4 Stocks Expected to Have the Fastest Growing Jobs in the Next 5 Years

Posted on by The INO.com Team

An apocryphal quote attributed to Charles Darwin observes that it is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.

Regardless of what the ideas and constructs that have shaped and perpetuated our civilization would want us to believe, there is hardly an aspect of our modern life that is immune to or exempted from the laws of nature. At least (and hopefully at most) metaphorically, we are either running for food or running from being food often without being able to tell the difference.

Consequently, in an era of ever-increasing automation, digitization, and decarbonization, individuals and institutions more prepared to accept and embrace change would thrive in the intraspecific struggle for economic existence at the expense of their more inertial peers.

According to the Future of Jobs Report 2023 by the World Economic Forum, in the next five years, almost a quarter of jobs (23%) are expected to change through growth of 10.2% and a decline of 12.3%. Employers anticipate 69 million new jobs to be created and 83 million eliminated, amounting to a net decrease of 14 million jobs, or 2% of current employment.

According to Moody’s Chief Economist, Mark Zandi, the macro trends driving the change present challenges, such as the displacement of the majority of the existing workforce while demanding significant adaptations from the talent that is being retained and disrupting business by lowering entry barriers and switching costs to creating a level playing field.

However, on the flip side, he also highlights the enormous opportunity for improvements in productivity and efficiency, which would be instrumental in ensuring economic growth while managing a general demographic decline.

With specialization, digitization, and sustainability driving demand for talent and reshaping the global world of work at an unprecedented rate, white-collar generic and repetitive jobs are being automated away. At the same time, businesses can’t find enough specialists to design and implement artificial intelligence-led automation and blue-collar workers to take care of work that is yet to be automated.

Consequently, autonomous and electric vehicle specialists top the list of fastest-growing jobs in 2023. Close behind, AI and machine learning specialists could see only slightly less job growth, followed by environmental protection professionals.

Among the non-technological roles, heavy truck and bus drivers, vocational education teachers, and mechanics and machinery repairers look set to see around 2 million new jobs each between 2023-2027.

At the other end of the spectrum, roles like bank tellers, cashiers, and data-entry clerks would be rendered obsolete and, hence, are set to witness the fastest rate of decline in the next five years.

In the context of this fundamental shift, the following businesses which have opted to disrupt themselves and their respective industries rather than being disrupted appear best placed to keep attracting talent in the foreseeable future.

NVIDIA Corporation (NVDA) recently made headlines when its stock got its moonshot due to the widespread public interest in AI. Post its earnings release on May 24; the Santa Clara-based graphics chip maker has stolen the thunder by becoming the first semiconductor company to hit a valuation of $1 trillion.
NVDA’s A100 chips, which are powering LLMs like ChatGPT, have become indispensable for Silicon Valley tech giants. To put things into context, the supercomputer behind OpenAI’s ChatGPT needed 10,000 of Nvidia’s famous chips. With each chip costing $10,000, a single algorithm that’s fast becoming ubiquitous is powered by semiconductors worth $100 million.

During a commencement speech on May 26 at National Taiwan University, NVDA CEO Jensen Huang’s message to his potential recruits was loud and clear, “You are at the beginning, at the starting line, of AI. Run. Don’t walk.”

Tesla, Inc. (TSLA)

The global e-mobility pioneer’s automotive segment includes the design, development, manufacturing, sales, and leasing of electric vehicles as well as sales of automotive regulatory credits.

In the recent earnings call, TSLA’s maverick CEO Elon Musk signaled that the automaker will target larger volumes of sales versus higher margins but said he expects the company “over time will be able to generate significant profit through autonomy.”

The company recently scored a major victory as an infrastructure provider by striking a deal with two of its rival automotive manufacturers, Ford Motor Company (F) and General Motors Company (GM) , to grant their vehicles access to more than 12,000 Tesla Superchargers across the U.S. and Canada starting early next year.

Moreover, since TSLA’s energy generation and storage segment includes the design, manufacture, installation, sales, and leasing of solar energy generation and energy storage products such as the Solar Roof and Powerwall, the stock could also be an energy transition play.

AGCO Corporation (AGCO) manufactures and distributes agricultural equipment and related replacement parts worldwide. The company provides telemetry-based fleet management tools, including remote monitoring and diagnostics, which help farmers improve uptime, machine and yield optimization, mixed fleet optimization, and decision support.

AGCO’s Precision Planting, Headsight, and Intelligent Ag Solutions brands provide retrofit solutions to upgrade farmers’ existing equipment to improve their planting, liquid application, and harvest operations.

On May 4, AGCO announced a capital improvement project, dubbed “Planter Accelerate,” scheduled to begin in the second quarter of this year and continue through the first quarter of 2024. The project aims to increase production capacities for Massey Ferguson and Fendt Momentum planters at its Kansas facilities in Beloit and Cawker City.

Canadian Solar Inc. (CSIQ) is a designer, developer, manufacturer, and seller of solar ingots, wafers, cells, modules, and other solar power and battery storage products internationally. The company, headquartered in Guelph, Ontario, operates through two segments: Canadian Solar Inc. (CSI) Solar and Global Energy.

On June 15, marking its first foray in the United States, CSIQ announced establishing a solar PV module production facility in Mesquite, Texas, with an annual output of 5 GW, equivalent to approximately 20,000 high-power modules per day. This follows the company’s successful track record of production in Canada, China, Brazil, Thailand, and Vietnam.

The new facility, expected to commence production around the end of 2023, represents an investment of over $250 million and will create approximately 1,500 skilled jobs once fully ramped up.

Is Meta Platforms (META) a Buy with Plans for New App to Rival Twitter?

Posted on by The INO.com Team

On October 27, 2022, Elon Musk completed his purchase of Twitter, Inc. Before everyone could let that sink in (figuratively as well as literally), the maverick entrepreneur implemented sweeping changes at the social networking company. In addition to slashing its headcount significantly, it also leaned on automation to moderate content.

While Mr. Musk claims that it has gained users after the change of ownership and management as an advertising-reliant business, Twitter’s troubles are far from over. It has witnessed an exodus of advertisers that was triggered by concerns, including the deterioration of moderation standards at the platform and a botched relaunch of Twitter’s subscription service, which led to a slew of verified impersonator accounts.

On March 10, Facebook-parent Meta Platforms, Inc. (META) announced its plans for a new decentralized, text-based social network. The stand-alone app, codenamed P92, is being built with the expectation of some of Twitter’s disenchanted users looking for alternatives after overhauling the microblogging site.

On June 9, META’s Chief Product Officer Chris Cox said the app aimed for “safety, ease of use, reliability” and giving creators a “stable place to build and grow their audiences.”

Given that public figures reportedly want a similar platform that is “sanely run,” Cox added that META was in discussion with Oprah Winfrey, who has more than 42 million followers on Twitter, and the Dalai Lama, who has nearly 19 million, to be potential users.

The project is being helmed by Adam Mosseri, head of Instagram, META's image-sharing app. The coding began in January, and although no date was given, there is some speculation that it could be released as early as the end of June.

From the screenshots that were shared internally and have since appeared online, the app's layout bore a resemblance to Twitter. However, it would enable users to log in using their Instagram credentials and could allow users to follow accounts they already follow on Instagram.

By relying on a protocol called ActivityPub, which enables interoperability between social networks, META is also exploring integrations allowing users to bring followers from their accounts with existing social networks like Twitter or Mastodon. This could bring down switching costs and encourage adoption.

How the Market Reacted?

META has been finding many takers on the Street in what, according to it, is its Year of Efficiency. In this context, its initiative to take on its more accomplished microblogging peer has been welcomed by investors.

Since the announcement of P92 on March 10, META’s stock has gained around 57% compared to the 14.6% gain of the S&P 500.

The Jury Is Still Out

Decentralization and interoperability are double-edged swords. While META hopes to gain adoption by lowering the entry barriers for users of other networks, in theory, this could also allow users of its new app to take their accounts and followers to apps supported by ActivityPub, such as Mastodon.\

Secondly, excluding its flagship social-networking app, META’s attempts at organic growth have a track record of flops, including the very name of the company and the purpose behind adopting the new nomenclature. Previous attempts at cloning, such as Lasso, which was supposed to offer an alternative to TikTok, have also failed.

Lastly, decentralized social networks, such as Mastodon or Jack Dorsey-backed Bluesky, rely on individual servers that use a uniform protocol, avoiding centralized content control and possible censorship.

Hence it remains to be seen if and how META, which is driven primarily by advertisement revenue, can productively marry decentralization with ownership while respecting the privacy of its users.

4 Oil & Gas Stocks Every Investor Is Watching in the Summer of 2023

Posted on by The INO.com Team

The redrawing of the global energy map and shifting geopolitical inclinations in the Middle East since the beginning of the conflict in Ukraine has been nothing short of a windfall for U.S. energy producers. The U.S. has “gone from (being) a very domestically focused market into an international powerhouse.”

The demand-supply imbalance is not as acute as a year back due to macroeconomic headwinds and the initial pent-up demand from China losing momentum amid its faltering economic recovery.

However, on June 4, while OPEC+, which pumps approximately 40% of the world’s crude, made no changes to its planned oil production cuts for this year, Saudi Arabia announced that it would implement an additional voluntary and (extendable) one-month 1 million-barrel-per-day cut starting this July.
With this decision, the kingdom has reined in its production to 9 million barrels from 10 million barrels, putting upward pressure on crude prices that have been delicately balanced between demand and supply.

Moreover, the Federal Reserve has adopted a hawkish pause to hold rates steady until the economy absorbs the cumulative effect of the earlier ten interest-rate hikes. This could help businesses and consumers breathe a sigh of relief and translate to increased economic activity during the summer and, consequently, demand for energy.

However, the resulting increase in energy demand amid constrained supplies could play into the hands of and lead to short-term gains for U.S. energy producers. In this context, let’s look at a few well-positioned stocks to convert rising energy prices to increased shareholder returns.
As an energy infrastructure company, Cheniere Energy, Inc. (LNG)is engaged in providing clean, secure liquefied natural gas (LNG) to integrated energy companies, utilities, and energy trading companies worldwide.

On May 16, LNG announced its entry into a long-term liquefied natural gas sale and purchase agreement with Korea Southern Power Co. Ltd (KOSPO). Pursuant to the agreement, KOSPO would purchase approximately 0.4 million tonnes per annum (mtpa) of LNG on a delivered ex-ship (DES) basis from 2027 through 2046, with a smaller annual quantity to be delivered starting in 2024.

On February 23, Cheniere Energy Partners, LP (CQP) announced that it initiated the permitting process for significant expansion of the LNG export facility at Sabine Pass, after which the total production capacity would increase to 20 mpta.

As a global energy services company, Weatherford International plc (WFRD) provides equipment and services used in the drilling, evaluation, well construction, completion, production, intervention, and responsible abandonment of wells in the oil and natural gas exploration and production industry as well as new energy platforms.

WFRD operates through three segments: Drilling and Evaluation (DRE), Well Construction and Completions (WCC), and Production and Intervention (PRI).
On June 8, WFRD announced that it was awarded a three-year contract with Aramco to deliver drilling services. Under the contract, WFRD will deploy its drilling services portfolio to add value to Aramco’s drilling operations by minimizing OPEX, reducing risks, and optimizing production.

Nustar Energy L.P. (NS) is primarily engaged in transporting petroleum products, renewable fuels, and anhydrous ammonia, terminalling and storing petroleum products and renewable fuels, and marketing of petroleum products. Accordingly, the company operates through three segments: pipeline; storage; and fuels marketing.

As a testament to its future readiness, on May 3, NS announced its agreement with OCI Global to transport ammonia, which the latter would use to make fertilizer and produce DEF (Diesel Exhaust Fluid), which reduces emissions from diesel engines in cars, as well as light and heavy-duty trucks, farming equipment and other heavy machinery.

Moreover, with ammonia emerging as a likely candidate to capture, store, and ship hydrogen for use in emission-free fuel cells and turbines, NS’ expertise in the transportation of ammonia is expected to be a significant growth driver in the future.

Beyond The Horizons

In its latest Oil 2023 medium-term market report, the International Energy Agency (IEA) has forecasted that, under current market and policy conditions, crude oil demand will rise by 6% from 2022 to reach 105.7 million barrels per day in 2028 on the back of the petrochemical and aviation sectors.
However, the agency also found that global oil demand growth will trickle nearly to a halt thereafter with the advancement of electric vehicles, energy efficiency, and other technologies.

However, until the modern economy and society can develop renewable energy technologies enough to rely on them exclusively, natural gas transported in bulk and consumed in liquified and compressed forms, respectively, will keep playing a crucial role as a bridge fuel to manage decarbonization goals and facilitate a seamless energy transition.

With Major Retail Stores Closing Down in 2023, What’s Next for These Stocks?

Posted on by The INO.com Team

U.S. domestic consumption has been on a roller coaster ride over the past three years. People have gone from not being free enough to spend practically-free money like there’s no tomorrow.

That, in turn, led to a not-so-transitory inflation, the hottest since the 1980s, forcing the Federal Reserve to implement ten successive interest-rate hikes in a little over a year to take the Fed funds rate to a target range of 5% to 5.25%.

While the consumer price index only grew by 4% year-over-year, which is the slowest in 2 years, the picture wasn’t as optimistic when volatile food and energy prices were excluded. The core CPI was still 5.3% over the previous year, indicating that consumers still find their budgets stretched.
With the stash of stimulus cash fast dwindling, average American consumers have been forced to rein in their urge to splurge to prevent inflation from biting harder. The Survey of Consumer Expectations for April by the New York Fed showed that the outlook for spending fell by half a percentage point to an annual rate of 5.2%, the lowest since September 2021.

This further explains why even a 0.4% recovery in retail sales for April, after two consecutive months of decline, still fell short of Dow Jones’ estimate of 0.8%.

We had discussed earlier the implications of this slowdown for mid-tier retailers and the prospects of the retail industry vis-à-vis travel and hospitality.

Given the fact that legacy retailers such as Bed Bath & Beyond Inc. couldn’t be rescued (and has subsequently filed for Chapter 11 on April 23), and retailers are encouraging gamified shopping on Livestream, we will look at a few embattled retail stocks in the context of the accelerated pace of store closures with the ascent of online retail.

On May 26, the Illinois-headquartered integrated healthcare, pharmacy, and retailing company Walgreens Boots Alliance, Inc. (WBA) announced its decision to slash its corporate staff by about 10% in an effort to streamline operations.

The second-largest pharmacy store in the United States has been around since 1901. However, the financial hardships it has faced during the pandemic resulted in lost market share, which the retailer has begun clawing back with acquisitions of healthcare services operator VillageMD and urgent-care provider Summit Health and the launch of initiatives, such as drone delivery.

However, the empowerment of each store to serve broader areas more remotely has come at the cost of a reduction in the total number of locations. In October, the company announced a slew of store closures across states, such as New York, Kentucky, Florida, Massachusetts, and Colorado.

WBA’s stock has lost more than 22% of its value over the past six months, relative to an almost 9% gain for the S&P 500 over the same period.

Diversified health solutions company CVS Health Corporation (CVS) has been busy aligning itself with the pandemic-catalyzed trend of patients using digital technologies to manage their health. To this end, the retailer has acquired the well-known home healthcare agency Signify Health to further its medication delivery reach.

However, this reorganization has also been accompanied by store closures. While the economic stagnation caused by the pandemic caused CVS to lose over 20 stores towards the end of 2021, the company has since decided to proactively close 300 locations each year for the next three years as it hones in on digital strategy and implements a "new retail footprint strategy aligned to evolving consumer needs."

With the strategic realignment yet to bear fruit, store closures in Pennsylvania, North Carolina, Maryland, California, Florida, Texas, and Georgia, among other states, have also been accompanied by around 29% slump in CVS’ stock price, compared to 9% gain for the S&P 500.

The muted retail outlook discussed earlier has also been reflected in the first quarter earnings of Macy's, Inc. (M). Although the mid-tier retailer surpassed its earnings estimates for the quarter, a spring pullback has caused it to miss its revenue estimates and slash its top- and bottom-line guidance for the entire year.

Moreover, in February 2020, the retailer announced its three-year restructuring plan, pursuant to which it had decided to close 125 of “its least productive stores.” With closures in 2020, 2021, and 2022, M has, in the words of CEO Jeff Gennette, begun its ‘final stretch’ of store closures with four stores: one each in Los Angeles, California; Fort Collins, Colorado; Gaithersburg, Maryland; and Kaneohe, Hawaii.

Given the prevailing demand softness in the unfavorable macroeconomic environment, M expects sales of $22.8 billion to $23.2 billion for the year, down from a previous range of $23.7 billion to $24.2 billion, while expected earnings per share of $2.70 to $3.20 is a major reduction from the previous guidance of $3.67 to $4.11.

M stock has plummeted by around 24% over the past six months, compared to the S&P500’s 9% gain over the same period.
Games and entertainment retailer GameStop Corporation (GME) was at the center of an unprecedented hype created by retail investors on social media forums when money was practically free, and inflation was ‘transitory.’

The hype created by an army of amateur traders in 2021 had less to do with the fundamentals of the company and more to do with the excitement of trading and a desire to short-squeeze professional speculators who were betting against it.

With online gaming more a norm than an exception, GME, which has been around since the 1980s, has seen a dramatic decrease in sales, resulting in many stores closing down and the company’s decision to transition into an exclusively online retailer.

In the fiscal first quarter that ended April 29, GME reported revenue of $1.24 billion, down from $1.38 billion in the year-ago period. Sales in the United States, Canada, and Australia dropped by 16.4%, 18.5%, and 8.9%, respectively, compared to the year-earlier period. This coincided with CEO Matthew Furlong's sudden firing and Ryan Cohen's appointment as executive chairman.

Since many e-commerce platforms offer viable alternatives for purchasing merchandise and hardware sold by the company, it is unclear how GME, with its own platform and fleet of e-commerce stores, would be able to differentiate itself from other players in this space and find its path to profitability.

Will “Revenge Travel” Keep Delta Air Lines (NYSE DAL) Stock Soaring?

Posted on by The INO.com Team

Delta Air Lines, Inc. (DAL) reported a wider-than-expected loss for the first quarter 2023. However, the carrier’s CEO, Ed Bastian, couldn’t sound more optimistic about its prospects. Two factors drove this dichotomy.

Firstly, the carrier cited its net loss of $363 million, or 57 cents per share, in what has seasonally been the weakest quarter of the year, partly due to a new, four-year pilot contract that includes 34% raises. Moreover, the bottom line is still an improvement over the net loss of $940 million, or $1.48 per share, during the year-ago period when travel demand was still recovering.

Secondly, and more importantly, with the pandemic firmly in the rear-view mirror, consumers are ever keener to redeem their pile of airline miles on other travel rewards on their credit cards for new experiences through revenge travel. Revenge travel has its origins in “baofuxing xiaofei” or “revenge spending,” an economic trend that originated in 1980s China when a growing middle class had an insatiable appetite for foreign luxury goods.

Since e-commerce, albeit with a few hiccups in the supply chain, was able to satiate the appetite for goods through the pandemic, Americans are now going above and beyond to compensate for the years spent indoors trying to substitute real experiences with virtual ones.

Even “pent-up demand” turned out to be an understatement when Ed Bastion and his team at DAL found the gap between inherent demand for U.S. travel that couldn’t be met over the past three years, based on “any kind” of historical pattern to come in at $300 billion. The pleasantly surprised CEO revealed, “We’ve had the 20 largest cash sales days in our history all occur this year.”

Even corporate bookings have been recovering, with domestic sales in March 85% back to 2019 levels. The carrier also got a boost in its loyalty program with the contribution from its co-branded credit card partnership with American Express (AXP) coming in at $1.7 billion in the previous quarter, up 38% year-over-year.

Because of this explosive demand, DAL has forecasted its top and bottom-line performance for the second quarter to exceed analysts’ estimates. Mr. Bastion expects his airline to clock an operating profit of $2 billion, at par with Q2 of 2019, with lower capacity and higher fuel prices, while being the only airline with all the labor contracts in place.

As a result, the Atlanta-based carrier expects sales in the current quarter to increase by 15% to 17% over last year, with adjusted operating margins of as much as 16% and adjusted earnings per share between $2 to $2.25.

The confident CEO has also brushed off the potential consumer pullback in spending while expressing the conviction that pent-up demand for travel will be a multi-year demand set.

According to him, revenue from premium cabins like the first class was outpacing the revenue from coaches, and while sales professionals have moved partially online, consulting and professional service have been the highest volume contributors. They are expected to remain so in the foreseeable future.

How the Market Reacted?

Quite positively, in a nutshell. DAL’s stock has gained 20.5% over the past two months compared to 4.7% for the S&P 500. It is trading above its 50-day and 200-day moving averages and close to its 52-week high.

Pinch of Salt

“If something cannot go on forever, it will stop.” The obviousness of this observation made by Herb Stein was what made it famous.
At times such as these, when air carriers have turned to bigger airplanes, even on shorter routes, and jumbo-jets, such as the Boeing 747 and the Airbus A380, are being brought back to help ease airport congestion and work around pilot shortages, it is easy to get carried away by the “pent-up demand” and “revenge travel” narrative.

However, it might be wise to consider certain things before indulging in the willful suspension of disbelief and extrapolating beyond the foreseeable future, like we are all guilty of doing in case of working from home, Great Resignation, and “quiet quitting.”
Since the rise of remote work and virtual teams, facilitated by contemporary collaboration and productivity tools, seems to have become an immune and immutable remnant of the cultural sea-change our work and lives had to adopt and adapt to during the pandemic, new reports give us reasons to doubt whether business travel is ever going back to normal.

In such a situation, with traveling for leisure being an occasional indulgence in most of our lives, there are risks that the pent-up demand might not be enough to sustain the momentum that is propelling the growth performance of DAL and other airlines, which are primarily in the business of ferrying passengers.

As far as the largest cash sales days are concerned, we can be certain that inflation would ensure that cash days in the future would still be larger.
Moreover, with ticket prices at all-time highs and JP Morgan and a few others predicting that the stash of pandemic stimulus cash, fueling the leisure travel boom, could run out over the next quarter, it is unsurprising to find tricks and trends, such as ‘skiplagging’ and consumers trading down on travel being on the rise.

Bottom Line

While DAL and its peers would want nothing more than for passenger demand to stay strong and, perhaps, keep growing, the most likely case would be a return to seasonality and cyclicality, as is typical of the airline industry.
However, the possibility of passenger demand falling off a cliff and investors rushing for the exits only to find that the clock struck midnight and the chariot turned back to a pumpkin can’t be completely ruled out.
Either way, every flight that takes off has to land at some point. The only problem is that nobody knows exactly when.