Tag: MarketClub Tips & Talk

1 Energy Stock to Fuel Your Portfolio This Winter

Posted on by The MarketClub Team

Amid macroeconomic and geopolitical headwinds, energy stocks have fared better than the broader market this year.

The war between Ukraine and Russia had led to a significant rise in prices of crude oil and natural gas as the world feared a shortage of these essential commodities with widespread sanctions on Russia, a major oil and gas producer. This led to investors’ focus shifting to energy stocks.

Oil and gas major TotalEnergies SE (TTE) has gained 29.8% in price year-to-date and 27% over the past year to close the last trading session at $63.13. Courbevoie, a France-based company, announced a solid third-quarter performance.

The company’s iGRP segment reported a record adjusted net operating income of $3.60 billion in the quarter, rising $1.10 billion sequentially, and cash flow of $2.70 billion, driven by increase in average LNG selling price.

TTE’s CEO Patrick Pouyanné said, “In a context marked by an average Brent price of $100/b and an increase in gas prices exacerbated by Russia’s military aggression in Ukraine, TotalEnergies leveraged its integrated model, particularly LNG, to generate results in line with previous quarters.”

TTE announced that it had obtained a 9.375% participating interest in the 16 million ton per annum (Mtpa) North Field South (NFS) LNG project in Qatar to fuel its growth further.

After combining its participating interest in North Field East (NFE) with NFS, TTE will add LNG production of 3.5 Mtpa to its worldwide LNG portfolio by 2028, which is in line with its goal to increase natural gas in its sales mix to 50% by 2030.

During the previous quarter, the company also announced that production had started at the Ikike field in Nigeria. The project is expected to deliver peak production of 50,000 barrels of oil equivalent per day by the end of this year.

TTE also launched the Begonia project in Angola and the Fenix project in Argentina, which is expected to produce 10 million cubic meters per day of natural gas after the expected operations in early 2025.

Moreover, the company’s partner Eni announced in August that it had made a significant gas discovery in the Cronos-1 well in Cyprus, with initial estimates indicating 2.5 TCF of gas. Continue reading "1 Energy Stock to Fuel Your Portfolio This Winter" →

3 Homebuilder Stocks to Buy When Inflation Eases

Posted on by The MarketClub Team

According to Bankrate’s national survey of large lenders, the average rate on 30-year mortgages is 6.59%, up 12 basis points compared to this time last week.

Mortgage Interest Rates

Source: Bankrate National Survey

As the cumulative effects of a protracted campaign of interest rate hikes by the Fed are yet to be felt, economic growth, or lack thereof, is expected to replace inflation as the topmost concern.

Amid such a downturn, softening demand from home buyers could end up exerting downward pressure on mortgage rates, thereby restoring equilibrium.

According to Nadia Evangelou, senior economist & director of forecasting at the National Association of Realtors, “If inflation continues to decelerate over the next several months, mortgage rates will likely stabilize below 7%.”

Is the Fed’s target of a 2% inflation rate realistic in the current economic scenario?

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In addition to high margin backlogs to help weather a potential slowdown, moderation of inflation, and consequently mortgage rates, would bode well for home-building stocks D.R. Horton, Inc. (DHI), Toll Brothers, Inc. (TOL), and KB Home (KBH) as some technical indicators point to sustained upsides with adequate downside protection. Continue reading "3 Homebuilder Stocks to Buy When Inflation Eases" →

1 Utilities Stock Too Cheap To Ignore

Posted on by The MarketClub Team

It has been a challenging year for the stock market as most equities have witnessed a sell-off due to various macroeconomic and geopolitical concerns.

However, retail energy and renewable energy solutions provider Genie Energy Ltd. (GNE) has gained 84.7% in price year-to-date and 90.6% over the past year to close the last trading session at $10.29.

The stock’s strong performance can be attributed to the rise in energy prices that led to strong earnings for the company.

Post its third-quarter earnings, GNE’s CEO Michael Stein, said, “We reported record third-quarter profit metrics driven by strength in Genie Retail Energy (GRE), our domestic retail energy business. GRE continued to outperform in a volatile energy price environment. We were well-positioned with our customer book and hedges heading into the quarter and were able to drive a 54% gross margin and generate nearly $28 million in Adjusted EBITDA.”

Its Genie Renewables (GREW) segment also did well as it acquired site rights to 64MW solar projects and advanced them through its permitting processes.

“Given the challenging environment in the European energy market, we determined that the risk was beyond our acceptable tolerances. As a result, we exited our remaining international retail operations and no longer serve customers in Scandanavia,” he added.

GNE is trading at a discount to its peers. In terms of trailing-12-month GAAP P/E, GNE's 5.44x is 73.5% lower than the 20.53x industry average. Its trailing-12-month EV/S of 0.55x is 86.4% lower than the 4.05x industry average. Also, the stock's 2.07x trailing-12-month EV/EBITDA is 84.4% lower than the 13.30x industry average.

On November 30, 2022, GNE announced the acquisition of a portfolio of residential and small commercial customer contracts from Mega Energy. GNE’s CEO Michael Stein said, “Our strong balance sheet, with significant cash reserves, positions us to compete for additional books of business at favorable prices. We will continue to look for customer acquisition opportunities as specific markets become more conducive to growth.”

The acquisition helps it acquire new customers across seven states in the Northeast and Midwest. The portfolio comprises approximately 11,000 residential and commercial customer meters, and it is expected to be revenue and earnings accretive for the company immediately. Continue reading "1 Utilities Stock Too Cheap To Ignore" →

BBW is Well-Positioned Following Q3 Revenue Beat

Posted on by The MarketClub Team

Build-A-Bear Workshop, Inc. (BBW) operates as a multi-channel retailer of plush animals and related products.

The company operates through three segments: Direct-to-Consumer, Commercial, and International Franchising. It runs around 346 locations managed by corporate and 72 franchised stores in Asia, Australia, the Middle East, Africa, and South America.

On November 30, the company announced record fiscal third quarter results. Its total revenue increased 9.9% year-over-year to $104.48 million, beating the consensus estimate by 1.8% and registering the seventh consecutive quarter of revenue growth.

Sharon Price John, BBW President and Chief Executive Officer, attributed this solid performance to momentum and consistency in business with solid brand interest from consumers. She expressed her confidence that the company is on track to deliver the most profitable year in its 25-year history.

Mirroring the above sentiment, the stock has gained 45.3% over the past month to close the last trading session at $25.17 despite the broader market remaining volatile on concern over the Fed’s potential rate hikes to bring inflation down to its 2% target.

Can the Fed achieve its 2% inflation target by 2023?

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BBW is trading above its 50-day and 200-day moving averages of $17.33 and $17.28, respectively, indicating an uptrend.

Here is what may help the stock maintain its performance in the near term.

Solid Track Record

Over the past three years, BBW’s revenue has exhibited a 10.5% CAGR, while its EBITDA has grown at a stellar 99.4% CAGR. The company has increased its EPS at a 55% CAGR during the same period. Continue reading "BBW is Well-Positioned Following Q3 Revenue Beat" →

ADT Hit a New 52-Week High

Posted on by The MarketClub Team

Provider of security, interactive, and smart home solutions ADT Inc. (ADT) hit a new 52-week high of $9.82 on December 2, 2022. ADT’s stock has gained 15.9% in price year-to-date and 16.9% over the past year to close the last trading session at $9.64.

ADT’s EPS and revenue surpassed the consensus estimates in the last quarter. Its EPS came 52.1% higher than analyst estimates, while its revenue beat the consensus estimate by 0.6%. Higher revenues from the CSB, Commercial, and ADT Solar segments drove revenues higher.

Total CSB revenue increased 7% year-over-year to $1.11 billion in the third quarter, while its total Commercial revenue rose 12% year-over-year to $314 million. Furthermore, ADT’s Solar segment contributed $179 million to its total revenue.

ADT’s President and CEO, Jim DeVries, said, “ADT’s strong third-quarter results demonstrate our continued momentum – setting records in customer retention, RMR balance, and revenue payback. Our performance to date validates our progress on key initiatives, outlined earlier this year during our Investor Day, to meaningfully grow revenue, earnings, and cash flows, as well as reduce debt.”

On September 6, 2022, ADT announced that State Farm would make an equity investment of $1.20 billion in ADT, resulting in State Farm owning approximately 15% of ADT. ADT also announced a new partnership with State Farm to expand opportunities to combine next-generation security, innovative smart home technology, and reimagined risk-mitigation capabilities to monitor, detect, prevent, and minimize homeownership risks.

Post the announcement, the stock had a gap-up opening and has not looked back since.

ADT Chart

Source: TradingView

State Farm will also invest up to $300 million in an opportunity fund to support product innovation, technology, and marketing that seeks to differentiate and improve the customer experience for homeowners. Continue reading "ADT Hit a New 52-Week High" →