker Pitchbook. And there’s uncertainty about what would happen with the TikTok algorithm, the secret sauce that feeds users short videos based on their interests and has contributed to the platform’s status as a cultural juggernaut. ByteDance would be barred from controlling the algorithm of a U.S. spinoff of TikTok. Many experts believe Chinese authorities would block any sale of the technology that populates people’s TikTok feeds under export regulations revised in 2020, when then-President Donald Trump unsuccessfully tried to ban TikTok through an executive order that was blocked in federal courts. Some, including Mnuchin, have said TikTok would need to be rebuilt in the U.S. using new technology. But it’s unclear what that might look like, or how well it can reproduce the type of video recommendations users have grown accustomed to seeing. Robin Burke, a professor of information science at the University of Colorado Boulder, says some aspects of the algorithm might be replicated by industry insiders. But he also noted there are areas where TikTok appears ahead of its competitors and duplication might prove challenging. “TikTok has all the experience, they have all the data,” Burke said. “I think it’s unlikely that a U.S. business — if they don’t inherit the technology from the parent company — would be able to build something equivalent. Certainly not right away.” ___ AP journalist Dake Kang contributed from Beijing.
Former Post Office executive gave ‘false’ evidence at high court, inquiry hears 2024-04-25 17:15:00+00:00 - A former senior Post Office executive gave “false” evidence to the high court about the ability of the Horizon IT system to be accessed remotely, a public inquiry has heard. Angela van den Bogerd, who was business improvement director at the postal company, was asked about testimony she gave in 2018 in a lawsuit brought by the former branch operator Alan Bates and 554 others suing the Post Office over their persecution and prosecution because of the Horizon system. The public inquiry was shown a “slew of emails” sent to Van den Bogerd in December 2010, 2011 and 2014 that referred to the fact that Horizon could be accessed remotely and branch accounts tampered with by Fujitsu, the Japanese company that developed the IT system. Jason Beer KC, counsel to the inquiry, put it to Van den Bogerd that she had made a “false” statement when she told the high court she had only been aware of remote access to the IT system “a year or so” beforehand.. Beer said: “You’re telling the [high] court the first time you knew of the possibility of inserting transactions was in the last year … That was false wasn’t it?” “At the time I didn’t think it was … The message on remote access kept changing,” she replied, adding that she could not remember seeing the 2010 email. In her witness statement, Van den Bogerd said she was not aware of remote access until after 2011. She was also asked at the inquiry about a January 2011 meeting with Rachpal Athwal, a Dorset branch operator who had been sacked by the Post Office and wrongly accused of stealing £710 that had gone missing from her accounts, according to the IT system. A transcript of the meeting showed Van den Bogerd told those present that no one from the Post Office could remotely access or tamper with the branch accounts. “In the light of the email you received a month before … what you said there wasn’t true was it?” Beer said. “Post Office can’t … that is what I said there,” Van den Bogerd said, adding: “What I said there was correct.” Beer replied: “No one in the Post Office can do this but Fujitsu can – that would be the open and transparent thing to say wouldn’t it?” Van den Bogerd, who is giving evidence across two days, began by saying she was “truly sorry” for the suffering of the branch operators. She later said she “did not knowingly do anything wrong”. The Post Office, which is owned by the UK government, pursued hundreds of branch operators for more than a decade, alleging financial shortfalls in their accounts and prosecuting them. It has since emerged the shortfalls were probably caused by bugs within the Horizon system. skip past newsletter promotion Sign up to Business Today Free daily newsletter Get set for the working day – we'll point you to all the business news and analysis you need every morning Enter your email address Sign up Privacy Notice: Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Privacy Policy . We use Google reCaptcha to protect our website and the Google Privacy Policy and Terms of Service apply. after newsletter promotion The high court case found Horizon was unreliable and it paved the way for victims of the scandal to have their criminal convictions quashed. Bates has been at the forefront of the campaign for justice, which was dramatised in the ITV drama Mr Bates vs the Post Office. The public inquiry is examining the scandal, which has been described by MPs as the biggest miscarriage of justice in British legal history. The hearing continues.
Microsoft cloud growth accelerates on back of AI push 2024-04-25 16:56:00+00:00 - Microsoft shares rose as much as 5% in extended trading on Thursday after the software maker issued fiscal third-quarter results that outdid Wall Street's expectations. Here's how the company did in comparison with the consensus from LSEG: Earnings per share: $2.94 vs. $2.82 expected $2.94 vs. $2.82 expected Revenue: $61.86 vs. $60.80 billion expected Microsoft's total revenue grew 17% year over year in the quarter, which ended on March 31, according to a statement. Net income, at $21.94 billion, or $2.94 per share, was up from $18.30 billion, or $2.45 per share in the year-ago quarter. With respect to guidance, Microsoft's finance chief, Amy Hood, called for $64.00 billion in revenue for the fiscal fourth quarter, below the $64.50 billion LSEG consensus. During the fiscal third quarter, Microsoft's Intelligent Cloud segment, including the Azure public cloud, Windows Server, Nuance and GitHub, produced $26.71 billion in revenue. That's up about 21% and more than the $26.26 billion consensus among analysts surveyed by StreetAccount. Revenue from Azure and other cloud services grew 31%, compared with 30% in the previous quarter. Analysts polled by CNBC had expected 28.8%, while the StreetAccount consensus was 28.6%. Inside of the Azure growth, 7 percentage points were related to artificial intelligence, up from 6 points of impact in the previous quarter. Microsoft provides cloud services for the ChatGPT chatbot from startup OpenAI, and companies have been increasingly adopting Azure AI services to develop their own capabilities for summarizing information and writing documents. The GitHub Copilot code-generation tool now has 1.8 million paid subscribers, CEO Satya Nadella said on a conference call with analysts.
Tata Steel rejects union plan to save jobs and keep Port Talbot furnace open 2024-04-25 15:59:00+00:00 - Tata Steel has rejected a plan by unions to keep open a blast furnace at the Port Talbot steelworks, ending any hopes of avoiding as many as 2,800 job losses. Unions met the company in London on Thursday with another plea not to press ahead with its proposals, which will likely end the ability to make steel from iron ore in south Wales by September and cause thousands of job losses. The first blast furnace is due to close at the end of June, followed by the second blast furnace and the “heavy end”, which makes steel from iron, in September. Tata Steel said it would open a voluntary redundancy scheme on 15 May. Indian-owned Tata Steel announced the closure of two of the UK’s four active blast furnaces in January, in a major blow to Port Talbot. The town and its economy are dominated by the steelworks. Tata plans to replace the two blast furnaces – which produce molten iron from iron ore – with electric arc furnaces. Tata on Thursday said it planned to place orders for the furnace equipment by September, and begin construction by August 2025. Electrification is a much greener option as it does not rely on a chemical reaction that creates carbon dioxide. It will also represent a significant £1.25bn investment in the site. However, the newer technology will require many fewer workers. The shift to new furnaces – which could cut UK emissions by about 2% if renewable electricity is used – is to be supported by about £500m in government subsidies. The union plan would have kept a blast furnace in operation while building an electric arc furnace, saving jobs. The Tata Steel chief executive, TV Narendran, said: “Having looked carefully at all the options over the past seven months in consultation with union representatives, we have decided to proceed with our proposed restructuring and transition. This is the most viable proposal, in contrast to the unions’ unaffordable plan, which has high inherent operational and safety risk.” Roy Rickhuss, the general secretary of the Community union, said Tata’s decision was a “destructive bad deal for steel” but added that “this isn’t over” as the union awaits a member vote on strike action. “We do not accept the company’s assertion our plan was too expensive,” Rickhuss said. “In fact, it would have returned the company to profits, and the additional capital expenditure needed to make it a reality could have been funded by an additional £450m from the government – a drop in the water compared to what other European countries are investing in their domestic steel industries.” The UK’s two other blast furnaces in Scunthorpe, run by the Chinese-owned British Steel, are also due to close. That will leave the UK without the ability to make primary steel from iron ore, as electric arc furnaces will instead rely on scrap metal. skip past newsletter promotion Sign up to Business Today Free daily newsletter Get set for the working day – we'll point you to all the business news and analysis you need every morning Enter your email address Sign up Privacy Notice: Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Privacy Policy . We use Google reCaptcha to protect our website and the Google Privacy Policy and Terms of Service apply. after newsletter promotion The confirmation of Tata’s decision will bring the prospect of industrial action closer. Community, the union representing the most steelworkers, called for members to back its ballot to allow it to call a strike. Community and GMB, which also represents steelworkers, will close their ballots on 9 May. Unite, another union, has been pushing for an even more ambitious plan for the UK steel industry that would include a subsidy for energy prices and ensure that no jobs are lost. That plan, which would rely on support from the government, has also been rejected by Tata. Unite’s steelworkers have already voted in favour of industrial action. The Unite general secretary, Sharon Graham, said: “Tata is an immensely profitable company using our outgoing government’s inadequacies to make easy money and boost its other operations at the expense of UK jobs and the national interest.” Stephen Kinnock, the Labour MP for Aberavon, home of the Port Talbot steelworks, said the closure “will have a devastating impact on our local community as it will mean exporting well-paid jobs from Port Talbot to India, despite the country’s steel plants having a far higher carbon footprint”. Tata is the country’s largest steel producer, employing about 8,000 staff in the UK, with about half based at Port Talbot.
Key Solar Panel Ingredient Is Made in the U.S.A. Again 2024-04-25 15:17:35+00:00 - A factory in Moses Lake, Wash., that shut down in 2019 will soon resume shipping a critical ingredient used in most solar panels that for years has been made almost exclusively in China. The revival of the factory, which is owned by REC Silicon, could help achieve a longstanding goal of many American lawmakers and energy executives to re-establish a complete domestic supply chain for solar panels and reduce the world’s reliance on plants in China and Southeast Asia. REC Silicon reopened the factory, which makes polysilicon, the building block for the large majority of solar panels, in November in partnership with Hanwha Qcells, a South Korean company that is investing billions of dollars in U.S. solar panel production. As part of the deal, Hanwha said this month that it had become the largest shareholder in REC Silicon, which is based in Norway. Executives at the companies say they reopened the factory in part because of incentives for domestic manufacturing in the Inflation Reduction Act, President Biden’s signature climate law. They expressed hope that their decision would also encourage other companies to revive production of a technology that was created in the United States about 70 years ago.
Hasbro’s Management Made All the Right Calls This Quarter 2024-04-25 15:16:00+00:00 - Key Points The market reacts to Hasbro's recent earnings announcement by bidding up the stock. Fundamentals show management is making the right calls to turn the business around. EPS Projections indicate Hasbro could be head and shoulders above its closest competitor. 5 stocks we like better than Hasbro After announcing the first quarter 2024 financial results, arguably the most critical quarter of the year as it sets the tone for any stock, shares of Hasbro Inc. NASDAQ: HAS jumped by as much as 12%. With Mattel Inc. NASDAQ: MAT also rallying on earnings and flirting with new 52-week high prices, momentum seems to favor the toy industry, and it could last well beyond the holiday season this time around. As the economy becomes more globalized, securing intangible assets through rights and patents is more important than ever, something Hasbro’s management has made a priority. Get Hasbro alerts: Sign Up Wall Street remains bullish on Hasbro, as this consumer discretionary stock shows signs of turning around. Hasbro’s Near Top of The Range Hasbro Today HAS Hasbro $64.97 -0.06 (-0.09%) 52-Week Range $42.66 ▼ $73.57 Dividend Yield 4.31% Price Target $62.80 Add to Watchlist As of the fourth quarter of 2023, Hasbro owned 43.6% of the recreational products market share, while competitor Mattel owned 47.4%. Apart from these two, no other company poses a real threat of intrusion. Market share dominance typically shows through gross margins, and Hasbro’s stood at around 48%, matching those of Mattel’s. The main difference between these two market leaders lies in their balance sheets. Mattel's balance sheet shows a total debt of 56% of its assets, while Hasbro's debt is much higher at 77%, as of the past 12 months. Because the Federal Reserve (the Fed) is looking to cut interest rates this year, companies with higher amounts of debt on their balance sheets may see an earnings per share (EPS) boost. Since more debt typically means more interest expenses, lower rates could significantly cut these costs and raise earnings. According to the CME’s FedWatch tool, these cuts could come as soon as September 2024, giving investors enough time to consider a second look into Hasbro. Management Is Making The Right Calls According to the company’s earnings presentation, inventory levels were reduced by 53% over the year, as the business segments show that the digital space is now taking over profitability. Consumer products revenue declined by 21% over the year, showing an operating loss of $47 million. On the other hand, Wizards of the Coast and Digital Gaming segments brought 7% revenue growth and a net operating profit of $123 million. Inventory reductions mean more free cash and fewer cost burdens as management focuses on profitable segments like digital. Management plans to cut $750 million of gross cost savings by 2025. Up to 50% of these savings would feed through the bottom line. In other words, there would be $375 million in net earnings to boost EPS. While these goals may seem a little bold, management is sending a resounding message. Hasbro Dividend Payments Dividend Yield 4.31% Annual Dividend $2.80 Annualized 3-Year Dividend Growth 0.97% Dividend Payout Ratio -26.12% Next Dividend Payment May. 15 See Full Details Offering an annual dividend yield of 4.3% couldn’t be done if management didn’t think the company’s financials could allow it. This yield would allow investors to beat stubbornly high U.S. inflation rates and almost match today's 10-year treasury bond yield of 4.6%. Wall Street’s Take As Wall Street analysts expect to see 18.4% EPS growth this year, it would seem the markets think a stronger 2024 is ahead for the company. By comparison, Mattel has a 10.2% projection. The forward P/E ratio also shows investors how Hasbro commands a premium over Mattel’s future earnings valuation; Hasbro’s 17.2x forward P/E calls for a 36.5% premium over Mattel’s 12.6x. Hasbro stock’s institutional quality remains high, as institutional ownership currently stands at 91.8%. In fact, over the past 12 months, the stock saw $1.9 billion in institutional inflows (which represented nearly 20% of the company’s market capitalization). Considering the stock trades at 88% of its 52-week high, investors can see how bullish momentum confirms these fundamental trends, aiding the company's future valuation. As long as management keeps making the right calld, Hasbro may be top choice for investors this year. Before you consider Hasbro, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Hasbro wasn't on the list. While Hasbro currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
Honda Commits to E.V.s With Big Investment in Canada 2024-04-25 15:09:58+00:00 - Honda Motor on Thursday said it and several suppliers would invest $11 billion to build batteries and electric cars in Ontario, a significant commitment from a company that has been slow to embrace the technology. Like Toyota and other Japanese carmakers, Honda has emphasized hybrid vehicles, in which gasoline engines are augmented by electric motors, rather than cars powered solely by batteries. The Honda Prologue, a sport-utility vehicle made in Mexico, is the company’s only fully electric vehicle on sale in the United States. But the investment adjacent to the company’s factory in Alliston, Ontario, near Toronto, is a shift in direction, raising the possibility that Honda and other Japanese carmakers could use their manufacturing expertise to push down the cost of electric vehicles and make them affordable to more people. “This is a very big day for the region, for the province and for the country,” Prime Minister Justin Trudeau said at an announcement event in Alliston, where Honda manufactures the Civic sedan and CR-V S.U.V. The investment, which will create 1,000 new jobs, is the largest by an automaker in Canadian history, he said.
A Chinese Firm Is America’s Favorite Drone Maker — Except in Washington 2024-04-25 14:48:52+00:00 - The drones circled over the caves and crevices scattered around the mountain trails in northern Utah, feeding real-time video back to a search team on the ground looking for a missing hiker. Nineteen minutes later, they had her coordinates, bringing the rescue — a drill — closer to conclusion. “In this kind of environment, that’s actually pretty quick,” said Kyle Nordfors, a volunteer search and rescue worker. He was operating one of the drones, made by the Chinese company DJI, which dominates sales to law enforcement agencies as well as the hobbyist market in the United States. But if DJI’s drones are the tool of choice for emergency responders around the country, they are widely seen in Washington as a national security threat. DJI is on a Defense Department list of Chinese military companies whose products the U.S. armed forces will be prohibited from purchasing in the future. As part of the defense budget that Congress passed for this year, other federal agencies and programs are likely to be prohibited from purchasing DJI drones as well.
Caterpillar’s Market Reset Isn’t Over: Get Ready for Lower Prices 2024-04-25 14:36:00+00:00 - Key Points Caterpillar struggled in Q1, but its diversified, global business model helped sustain operations. The margin widened significantly and aided the cash flow and healthy balance sheet. A market reset is in play, but the uptrend is still intact. Lower prices will lead to a buying signal later this year. 5 stocks we like better than Caterpillar The market’s reaction to Caterpillar’s NYSE: CAT Q1 results and guidance proves that the correction in price action is not over. The news isn’t bad, but tepid and weaker than expected, causing a sentiment reset. Analysts rate the stock at Hold and lifted their price targets steadily over the last year, but the market front-ran the trend, setting the stock up for today’s decline. Because the market for Caterpillar stock is still 10% above the analysts' consensus reported by Marketbeat, it will likely fall another 10% at least, retesting support at the 150-day EMA, if not lower price points. Caterpillar Dividend Payments Dividend Yield 1.54% Annual Dividend $5.20 Dividend Increase Track Record 29 Years Annualized 3-Year Dividend Growth 6.67% Dividend Payout Ratio 25.82% Next Dividend Payment May. 20 See Full Details However, Caterpillar is still a solid dividend-paying stock. At lower price points, it will offer a better value, verging on deep value, and pay a higher yield. The dividend is worth about 1.5%, with shares trading near $360, so the increase won’t be substantial, but investors need every edge they can get. The payout is reliable, and the distribution is growing, so there is also some leverage to be gained. The payout ratio is a low 24%, and the balance sheet is healthy, so additional increases are expected to match the 8% CAGR now posted. Get Caterpillar alerts: Sign Up Caterpillar’s Global Presence and Diversification Drive Results Caterpillar had a rough quarter in Q1, with demand offsetting price increases to leave revenue at $15.8 billion and down 0.6% compared to last year. The revenue is relatively flat compared to last year, but $120 million short of the analyst consensus, forecasting slight growth. Energy & Transportation was the strongest segment, with an increase of 7% offset by a 7% decline in Resource Industries and a 5% decline in Construction Industries. Geographically, North America led with growth of 7%, followed by a 2% gain in Latin America, offset by a 5% contraction in Asia and a 17% contraction in Europe. Margin is the bright spot in the report, but there is a one-off in play, and the news was not enough to sustain upward momentum in the stock price. The GAAP operating margin widened by 510 basis points to 22.3% to drive record earnings. The GAAP and adjusted earnings include a business divestiture, but strength is also present when accounting for the sale. The adjusted earnings grew 14% on leverage gained by pricing and efficiency efforts to $5.60, 47 cents above the consensus. Accounting for the sale, adjusted earnings are up 7% and 13 cents above forecast. Guidance is another sticking point for today’s market. The guidance expects Q2 to see contraction and flat full-year results. However, the takeaway is that Q2 will be a trough in the contraction, leading to growth in the back half that is expected to accelerate next year. Caterpillar is Building Leverage for Investors Caterpillar’s results and guidance are tepid but sufficient to sustain company health and an outlook for robust capital returns. The dividend yield isn’t robust on its own; at 1.5%, it is only slightly better than the S&P 500 average, but share repurchases compound it. The company aggressively repurchased shares and lowered its count by 4.3% average at the end of Q1. Repurchases are expected to remain robust in 2024 and may grow over time. Caterpillar Today CAT Caterpillar $338.00 -25.52 (-7.02%) 52-Week Range $204.04 ▼ $382.01 Dividend Yield 1.54% P/E Ratio 16.78 Price Target $307.56 Add to Watchlist The price action in CAT stock is unfavorable, but the uptrend remains intact. The caveat for investors is that the uptrend took the price action significantly above fair value, and the correction could easily do the opposite. Critical support targets exist at $318, $287, and $243. The first two targets bracket the analysis consensus and will likely provide solid support. If not, a move to $243 is likely. The next catalyst for CAT is the FOMC rate cut. The FOMC rate cut is expected to signal an economic pivot that unfetters global industrial activity. The problem today is that inflation and persistently hot labor data suggest the FOMC will not cut rates until late this year, if they cut in 2024 at all. Before you consider Caterpillar, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Caterpillar wasn't on the list. While Caterpillar currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
‘Must love dogs and rude roommates’: the scramble to get around New York’s Airbnb crackdown 2024-04-25 14:01:00+00:00 - Until recently, visitors to New York basically had two options: hotel rooms or short-term rental platforms like Airbnb. But in September 2023, the city started enforcing a 2022 law that banned people from renting their homes for fewer than 30 days (unless the host stayed in the home with guests). Now the only legit option for people visiting the city is hotel rooms – and they’re unaffordable for many. Most of the Times Square hotels don’t have rooms for less than $300 a night. A search for Thursday 2 May found the Muse at $356, Hampton Inn at $323 and the Hard Rock at $459 (although, because of dynamic pricing, these are subject to regular change). They’re getting more expensive still. Hotel rates have increased between the first quarter of this year and the first quarter of 2023 at twice the rate of inflation, said Jan Freitag, an analyst at the real-estate data firm CoStar Group. Many visitors and New Yorkers have turned to the black rental market, where Facebook groups, Craigslist posts, Instagram listingsand word of mouth have become the go-to for finding short-term rentals in the five boroughs. If you have friends in New York, you’ve probably seen the Instagram stories. “Hi guys! Subletting my room in a 5 bed apartment for four days over Easter! Must be good with dogs and rude roommates! DM if interested!” Other travelers have headed to New Jersey, causing the kaleidoscope of cities across the Hudson River to become the fastest-growing market for Airbnb demand in the nation, according to the analytics site AirDNA. Others have ponied up for hotels, which are only projected to get more expensive in the coming years. For many tourists, there’s no good answer yet to the so-called Airbnb ban. Yoya Busquets, 56, considered an Airbnb in New Jersey, but really wants to be in the city when she visits from Barcelona in early September with her husband and two teenage daughters. She poked around on Facebook a bit and chatted on Messenger with some people advertising short-term rentals there. The last time she was in New York, in 2012, she stayed in an Airbnb in Brooklyn, and she wants a similar experience. She just might get lucky. “I’m communicating with a girl who has a place available for one week and it’s posted on Airbnb as in New Jersey, but when you contact them they say it’s in Brooklyn,” she said. The apartment also happens to be near the area she stayed last time, and it’s within her budget of $160 a night. It’s the best option she’s found, considering the cost of hotels and the space it offers for her daughters to unwind after busy days tromping around. But the setup probably falls foul of the new laws, which is why the apartment is listed in Jersey. View image in fullscreen Williamsburg Bridge in Brooklyn. For a hotel, ‘I’d have to pay like $400 a night and I don’t have money like that,’ said one New Yorker seeking to host her parents. Photograph: Ryan Deberardinis/Alamy According to AirDNA, which tracks data from short-term rental sites like Airbnb and Vrbo, listings for stays of fewer than 30 days have fallen 83% since August 2023, when the regulations started being enforced. Once there were 22,200 short-term listings available in New York City; there are now just 3,700, according to AirDNA. While juggling her thesis, finishing classes and searching for a job that will allow her to continue living in the US, Tehsin Pala, 24, has been looking for a place for her family to stay in May when she graduates from New York University’s graduate program for journalism. “This is their first time coming to New York City and I want to give them a good experience,” Pala, from India, said of her parents and grandmother. “I thought I wanted to do an Airbnb so I can also cook for them,” so she was dismayed to learn short-term rentals really weren’t an option any more. Pala wants a place where her family has room to congregate. As a show of gratitude and respect, she wants to cover the cost of her family’s accommodations and has budgeted about $200 (£160) a night for their week-long stay. “I’m kind of stuck about what to do,” Pala said. “Probably a hotel, but I’ll have to pay like $400 a night and I don’t have money like that.” Now, saddled with the dual stresses of finishing school and facing down hotel rates she isn’t able to float, she’s at a crossroads: does she opt for a hotel and have her parents pay or rent something in New York short term that’s not technically legal? Without the accountability and protections that platforms such as Airbnb offered, avoiding scams has become a normal part of seeking a short-term rental. Because of that, Pala skipped scanning Craigslist entirely. Now she’s looking into booking an Airbnb in New Jersey, but she fears the slog on the local Path train could be inconvenient for her grandmother. While the regulations were passed with the intention of curbing rents for New Yorkers by bringing apartment inventory back on to the market, they’ve also cut off an often crucial source of income for New York renters and homeowners who lived in their apartments but listed their places when they were out of town. Some New Yorkers are still finding ways to bring the money in. Kathleen, whose last name is being withheld for privacy reasons, only recently started renting her East Village apartment on the black rental market. The 29-year-old travels a lot for her work in personal finance and to visit family in North Carolina. She’s out of town about four months a year, she said, and of course still has to pay her $2,600-a-month rent when she’s not there. To make up some of that lost money, she’s started connecting with people via Facebook groups for unregulated stays. View image in fullscreen Opponents of Airbnb rally at New York’s city hall in 2015. Photograph: Shannon Stapleton/Reuters “I really vetted out a lot of the people,” she said, citing concerns about how her space would be treated given that she wouldn’t have the protections that short-term-rental platforms offer to hosts. She has two forthcoming guests – one weekend visitor and one staying in her apartment for three weeks over the summer – who are paying her $50 a night. “I’m a side-hustle girl always,” she said. “If you can make extra money, why would you not make extra money? I live in a great location. I love my place and I’m very clean and I just figured if someone was new to this city, it would be kind of a nice, cute spot to be.” It’s the kind of spot that visitors like Juan José Tejada might champ at the bit for. Tejada, a wellness influencer from Bogotá, Colombia, is visiting New York in July for nine days with his best friend. He started his search for a place by scanning hotels but quickly realized they were too expensive. “I am 25 years old. I’m traveling with my best friend. And, you know, we don’t have that much budget,” he said. On the recommendation of a cousin who lives in the city, Tejada used Facebook to look for a short-term rental. What he found was quadruple his budget of $100 to $200 a night. But that wasn’t the only issue. “When I was looking for a short-term lease, the payment situation was a little bit hard,” Tejada said, “because the people who are renting say ‘you have to pay me through bank transfer or through Zelle’ or another service that we don’t have in Colombia.” I’m coming from a city where the craziness of Airbnb is actually taking the locals away Yoya Busquets of Barcelona Tejada and his friend ended up booking at Hi New York City, a hostel on the Upper West Side, which cost them about $55 each a night for a spot in a bunk room with a shared bathroom. Tejada said he had considered an Airbnb with an on-site host but didn’t find any suitable options. It’s not the apartment he dreamed of breezing in and out of as if he were a local, but it’ll do. People are making their own solutions for short-term stays. On Instagram, there are accounts like Book That Sublet NYC, where over 4,000 followers watch along for sublets often posted on a daily and weekly basis as well as the endless “book my apartment!” or apartment-swapping callouts that are shared on Instagram Stories. And then there are the longtime apartment-swapping sites like HomeExchange or HomeLink that offer another way for visitors to get their foot in the door of a city apartment. Advocates for the new regulations thought that limiting rentals in the short term would bring long-term rentals back on to the market – and perhaps help push rents down in the notoriously pricey city. About seven months in, those effects on a wide scale remain to be seen, said Jamie Lane, AirDNA’s chief economist. Jonathan Miller, CEO of the appraisal firm Miller Samuel, offered an explanation: he said a modest number of apartments had returned to the rental market after the law was modified, but because mortgage rates remain high and have inched back up since the start of the year, would-be buyers are priced out of purchasing for the time being, pushing rents up. Pala, the NYU student, doesn’t think the regulations are the most effective way of tackling New York’s housing crisis. “I don’t understand how this regulation makes sense, not in terms of lessening the load of how many Airbnbs there are, but in terms of how equitable this decision is for the population of New York City, considering it’s an immigrant city,” she said. But Busquets, who’s visiting in September, has witnessed first-hand the effects tourism, and short-term rentals, can have on a world-famous destination. “I’m coming from a city where the craziness of Airbnb is actually taking the locals and people who’ve lived there for years away,” she said. “The owners wanted to keep the people who were there just to rent it short-term because it’s more profitable.” Busquets said Airbnb made Barcelona unliveable and she herself eventually left for its suburbs. She added: “It’s changed. It’s not the same city as 10 or 15 years ago.”
Power Surge: Utilities Sector's Resilience Shines 2024-04-25 13:51:00+00:00 - Key Points The Utilities Select Sector SPDR Fund has recently shown notable strength, outperforming the overall market and certain key sectors. The recent outperformance comes amidst heightened tension in the Middle East, uncertainty surrounding interest rates, and a rise in oil prices. Despite a recent downturn in the overall market, XLU has maintained an upward trajectory, gaining nearly 4%, showcasing its impressive relative strength compared to the market. 5 stocks we like better than Duke Energy One standout player in the exchange-traded funds (ETFs) world has been making waves for its recent relative strength: the Utilities Select Sector SPDR Fund NYSEARCA: XLU. It's been holding its ground well this year, clocking in gains of almost 5% so far. Lately, however, it's caught up with the broader market, showing impressive strength compared to other sectors. The recent standout performance is interesting, especially given the tension in the Middle East and the rise in oil prices. Investors are shifting their focus towards utilities, possibly reallocating capital away from higher growth bets in semiconductors and tech. Get Duke Energy alerts: Sign Up Despite the recent downturn in the overall market, which has seen a drop of approximately 3% in the last month, XLU has been on an upward trajectory, gaining almost 4%. The contrast is stark when you compare the charts: while the market's (orange) trend has been downward, XLU's has steadily climbed, showcasing its impressive relative strength and resilience. To see this for yourself, simply click on the “+” symbol on a chart. So, will the sector continue outperforming, or might it be short-lived? Let's look closer at the overall sector, what analysts are saying, and its top holdings. Analysing the Utilities Sector Utilities Select Sector SPDR Fund Today XLU Utilities Select Sector SPDR Fund $66.92 +0.18 (+0.27%) 52-Week Range $54.77 ▼ $69.77 Dividend Yield 3.08% Assets Under Management $11.94 billion Add to Watchlist The XLU aims to track the price and yield performance of the S&P 500 Index's Utilities Select Sector, which comprises companies from electric utilities, multi-utilities, independent power producers, and gas utilities. The fund employs a passive investment approach to mirror the index's investment performance. The ETF primarily focuses on U.S. exposure, with 99.8% of its assets allocated domestically. Within its subindustry exposure, Electric Utilities account for 59.1%, Multi-Utilities comprise 27%, and Water Utilities account for 2.4%. Analysts' ratings for holdings within XLU indicate an aggregate hold rating based on 292 analyst ratings covering 30 companies, representing 99.9% of the portfolio. The aggregate price target for these holdings is $69.35, with a range spanning from $58.95 to $79.53 across the same 30 companies. From a technical analysis perspective, the XLU has recently broken its downtrend on a higher timeframe, suggesting a shift in momentum. As mentioned, the sector has recently outperformed the overall market. The XLU is now trending above its downtrend resistance and major key Simple Moving Averages (SMAs). This price action and setup are exceptionally bullish for the sector and suggest a significant overall trend and momentum shift, favoring the bulls. Assessing the ETF's Top Holdings While technical analysis offers valuable insights, it's crucial to also consider the top-weighted holdings of the ETF, as they play a significant role in shaping its overall performance. So, let's take a closer look at the three main holdings of the XLU: NextEra Energy NYSE: NEE, comprising 13.7% of the total weighting; Southern Company NYSE: SO, at 7.93%, and Duke Energy NYSE: DUK, at 7.68%. NEE's impressive performance has certainly helped the overall sector push higher in recent weeks. The sector ETF’s top holding has climbed over 7% in the previous month and over 16% in the previous three months. With a $136 billion market capitalization and projected earnings growth of 7.35%, the utility giant has a moderate buy rating and forecasted upside of 7.5%. SO, the second-largest holding of the XLU, has performed in line with the sector and overall market this year while possessing an impressive 3.79% dividend yield. Notably, the stock recently took out its previous pivot high from the beginning of the year and is now approaching a multi-year area of resistance near $75. If SO can push above and hold above that zone, momentum could occur for SO and the overall sector. DUK, the ETF’s third top holding, is also trending above rising key SMAs. However, DUK presents a more intriguing setup that might boost the sector's momentum if it follows through. DUK has formed a base on a higher timeframe and is steadily approaching a major potential inflection area near $100. Should the stock break above this level, momentum to the upside might be explosive. Before you consider Duke Energy, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Duke Energy wasn't on the list. While Duke Energy currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
3 Bargain Stocks Near 52-week Lows 2024-04-25 13:45:00+00:00 - Key Points After the market sold off on disappointing Fed announcements, some of the market's most valuable brands also became bargains. With double-digit upside ahead of them, according to analysts, investors need to add these to a watchlist soon. If the Fed does decide to cut rates in September, these names would make for a massive rally opportunity. 5 stocks we like better than adidas Markets were scared to wake up to the Federal Reserve (the Fed) pulling the rug. After pricing in the proposed interest rate cuts for 2024, which were set to be implemented by March, then May, and now September, according to the CME’s FedWatch tool, markets retraced on the thought of no more cuts coming this year. Lucky for investors who understand where value and stability come from, leading consumer discretionary stocks are included in this sell-off. Even one of the strongest in the consumer staples space saw its price approach a new 52-week low. Get adidas alerts: Sign Up Today, investor portfolios would be best served by adding Nike Inc. NYSE: NKE, Starbucks Co. NASDAQ: SBUX, and even Pfizer Inc. NYSE: PFE to their watchlists. Each with its own merit, these companies become undeniable bargains to consider in the coming quarters. Nike’s Moat Obeys No Cycle NIKE Today NKE NIKE $93.94 -0.70 (-0.74%) 52-Week Range $88.66 ▼ $128.68 Dividend Yield 1.58% P/E Ratio 27.63 Price Target $116.26 Add to Watchlist That’s right. What once started as a discretionary item, the Nike brand has become a commodity across the U.S. consumer market. Despite carrying the burden of higher-than-expected inflation, U.S. consumer sentiment has now broken to a 3-year high Financial stocks like Bank of America Co. NYSE: BAC earnings show deteriorating credit card environments, with declining average FICO scores and rising credit card delinquencies. However, not even these trends can act to stop Nike’s penetration. Investors can imagine the positioning that Nike finds itself in, but here are some actual figures. As of 2023, Nike took 43.7% of the global sportswear market share, with Adidas OTCMKTS: ADDYY coming in second with nearly half of Nike’s take at 23.7%. Despite trading at 73% of its 52-week high, Nike’s future earnings are regarded above Adidas’ even though the stock trades at 100% of its 52-week high today. A forward P/E ratio of 24x gives Nike a premium of 45.6% over Adidas’s 16.5x valuation. A consensus price target of $116.3 a share gives the stock a net upside of 22.3% from where it trades today. This $143 behemoth still manages to generate an average return on invested capital (ROIC) rate of over 15%, giving investors a chance to buy this wealth compounder at generationally low prices. Generational Wealth in Starbucks Starbucks Today SBUX Starbucks $87.84 -0.91 (-1.03%) 52-Week Range $84.29 ▼ $115.48 Dividend Yield 2.60% P/E Ratio 23.49 Price Target $106.68 Add to Watchlist Once just another coffee shop, Starbucks is now one of those inflation-resistant stocks that can’t seem to stop compounding. Raising prices by as much as 4% over the past year, according to the company’s first quarter 2024 earnings release , shows the brand’s ability to keep profits above costs without affecting demand. Through this pricing power, management can get the company’s retained capital to compound at ROIC rates of up to 23% a year, one of the reasons behind the stock’s stellar five-year performance of 141%. Now that it trades at only 76% of its 52-week high price, the stock may become a price target soon. On a P/E ratio basis, Starbucks stock still commands a near 15% premium in its 23.5x multiple compared to the retail sector despite the stock price falling to these levels. Through a current consensus price target of $106.7 for Starbucks, Wall Street analysts are calling for up to 21% upside in the name from where it trades today. More than that, the stock’s institutional quality is still intact, as over the past 12 months, up to $21.8 billion has made its way into Starbucks. Pfizer’s Every Day Reliability Pfizer Today PFE Pfizer $25.26 -1.01 (-3.84%) 52-Week Range $25.23 ▼ $40.37 Dividend Yield 6.65% P/E Ratio 70.17 Price Target $36.33 Add to Watchlist Exposed to the explosive characteristics of some pharmaceutical stocks , which tend to rally on drug trial news, Pfizer carries all the excitement of a small capitalization name with most of the stability that comes from a $150 billion behemoth. Part of the low beta group, this stock lacks volatility, making for a great potentially ‘passive’ buy and hold strategy. The stock is so cheap today; at only 65% of its 52-week high, its dividend yield rose to levels not seen since the financial crisis 2008. Paying investors a 6.4% yield helps them beat stubbornly high inflation rates in the U.S. and stay above the 10-year treasury bond, which currently pays 4.6%. Wall Street analysts set price targets at $36.3 a share, and most recently (as of April 2024), those at Cantor Fitzgerald saw it fit to boost valuations up to $45 a share. To prove these analysts right and close the generationally low price, the stock would need to rally by as much as 71% from where it trades today. Before you consider adidas, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and adidas wasn't on the list. While adidas currently has a "Buy" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
Chicago Bears to seek public funding in $5bn plan for new lakefront stadium 2024-04-25 12:47:00+00:00 - The Chicago Bears unveiled a nearly $5bn proposal Wednesday for an enclosed stadium next door to their current home at Soldier Field as part of a major project that would transform the city’s lakefront, and they are asking for public funding to help make it happen. The plan calls for $3.2bn for the new stadium plus an additional $1.5bn in infrastructure. The team and the city said the project would add green and open space while improving access to the city’s Museum Campus and could also include a publicly owned hotel. “This is not an easy project, but Chicago doesn’t like it easy,” Bears president Kevin Warren said. The announcement at Soldier Field comes during a busy week for the Bears. They are expected to take 2022 Heisman Trophy winner Caleb Williams with the No 1 pick in the draft on Thursday night and bank on the USC quarterback to solidify a position that has long been a sore spot for the founding NFL franchise. The team said last month it was prepared to provide more than $2bn in funding toward a publicly owned stadium in the city. The proposal calls for $2.025bn from the Bears, $300m from an NFL loan and $900m in bonds from the Illinois Sports Facilities Authority. The funding from the ISFA would involve extending bonds of the existing 2% hotel tax. The process, the vision and the steps that need to be taken to build a #StadiumForChicago ⤵️ — Chicago Bears (@ChicagoBears) April 24, 2024 The Bears said the project would generate $8bn in economic impact for the region. It would be built in three phases and take up to five years. The new stadium would be constructed on a parking lot just south of Soldier Field, the Bears’ home since 1971. The team’s lease at the 100-year-old stadium runs through 2033. Mayor Brandon Johnson gave a full-throated endorsement, saying the project is in line with Daniel Burnham’s “Plan of Chicago”. He said there would be no tax hikes or new taxes for Chicago residents. Renderings show the Bears’ stadium would have a translucent roof and massive glass panels that would bring in sunlight and allow for views of Chicago’s famed skyline. The plan is to host major concerts throughout the year as well as Super Bowls, Final Fours and Big Ten championship games. Though Soldier Field’s famed colonnades would be preserved, the spaceship-like stadium that was installed in the renovation two decades ago would be torn out and replaced by playing fields as well as park space. The plan calls for a pedestrian mall, food and beverage options, a promenade and plaza. “My administration insisted that any new project – especially one on public land – must deliver strong public benefit and public use for the City of Chicago, and I am pleased today that this plan does exactly that,” Johnson said. Illinois governor JB Pritzker, however, said he wasn’t on board. “I remain skeptical about this proposal and I wonder whether it’s a good deal for the taxpayers,” Pritzker told reporters Wednesday at an unrelated news conference. “I’m not sure this is among the highest priorities for taxpayers.” Illinois’ top legislative leaders were also doubtful. “If we were to put this issue on the board for a vote right now, it would fail and it would fail miserably,” Illinois house speaker Emanuel ‘Chris’ Welch said at an unrelated news conference. “There is no environment for something like this today.” However, he added that the environment in Springfield does change. The proposal comes as two other Chicago sports teams, including the White Sox and Red Stars, have expressed interest in public funding for new stadiums. Warren, who replaced the retired Ted Phillips a year ago, played a role in the construction of US Bank Stadium in Minneapolis through a public-private partnership when he worked in the Minnesota Vikings’ front office from 2005 to 2019. The Bears spent $197.2m more than a year ago to purchase the site of the shuttered Arlington International Racecourse from Churchill Downs Inc. They envisioned building a stadium on the 326-acre tract of land some 30 miles northwest of Soldier Field, with restaurants, retail and more on the property – all for about $5bn, with some taxpayer help. The Bears had said they would pay for the stadium in Arlington Heights, with taxpayer dollars covering infrastructure costs such as roads and sewers. Those plans stalled, with the team citing a property assessment it said was too high. They would remain tenants by staying in Chicago rather than owning a stadium in Arlington Heights. But Warren said he sees it as more of a partnership with the city rather than a landlord-tenant relationship. “I believe in Mayor Johnson,” Warren said. “I believe in his staff, his vision, I believe in this city. I don’t look at it as being a renter. I look at it as being able to develop a relationship, to be able to come together. People asked that same question in Minnesota – why would you want to be a renter?”
A Mega Market Reset for Meta Platforms Stock 2024-04-25 12:45:00+00:00 - Key Points Meta Platforms had a solid quarter, outperforming on the top and bottom lines and generating robust cash flow. Analysts are trimming targets, but the new range aligns with a consensus or a higher outlook for the market. Meta Platforms stock could rise 20% to 50% over the next few quarters and upward of 100% within twelve to eighteen months. 5 stocks we like better than Meta Platforms Anyone waiting for a pullback in Meta Platforms NASDAQ: META stock should cheer the Q1 results. The news underscores the company’s strengths yet resulted in a 15% correction in the share price. Analysts are adjusting their targets but continue seeing substantial upside, leading the market to new heights. Weak guidance or not, Meta is looking ahead to a solid year and will likely outperform its targets. Marketbeat.com is tracking more than a dozen analysts' revisions that suggest a 20% to 50% upside from the post-release price point. Most revisions are lower but range from slightly below the consensus to well above it. Several revisions are higher and also align with a consensus-or-higher outlook for share prices. The takeaway is that the consensus target, up 135% in twelve months, aligns with the all-time high share price and continues to rise. The price action in Meta may be volatile over the next few weeks or months, but a bottom for the market is close, and a rebound is on the way. Get Meta Platforms alerts: Sign Up Meta Platforms Builds Leverage in Q1 Meta Platforms Today META Meta Platforms $441.38 -52.12 (-10.56%) 52-Week Range $208.88 ▼ $531.49 Dividend Yield 0.45% P/E Ratio 29.62 Price Target $520.28 Add to Watchlist Meta Platforms had a solid quarter in Q1, producing revenue of $36.46 billion. The 27.3% YOY growth outpaced the Marketbeat.com analyst's consensus forecast by 660 basis points on increased users, ad delivery, and revenue per ad. DAP increased by 7% across the enterprise, with ads served up 20% and revenue per ad up 6%. Margin is another area of strength. The lead into efficiency and leverage gained with revenue growth shaved 1300 basis points off the operating margin. Because of this, the bottom line results grew by 115%, leaving GAAP earnings at $4.71 and the company in robust financial conditions. Guidance, specifically the increase to CAPEX, is why the market for Meta stock reset. The company issued guidance for Q2 that aligns with the analysts' consensus forecast but with the midpoint below it. That was compounded by a 12% increase in planned spending as the lean into AI infrastructure ramps. The problem for the market is that AI costs more than expected and isn’t delivering the secretly hoped-for strength. However, guidance is still strong, with revenue forecast up 20% YOY in Q2 and a positive long-term outlook. Meta Platforms Increases CAPEX, Analysts Defend the Move The chatter on Wall Street is bullish. The takeaway is that the momentum move in Meta stock is likely over, but the next growth phase lies ahead. AI has already benefited results and should continue to add momentum as technology advances. AI is also seen to aid Meta’s moat, increasing its differentiation from other social media companies and ensuring its long-term dominance. Analysts also point to past investment cycles, which have produced robust returns for investors. The stock is down 15% today but up 300% from recent lows and 1000% over the last ten years. The technical outlook for Meta stock is robust. Earlier this year, the break to new highs signaled an inflection in the market that could lead to the $665 region or higher over the next twelve to eighteen months. The swing from the low to the break-out point is worth $287 or 311%, providing projects for future price movement. The critical time for Meta stock is now. The market is correcting after a substantial rally and may fall further before rebounding. The critical support target is the previous high, near $380, which may be reached soon. A rebound will likely follow if the market confirms support at this level. If not, Meta stock could crash through support and fall back into its prior trading range. Because the analysts support the market, that is not expected. The more likely scenario is that Meta will consolidate at or near current levels until more news is available later in the year. Before you consider Meta Platforms, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Meta Platforms wasn't on the list. While Meta Platforms currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
U.S. Growth Slowed in First Quarter, but Inflation Remained a Bug 2024-04-25 12:35:24+00:00 - The U.S. economy remained resilient early this year, with a strong job market fueling robust consumer spending. The trouble is that inflation was resilient, too. Gross domestic product, adjusted for inflation, increased at a 1.6 percent annual rate in the first three months of the year, the Commerce Department said on Thursday. That was down sharply from the 3.4 percent growth rate at the end of 2023 and fell well short of forecasters’ expectations. Economists were largely unconcerned by the slowdown, which stemmed mostly from big shifts in business inventories and international trade, components that often swing wildly from one quarter to the next. Measures of underlying demand were significantly stronger, offering no hint of the recession that forecasters spent much of last year warning was on the way. “It would suggest some moderation in growth but still a solid economy,” said Michael Gapen, chief U.S. economist at Bank of America. He said the report contained “few signs of weakness overall.”
Nucor Stock Earnings Riding the Steel Industry Wave 2024-04-25 11:25:00+00:00 - Key Points First-quarter manufacturing earnings are on watch as companies like Nucor give mixed signals. Within the trends, investors can find the true momentum behind the industry and why Nucor's business could push higher. Analysts see double-digit upside, and markets are willing to pay a premium for future revenues; here's why. 5 stocks we like better than Nucor After outperforming the Industrial Select Sector SPDR Fund NYSEARCA: XLI by more than 15% over the past five months, shares of Nucor Co. NYSE: NUE have now fallen behind the sector after reporting its first quarter 2024 earnings, arguably the most important earnings for the year as they set the tone for the stock. Even though the quarterly results were far from stellar, analysts continue to see this stock as a leader that could outperform the market in the coming months. The industrial and manufacturing sector in the United States remains a focal point for traders and investors this year. Get Nucor alerts: Sign Up Other industry players, such as Steel Dynamics Inc. NASDAQ: STLD, have also experienced bearish price action after reporting earnings, with this one down almost 3% on results. It’s a Manufacturing Year After more than a year of contracting, the ISM Manufacturing PMI Index pushed its first month of expansion in March, following a breakout thesis set out by Goldman Sachs analysts. In its 2024 macro outlook report, the investment bank told Main Street to watch out for increased profits and activity in the sector. So far, it’s been proven right, as February’s PMI reported a 6.4% jump in export orders, backed by the belief of coming interest rate cuts by the Federal Reserve (the Fed). According to data from the CME's FedWatch tool, the Fed is expected to initiate these proposed cuts by September 2024. Interest rate cuts could lower the dollar's value in the currency markets, making American exports, like steel, more attractive. Even foreign companies could be after U.S. steel-makers -- in fact, Japan’s Nippon Steel Co. OTCMKTS: NISTF recently made a takeover bid for United States Steel Co. NYSE: X More than that, the Biden administration took measures to increase steel and aluminum production within the United States, boosting jobs and corporate activity in the sector. Now that the fundamental macro trend is set for the steel industry, here is why Nucor’s earnings weren’t actually that bad. It’s a Bottoming Markets Want to Buy Nucor Today NUE Nucor $175.88 +3.12 (+1.81%) 52-Week Range $129.79 ▼ $203.00 Dividend Yield 1.23% P/E Ratio 10.35 Price Target $193.14 Add to Watchlist Nucor’s price-to-sales (P/S) ratio commands a 50% premium compared to the steel mills industry. Willing to pay 1.2x Nucor’s sales over the industry’s average 0.8x gives investors a gauge into future market sentiment. There must be a reason markets would be willing to overpay for the company’s sales over its peers, and the answer may lie in its financials. In the first quarter earnings press release, investors will notice a shift from the year-on-year trend to the quarter-on-quarter trend. Sales declined 7% in the past year but rose 6% over the quarter. This makes sense after investors revisit the contractionary periods in the manufacturing PMI, justifying the quarterly sales breakout as the sector pivoted back into expansion. Steel prices are 17% lower than a year ago, though the past month reflects a rally of 7.8% as a sign of a bottoming industry. Commodity-dependent stocks tend to move with the underlying commodity’s cycle, and most on Wall Street can agree this time, it’s Nucor’s bottom. The company’s management agrees that the stock is on the cheaper end and is set to surprise markets with a potential uptrend soon. This can be proved by the $1 billion allocated to share buybacks in the first quarter, representing close to 2.5% of the company’s market capitalization. Wall Street’s Vote By boosting their price targets to $240 a share, Citigroup analysts call for a net upside of 40% from today’s prices. The recent selloff in the stock comes as investors focus on the 22.2% annual decline in earnings per share (EPS) when they should focus on the 9.5% jump over the quarter instead. Despite the negative sentiment on these recent earnings, bears have decided to leave this stock alone. Over the past month, Nucor stock’s short interest declined by 4.3%, bringing the net percentage of short shares down to 2%. United States Steel stock trades at only 73% of its 52-week high, even after talks of being bought out, and is arguably one of the biggest steel exporters in the U.S. On the other hand, Nucor stock trades at 85% of its 52-week high, giving investors the final bullish vote through price action. Before you consider Nucor, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Nucor wasn't on the list. While Nucor currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
Simpson Manufacturing: Buy This Future Dividend King While Down 2024-04-25 11:10:00+00:00 - Key Points Simpson Manufacturing stock is down because of today's end-market weakness, but the long-term outlook is robust. The company's healthy balance sheet and capital return strategy suggest this stock will be crowned a Dividend King. Analysts favor the name and see it moving higher. 5 stocks we like better than Simpson Manufacturing Simpson Manufacturing Co. NYSE: SSD sent its share price reeling as it reported its struggles during Q1 2024, but this is a great time to buy this construction stock. You don’t buy Simpson because of today’s results, or even next quarter’s or next year’s, but because of the long-term outlook. This company is a budding Dividend King on track to sustain solid dividend growth for several decades. Sustained dividend growth is important because an increasing distribution helps offset the rot of inflation while compounding returns on investment and building value for shareholders in other ways. Sustained distribution increases attract buy-and-hold investors, reduces volatility, and helps support above-average valuations. Get Simpson Manufacturing alerts: Sign Up Stocks like Cintas Corp. NASDAQ: CTAS are a great example. That company’s stock has risen by quadruple digits while steadily growing the business and leveraging that growth into sustainable distribution increases. The company has increased for nine consecutive years, with the 10th increase set for this summer. Simpson Manufacturing Dividend Payments Dividend Yield 0.64% Annual Dividend $1.08 Dividend Increase Track Record 3 Years Annualized 3-Year Dividend Growth 4.83% Dividend Payout Ratio 13.53% Recent Dividend Payment Apr. 25 See Full Details While Simpson’s dividend is not attractive at face value, it's the internal metrics that make it shine. The 0.65% yield is below the industry and S&P 500 average but far safer and more reliable. The company’s balance sheet is a fortress with cash flow supporting the internal funding of growth, cash building compared to last year, and very low leverage ratios: long-term debt-to-equity is about 0.25x while debt-to-cash is about 1.25x. The takeaway is that the 12% payout ratio leaves ample room in the books to sustain the 5% CAGR, and earnings growth is expected. 2024 will be a challenging year, but it will lead to a rebound in housing in 2025. Simpson Manufacturing Has Tough Quarter; Guides for Margin Growth Simpson Manufacturing had a tough time in Q1, with weaknesses across the business. The company reported $530.58 million in net revenue for a decline of 0.7% that missed the analyst's consensus by 260bps. North America and APAC saw tepid growth below 0.5%, offset by more significant European weakness. Sales in Europe fell 3.4% due to declining volume, which would have been worse without favorable FX translation. In North America, volume grew by 8% but was offset by pricing and timing of discounts. Margin was also a concern in Q1. The gross margin contracted by 120bps on rising costs compounded by increased spending. Income from operations fell by 18.6%, net income by 14.5%, and GAAP earnings by 13.5% to $1.77. The $1.77 is 15 cents shy of the consensus but sufficient to sustain operational quality and the outlook for capital returns. Capital returns include dilution-fighting share repurchases that reduced the share count by 0.45% average in Q1. The guidance is non-specific regarding revenue and earnings but comes with a favorable outlook for margin. The company expects the full-year margin to widen to 20% to 21.5% from 18.1% for a gain of 240bps at the high end. Simpson Manufacturing Returns to More Sustainable Levels Simpson Manufacturing Today SSD Simpson Manufacturing $170.82 +1.20 (+0.71%) 52-Week Range $117.08 ▼ $218.38 Dividend Yield 0.63% P/E Ratio 21.41 Price Target $195.00 Add to Watchlist Among the problems for Simpson’s stock price today is the valuation. The stock is trading at 22x this year’s outlook and 18x next year’s after its implosion, suggesting higher prices may be hard to come by soon. However, At 18x next year’s earnings, there is an opportunity for a price-multiple expansion as the business pivots back to growth. Analysts are bullish on the stock, which now has a 15% upside relative to the consensus. Consensus may be adjusted over the next few weeks, but a reversal in sentiment is not expected. The price action in SSD fell hard following the report, and it is down again the day after, but there are signs of solid support. The initial sell-off found support at a critical level and resulted in historically high volume. The volume spike and signs of support suggest capitulation in the market and may signal a bottom. If so, SSD shares will move sideways at this level until later in the year. If not, SSD could fall below critical support, in which scenario it could fall to the $120 level. Before you consider Simpson Manufacturing, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Simpson Manufacturing wasn't on the list. While Simpson Manufacturing currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here