FA Alpha Weekly Digest - 03 04 2024

Wall Street’s stock picks can’t be trusted and the advertising bias of the mainstream financial media makes their news only sensationalist-driven. Gain an edge by knowing the trends that matter and some of the mispriced stocks in the market.

We bring you the FA Alpha Weekly Digest, a roundup of FA Alpha’s unique and unparalleled equity, credit, and macroeconomic insights over the past week.

In today’s digest, we’ll cover Senior Loan Officer Opinion Survey (SLOOS), Boeing (BA), Lattice Semiconductor (LSCC), Concrete Pumping Holdings, Inc (BBCP), and ASGN (ASGN).

Corporate America’s credit crunch

Today's business world is reflective of past financial difficulties with economic challenges and tighter credit conditions. Despite a notable increase in speculative-grade debt refinancing and investment-grade bond issuances, and a slight drop in interest rates, banks remain cautious when handing out credit. Even established companies are facing difficulties in securing refinancing. Despite a slight easing in lending standards recently, the overall situation has mostly stayed the same. We look into the Senior Loan Officer Opinion Survey (SLOOS) readings, suggesting tightened lending criteria.?

Boeing is in trouble, again…

Boeing faces renewed scrutiny over safety concerns after a door plug detached from an Alaska Airlines 737 Max jetliner. The incident brought back worries from the two fatal crashes in 2019 attributed to a faulty automated system, which led to the fleet's grounding. The FAA's decision to allow the plane to return to service has drawn criticism, some suggesting it may have contributed to the recent incident, which has fuelled the ongoing concerns about the 737 Max's safety.. Despite this, markets remain confident about the company's potential recovery and ability to regain its standing in the aerospace industry.

This company will keep benefiting from the rising tech investments

Startups are flourishing due to rapid technological advancements and a booming innovation ecosystem in the U.S.. New business applications reached a record high in 2023, and the global IT spending is soaring. Amidst this surge, semiconductor companies, like Lattice Semiconductor, are positioned to benefit significantly. Conversely, rating agencies express concerns about the cyclical nature of the industry. Credit Cash Flow Prime? delves into Lattice's true financial health and assesses the validity of these concerns to determine its actual credit risk.

This company will be cementing the future of America’s infrastructure

The Bipartisan Infrastructure Bill's $1.2 trillion allocation for infrastructure projects promises a surge in demand for construction, particularly concrete. Concrete Pumping Holdings (BBCP) stands to benefit from this emerging tailwind as services like concrete pumping and waste management can significantly reduce labor costs and construction time. However, the market's fear of a potential economic slowdown impacting construction spending is reflected in their expectation for BBCP's return on assets to fall back to 2017 levels. Despite these concerns, the expected increase in demand for concrete and BBCP's services can lead to higher cash flows.

Moving from staffing to consulting

Since its founding as a staffing company, ASGN Incorporated (ASGN) has experienced a dramatic shift by becoming a profitable consulting firm. After initially concentrating on temporary workforce options, ASGN realized it had to change to keep up with digitalization. ASGN has improved its profitability and diversified its revenue streams by deliberately moving toward consultancy services. However, investor perception still needs to catch up, seeing ASGN primarily as a staffing firm despite these achievements. This development highlights ASGN's redefinition and potential as a major player in digital transformation, signifying more than merely service diversification.

We hope you find this week’s FA Alpha Daily articles insightful.

See you next week as we talk about another set of interesting names.

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