FA Alpha Weekly Digest - 05 22 2023

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 names 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 take a look at the Japanification of the U.S. financial system, Fleetcor Technologies (FLT), Alcoa Corporation (AA), Thermo Fisher Scientific (TMO), and Norges Bank Investment Management.

The Banking Crises in Japan and the U.S. Are More Similar Than You Think

During the Japanese economic crisis of 1980s, banks made a bad choice? of saving companies that should have gone out of business. The Japanese banks didn't want these companies and others within the conglomerates to go bankrupt as it would mean acknowledging their own losses. Instead of allowing the companies to fail, absorbing the loan losses, and fixing their own financial situations to provide new loans, the banks simply extended new loans to the companies at the same low interest rates. Essentially, they did not address the underlying problem and simply covered them up.

This company’s fleet will keep the economy’s wheels turning

More goods to transport means more demand for trucks and Fleetcor Technologies’ fleet payment solutions. The trucking industry is still performing well even when the economy seems like it’s on the edge. It is supported by the ramp up of U.S. supply chain and infrastructure projects and strong personal consumption. Trucking companies like Fleetcor are likely to thrive as long as the industry does not completely collapse.

This commodity company is much safer than rating agencies suggest

Supporting electrification of everything, the need for long-distance power wires presents aluminum as one of the most important raw materials. In addition, the need for lightweight components for electric vehicles and aircrafts fuels the need for aluminum. This means Alcoa Corporation’s legacy business on mining, refining, and smelting of aluminum has a little chance of going bankrupt.

This life sciences tools company is behind the innovations in healthcare

The use of synthetic biology to extend life is accelerating in the healthcare industry. It combines engineering with biology to develop new biological parts, devices, and systems found in nature. Thermo Fisher Scientific provides equipment for synthetic biology to work. If R&D spending continues to surge, this company is in a great position to benefit from innovations in the healthcare world.

Investors should be cautious this year and this fund makes sure you are

Exemplifying cautious and prudent investing approach, Norges Bank Investment Management aims to safeguard the wealth generated from oil and gas revenues for future generations. Its substantial size and cautious investment strategy has made Norway’s Sovereign Wealth Fund handle market volatility better than many other funds. Instead of taking on risky ventures, the fund prioritizes diversification across various asset classes, sectors, and regions to minimize risk and maintain a stable investment return.

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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