🚂 A Red Sea-Related Stock

How to play the shipping disruption in the Middle East.

Happy Wednesday afternoon to everyone on The Street. Here's a snapshot of where markets ended the trading session, plus tomorrow's trade idea delivered to you today.

  • 🟥 | US stocks stumbled again Wednesday. The Dow slipped 0.2%, the S&P lost 0.5% and the Nasdaq fell 0.6%, as Treasury yields rose on robust U.S. economic data. December retail sales came in hotter than anticipated, which means the Fed may not cut rates as quickly as expected.

  • 📈 | One Notable Gainer: Sinclair's shares surged over 17% following an announcement that they settled all litigation with Diamond Sports Group. This included a $495 million cash payment to Diamond.

  • 📉 | One Notable Decliner: Rivian's stock dropped almost 6% after Deutsche Bank downgraded it to a hold rating.

  • 🚂 | Tomorrow's TradeA Red Sea-Related stock. Scroll down for more.

Plus, fortify your portfolio with gold today and plan for a better tomorrow.


Which asset do you think will outperform in 2024?

🟨🟨🟨🟨🟨⬜️ 🏘️ REITs

🟨🟨🟨⬜️⬜️⬜️ 💵 High-quality US bonds

🟩🟩🟩🟩🟩🟩 ⚡ Utility company stocks

S&P 500 Heatmap. Credit: Finviz.

All stocks listed on US stock exchanges. Credit: Finviz.

Foreign ADR stocks on NYSE, NASDAQ, AMEX. Credit: Finviz.


SAVE: Spirit Airlines fell 22% after a federal judge blocked JetBlue's $3.8 billion bid for Spirit, leading to downgrades by Bank of America and Susquehanna.

CART: Instacart's shares rose 7% after Wolfe Research upgraded the stock to outperform from peer-perform.

TSLA: Tesla's stock declined roughly 2% following price cuts for its Model Y vehicles in Europe, soon after similar reductions in China.

MARA: Marathon Digital's stock fell 3% despite an upgrade to buy from BTIG and recent acquisitions of two bitcoin mining sites.

FSR: Fisker's shares fell 7.5% after TD Cowen downgraded it to market perform, citing distribution strategy shifts, delivery issues, missed timelines, and a softer overall EV market.


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CNBC: JPMorgan Chase CEO Jamie Dimon on Wednesday praised former President Donald Trump’s record and admonished Democrats to be “more respectful” of Trump’s supporters, or else risk hurting President Joe Biden’s reelection bid.

Strategas: Technical analyst Chris Verrone told clients in a note early Wednesday that health care and REITs are outperforming in early 2024.

Verdence Capital: Chief Investment Officer Megan Horneman believes rates may not be lowered until the second half of 2024.

CNBC: Restaurant Brands International is acquiring Carrols Restaurant Group, the largest U.S. Burger King franchisee, for approximately $1 billion in cash.

Euronews: Vodafone has struck a 10-year agreement with Microsoft to deliver AI, digital, and cloud services to over 300 million businesses in Europe and Africa, leveraging the tech giant's advanced technologies.


ship container GIF

Disruption in the Red Sea

Recent conflicts in the Middle East, specifically the Red Sea, have significantly disrupted supply chains across the world. As a result, companies are looking for alternative global shipping routes. 

This inconvenience is overall bad for business, but it could be good for CPKC (CP). CPKC is a merger between two railways: Canadian Pacific and Kansas City Southern. 

The merged railways recently completed a land bridge offering transportation from the Mexican West Coast to the US East Coast.

Speed Is Key

Shipping through the Red Sea had fallen by about 30% in mid-December. 

Ships ready to cruise through the Red Sea or ships coming to or from the Suez Canal were also down by 90% at the beginning of this year.

Alternative routes are hard to come by. Sailing around the Cape of Good Hope in Africa adds 12 days of travel. The Panama Canal is no quicker, with low water levels causing delays. 

That’s where CPKC comes in, with its land bridge cutting transit time by 10 to 14 days when compared to the Panama Canal route.

Looking To the Future

According to analysts, CPKC’s stock could offer investors a haven from a weakening macroeconomic landscape. They also believe it has the best long-term earnings outlook of any railroad. 

The railroad’s management is projecting earnings per share to double to CAD$8 by the fiscal year ending in 2028. Analysts believe the stock price will double to CAD$200 over the same period. 

Lately, there has been much frustration in the world of shipping. CPKC could provide some relief to businesses and investors alike.

Are you bullish or bearish on CPKC (CP) in 2024?

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WSJ: Chinese researchers isolated and mapped the virus that causes COVID-19 in late December 2019, at least two weeks before Beijing revealed details of the deadly virus to the world, congressional investigators said.

CNN: The Consumer Financial Protection Bureau proposed a rule to limit excessive overdraft fees by large banks and credit unions, potentially saving consumers up to $3.5 billion annually, applicable to institutions with over $10 billion in assets.

BBC: President Zelensky advocates using the entire $300 billion in seized Russian assets for Ukraine's rebuild, challenging the G7's more conservative approach amid European banking concerns.

Bloomberg: Apple Inc. may confront a U.S. antitrust lawsuit by March, with the Justice Department gearing up to challenge the tech giant.

Axios: America's major banks incurred billion-dollar losses last quarter to cover bailouts of uninsured depositors at Silicon Valley Bank and Signature Bank, totaling $9 billion.

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