FA Alpha Weekly Digest 11 25 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 U.S. Innovation, BlackRock (BLK), Asbury Automotive (ABG), SolarEdge Technologies (SEDG), and Harmonic (HLIT).
America's innovation is unmatched
America’s legacy as a global innovator stems from groundbreaking developments like the Internet, which evolved from DARPA’s Cold War project to a key driver of the digital economy. Additionally, U.S. worker productivity remains the highest worldwide, with American laborers generating significantly more economic output than counterparts in other advanced economies. Meanwhile, robust public and private sector investment in R&D, totaling 3.5% of GDP or $960 billion annually, fuels advancements across industries, with capitalized R&D among S&P 1500 companies quadrupling since 2004. Lastly, government initiatives, such as DARPA funding and federal legislation like the CHIPS Act, further accelerate technological progress in critical areas like semiconductors and AI. These aforementioned factors underpin America’s competitive edge, positioning it as a leader in innovation, profitability, and economic growth for decades to come.
The world's largest asset manager continues to grow
BlackRock (BLK), the world’s largest asset manager with $11.5 trillion in AUM, has leveraged scale, innovation, and diversification to drive consistent growth. Its iShares ETF platform, a key revenue driver, spans emerging markets, fixed income, and Bitcoin. Strategic acquisitions like Global Infrastructure Partners and Preqin have expanded its presence in private markets, while its Aladdin platform, an investment management and trading platform, continues to enhance both internal operations and client offerings. With 34% Uniform ROA, BlackRock offers attractive upside, supported by disciplined cost management, shareholder returns, and leadership in financial innovation.
领英推荐
This auto dealer is battling cyclicality with a high margin services business
In recent years, the automotive industry has faced significant disruptions such as supply chain issues and rising interest rates. Despite these, Asbury Automotive (ABG) has leveraged its scale, acquisition strategy, and focus on high-margin segment drive profitability. The company has also invested in digital tools and specialized maintenance services for emerging markets like electric vehicles. While weather-related disruptions and cyclical headwinds pose risks, Asbury's strategic focus on high-margin services positions it for long-term growth and stability.
The sun isn’t shining on this solar company
SolarEdge Technologies, a key player in solar inverters, faces declining European demand, financial strain, and significant debt maturities amid a tough market environment. The company’s efforts to regain competitive advantage, including price cuts and product updates, are slow to show results, while leadership changes add further uncertainty. Analysts have downgraded SolarEdge's stock, urging caution as the company navigates near-term risks and attempts to stabilize its business.
This company’s strong performance is overshadowed by its weak guidance
Harmonic (HLIT), a provider of broadband and video service solutions, is facing challenges after issuing weak guidance for the current quarter despite better-than-expected earnings. The company's Broadband segment delivered strong revenue growth, but it was overshadowed by concentration risk. Meanwhile, its Video segment saw declining revenue, and management expects slow growth in Broadband in 2025 due to delays in rolling out Unified DOCSIS 4.0. Considering all these factors, investors may need to wait for clearer signs of Harmonic’s recovery.
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.