FA Alpha Weekly Digest - 11 20 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 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 the debt maturities, Malibu Boats (MBUU), Stanley Black & Decker (SWK), Northwest Pipe Company (NWPX), and Viking Global.

Companies are going to need money eventually

The Federal Reserve is maintaining high-interest rates despite a surge in bankruptcies, raising concerns about the ability of companies to meet their financial commitments. October 2023 saw the slowest borrowing month and a decline in corporate debt issuances. U.S. companies face increasing pressure with approximately $100 billion in debt due this year, $250 billion next year, and $389 billion in 2025, compounded by rising defaults on high-risk debt. The commitment to high rates by the Federal Reserve poses a threat to U.S companies, emphasizing the urgent need to secure financing in the challenging economic landscape.

The market thinks a recession could kill this company

Malibu Boats has an affluent customer base that makes them less affected by economic fluctuations. Moreover, the company's strong brand loyalty, diverse product line, and pricing flexibility contribute to its resilience during tighter economic conditions. These factors enable Malibu Boats to maintain demand for their high-end sport boats and appeal to a wider range of budgets during economic challenges.

Stable demand isn’t enough to keep this toolmaker safe

Rating agencies typically favor industry leaders, equating their market dominance to financial stability. Stanley Black & Decker, a prominent player in the industrial tools and hardware sector, exemplifies this, enjoying a reputation for quality and dependability. Despite facing recent adversities, the company's creditworthiness, as reflected by its "A-" rating from S&P, is presented as solid and low-risk. Despite the favorable rating, credit cashflow prime paints a? different story.

Capitalizing on America's water infrastructure evolution

Decades of chronic underinvestment in water infrastructure have resulted in the annual loss of trillions of gallons of water, posing significant public health risks from contaminated water supplies in the United States. The Bipartisan Infrastructure Law directly tackles these issues through targeted funding. Northwest Pipe Company, as the leading producer of engineered steel water transmission infrastructure in North America, uniquely positions itself to benefit from the substantial and ongoing water resurgence across the United States. With strategic manufacturing assets and a comprehensive suite of solutions for water projects, Northwest is optimally poised to seize opportunities arising from the much-needed renewal of aging systems nationwide, fueled by increased infrastructure funding.

This fund is taking lessons from the Vikings

Viking Global, led by Ole Andreas Halvorsen, uses lessons from the Vikings to navigate today's investing challenges. Despite recent setbacks, the fund is making a comeback in 2023 and is rumored to consider reopening its flagship fund. Examining the fund's top 15 investments reveals insights into their approach to economic productivity.

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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