FA Alpha Weekly Digest 11 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 recent trends in SLOOS, General Motors (GM), Walmart (WMT), Viant Technology (DSP), and Wex (WEX).

An unnoticed triumph for banks

The Federal Reserve’s recent 50 bps rate cut made headlines, but another key development went somewhat unnoticed. Major U.S. banks secured a reduction in proposed capital requirements, initially set at a 19% increase but ultimately lowered to just 9%. This victory is significant, as higher capital requirements would have limited banks' ability to lend, potentially reducing profitability and returns for investors. Now, with lower capital requirements, banks are more able to provide loans, boosting credit availability and competition, which could lead to lower rates for borrowers. Combined with a recent easing in lending standards, this adjustment encourages growth and investment, signaling an optimistic outlook for borrowing.

This carmaker truly is the diamond in the rough of the industry

Automakers are currently navigating a challenging landscape due to high prices and limited charging infrastructure. General Motors (GM), however, has shown resilience by focusing on high-demand models, expanding its EV lineup, and maintaining a strong internal combustion engine (ICE) business. In the third quarter, GM beat earnings estimates and increased its U.S. EV market share to nearly 10%. Despite some anticipated production setbacks, GM’s strategy to balance ICE and EV growth has positioned it well in an evolving market, though further performance confirmation may be needed to solidify its recovery.

This old dog has finally learned a few new tricks

E-commerce is reshaping the retail landscape, with sales expected to reach $7 trillion by 2028, yet physical stores remain essential for brand connection and immersive experiences. Walmart, once focused mainly on physical stores, has pivoted to expand its online presence especially in groceries. Walmart's marketplace and advertising segments contribute to profitability and enhance its competitive edge, even as it continues to trail Amazon. While the company’s future looks promising due to this strategic balance, investors must consider the premium priced into its stock.

This advertising company is tapping into Connected TV

Viant Technology (DSP) stands out in the ad tech sector by addressing new privacy challenges and moving beyond traditional cookie-based targeting. Leveraging AI and people-based identifiers, Viant offers a resilient, privacy-conscious advertising approach through tools like its Viant Data Platform and AI Big Optimizer. With a focus on high-growth channels like Connected TV (CTV) and streaming audio, Viant has successfully captured market share, achieving 28% revenue growth in Q1 2024. Despite facing competition from larger players and the risk of new technologies’ adoption, Viant’s unique positioning and innovative solutions provide a promising foundation for continued growth.

This company helps businesses streamline fleet and travel payments

Wex (WEX) is positioned for growth in the corporate payment solutions market as it addresses the complexities of managing travel and fleet expenses through digital innovations. With its focus on AI and strategic acquisitions, Wex aims to enhance efficiency and streamline transactions in both the fleet and travel sectors. The company's DriverDash app is a key tool for fleet managers, while its ownership of WEX Bank provides access to low-cost capital. Despite market concerns about competition and regulatory challenges, Wex’s strong fundamentals and strategic initiatives indicate promising upside potential.

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.

To get access to FA Alpha’s best macro insights and top stock picks each month, click here .