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🍟 A Happy Meal for Investors?
Plus, the IPO market officially died in 2023.
Happy Sunday to everyone on The Street.
The 2023 IPO market was officially a snoozefest. We've seen just 106 companies awkwardly shuffle into the public markets, scraping together just $19.4 billion, per Renaissance Capital's tally. This follows 2022's less-than-stellar showing where a paltry $7.7 billion was raised, making it one of the IPO market's least memorable years.
In a typical year, Wall Street expects at least $50 billion to be raised. With the S&P 500 up nearly 20%, you'd think companies would be lining up to make their debut. But as we’ve seen that’s simply not the case.
The last noteworthy IPO was Birkenstock's debut back on October 10th. Since then? It's been tumbleweeds and crickets in IPO land. Below is a live look at all the first and second-year investment banking analysts who thought they would be working on deals the past two years.
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Review
The U.S. stock market managed to close its sixth straight week of gains, with the S&P 500 Index closing the week at its highest level since January 2022.
Market sentiment continues to be shaped by the anticipation of Federal Reserve interest rate cuts in 2024. Yet the euphoria surrounding these rate cuts was slightly dampened on Friday by a stronger-than-expected labor market report and an unexpected surge in the University of Michigan consumer sentiment for December.
Investors now eagerly await the release of November’s inflation data on Tuesday next week and the Federal Reserve Open Market Committee meeting on Wednesday.
The best-performing sector of the week was consumer discretionary, driven by rallies in travel-related stocks like Carnival Corp, Norwegian Cruise Line Holdings, and Royal Caribbean Cruises Ltd.
The worst-performing sector was energy, as oil recorded its fifth consecutive week in the red, the worst streak in five years.
Meanwhile, Google introduced Gemini, aiming to outshine OpenAI’s ChatGPT. TikTok parent ByteDance is ready to unveil an AI model that could be even more powerful, intensifying the AI technology race.
Apple plans a significant leap in battery performance for the iPhone SE 4, potentially increasing battery capacity by 60%, driven by advanced technology and design enhancements.
The highly anticipated trailer for Rockstar Games’ Grand Theft Auto 6 smashed viewing records, achieving over 108 million views within 48 hours, surpassing its predecessors and showcasing the game’s massive popularity.
Lastly, JPMorgan CEO Jamie Dimon spoke in favor of a halt to Bitcoin and the cryptocurrency industry, triggering a wave of varied reactions and discussions across social media platforms. Dimon’s remarks came after the cryptocurrency reached $44,000 and a total market value of over $860 billion this week.
Preview
Monday
Data: November Consumer Inflation Expectations: U.S. consumer inflation expectations decreased from 3.7% in September to 3.6% in October 2023.
Earnings: Oracle (ORCL): Last quarter, Oracle shared that its $28.2 billion acquisition of Cerner was slowing down its revenue growth, but it was in the process of an accelerated transition to the cloud.
Tuesday
Data: November CPI Inflation (Headline and Core): The annual inflation rate in the U.S. slowed to 3.2% in October, while core inflation edged down to 4%.
Wednesday
Data: Weekly Mortgage Rate Update: The average 30-year fixed-rate mortgage fell to 7.17% last week, its lowest level since August. Producer Price Inflation: Producer prices fell 0.5% month-over-month in October 2023, defying expectations of a 0.1% increase.
Earnings: Adobe (ADBE): In September, Adobe announced record revenue of $4.89 billion for its fiscal third quarter.
Thursday
November Retail Sales: Retail sales in the U.S. decreased by 0.1% month-over-month in October, ending a six-month trend of increases.
Earnings: Costco (COST): Much like other major retailers including Target and Walmart, Costco said it was seeing weaker trends in discretionary spending in its last earnings announcement.
Friday
Data: Monthly Composite, Services, and Manufacturing PMIs.
Darden Restaurants (DRI): In its previous earnings, the Olive Garden owner saw a double-digit increase in sales, despite a decline in its fine-dining segment.
Kendall Jenner Would Be Happy
Barron’s Gives the Green Light To PepsiCo
PepsiCo (PEP) investors have had a disappointing 2023.
The stock has dropped around 7% while the S&P 500 has grown roughly 20%.
Barron’s says it’s time to grab PEP off the shelves and put it into portfolios.
The magazine sees improving margins next year thanks to reductions in shipping and labor costs. Investors can also bank on a dividend that’s gone up for over 50 years straight and $1 billion in share buybacks.
Tune Out the Noise
Some investors are skittish toward Pepsi because of new weight-loss drugs like Ozempic. They anticipate a consumer shift away from snack foods and toward healthy foods.
Pepsi has responded by offering healthier products, including zero-sugar Pepsi and Gatorade. It has acquired companies offering protein shakes, protein bars, and dried fruits. Barron’s anticipates that PepsiCo’s diversity will allow them to grow, even as weight-loss drugs gain traction.
The panic over new weight-loss drugs might be overblown. If this is the case, PEP should recover some of its 2023 losses.
Part of a Well-Balanced Portfolio
Money managers see Pepsi as a stable stock to add to any portfolio.
Laffer Tengler Investments calls PEP its “largest staples holding” with the dividends and stable business model providing support during market downturns.
The Street has an average price of about $190, implying a 12% boost from the current share price.
A bounce-back in 2024 and a healthy dividend could give PEP investors a lot to cheer about this time next year.
Which would you rather own? |
This Infrastructure Stock Is Building a Name for Itself
A Long History of Success
This maker of coatings, sealants, and building materials has been making investors money for decades.
RPM International (RPM) has a consistent track record for boosting its dividend annually, with 50 years of increases.
Now could be a great time to get in on the action. The company has a broad international reach, with products used anywhere from a bridge in Australia to a water treatment plan in Colombia.
RPM is also making efforts to cut costs internally, with a plant to increase gross margins to 42% by May 2025.
Wall Street Backs RPM
The infrastructure play has some supporters on the Street too.
An analyst at Deutsche Bank rates it a buy, emphasizing the company’s cost-cutting efforts.
Seaport Research Partners says higher interest rates are a drag, but infrastructure investments should propel the stock forward. Seaport’s $120 price target implies a roughly 15% increase from RPM’s current share price.
Not Just a Dividend Story
Investors are certainly benefiting from RPM’s dividend history. However, executives are returning capital in other ways too.
The company could buy back up to $50 million in shares during the current fiscal year. RPM also has a history of acquisitions, and it’s looking to continue that trend in the future.
This combination of increasing dividends, buybacks, and internal cost discipline makes RPM a solid pick.
What are your thoughts on RPM? |
PRESENTED BY NINJATRADER
Up your futures trading game with NinjaTrader’s award-winning technology and brokerage services.
Get unlimited live simulated trading: Sharpen your trading skills and test your ideas risk-free with real-time streaming market data.
Get expert education and market commentary: Join daily livestreams as we prepare and trade the markets in real time, plus premium on-demand training courses designed to help you grow your trading skillset.
Get cutting-edge tech features: Customize your trading setup with award-winning platforms and technical analysis tools, including access to 1,000s of third-party indicators, strategies and apps.
Get low margins and commissions: Trade futures with $50 day trading margins and commissions as low as $.09 per micro contract—no deposit minimum requirement.
With all this, it’s no wonder we’re consistently voted an industry leader by the trading community.
Better futures start now. Get started for free with NinjaTrader today.
A Happy Meal for Investors?
I’m Lovin’ It
McDonald's Corp (MCD) is optimistic about the future, even amidst economic uncertainty.
An analysis by Oppenheimer's Brian Bittner sheds light on its financial prospects, highlighting historical resilience, menu pricing, and anticipated 2024 performance.
Bittner also set a price target of $315, well above a current share price of around $285.
Great Expectations
History can sometimes repeat itself. McDonald's was the only public restaurant company to maintain positive earnings revisions throughout the economic downturn of 2008. This historical resilience suggests that a challenging macro environment could serve as a positive catalyst for the company.
In 2024 and 2025, McDonald's is expected to mirror its 2020 performance, with mid-single-digit system sales growth and EBIT margins in the high 40s. 2024 in particular holds an EPS estimate of $12.47 for McD’s.
From Wall Street to the Great Wall
Recently, McDonald's has decided to take a bold step by expanding control over its Chinese operations.
Reports from Euromonitor indicate that the market value of limited-service restaurants in China is expected to grow by about 4% annually through 2025. McDonald's is poised to capture a significant share of this growth. It currently commands 70% of the limited-service burger-focused restaurants in China.
More than just leading the industry in flipping burgers, McDonald’s is taking calculated risks to adapt to global market changes. Investors and executives alike hope to see these risks pay off.
Are you bullish or bearish on McDonald’s over the next 24 months? |
Last Week's Poll Results
Which stock will have the best performance over the next five years?
🟩🟩🟩🟩🟩🟩 Medtronic (MDT)
🟨🟨🟨⬜️⬜️⬜️ Abbott (ABT)
🟨🟨🟨⬜️⬜️⬜️ Boston Scientific (BSX)
Which stock will have the best 2024?
🟩🟩🟩🟩🟩🟩 Corteva (CTVA)
🟨⬜️⬜️⬜️⬜️⬜️ Ingredion (INGR)
🟨🟨🟨⬜️⬜️⬜️ Archer-Daniels-Midland (ADM)
Are you bullish or bearish on Vontier (VNT) over the next 12 months?
🟩🟩🟩🟩🟩🟩 🐂 Bullish
🟨🟨🟨⬜️⬜️⬜️ 🐻 Bearish
Join the conversation