TFT #53: AMC's Legal Twist, Budget Retail Earnings Shine, Bill.com Surprises Investors, and More...
Hello Reader,
In this issue, we cover AMC's legal twist, celebrate the resplendent earnings of budget retail giants, shine a spotlight on Bill.com's investor-surprising performance, and more.
Let’s get into it.
Surprising U.S. Growth Amidst Mixed Signals: Consumer Strength Shines, While Market Moves Lower
Amidst varied economic signals, the U.S. economy is showing surprising growth potential, partly driven by resilient consumer spending. At the same time, manufacturing activity remains weak, while rising interest rates (7.09%, the highest U.S. mortgage rates in over 20 years) and bearish sentiment continue to challenge the market. China's rate cut and youth unemployment concerns also impact global outlook amidst unexpected U.S. economic buoyancy.
Steel Showdown: US Steel's Thrilling Rejection of Takeover Bid Ignites Market Fireworks
United States Steel Corp. ($X) has set the stage for a gripping market drama by spurning Cleveland-Cliffs Inc.'s ($CLF) $7.25 billion takeover gambit, sending shockwaves through the industry. In a stunning turn, U.S. Steel's stock rockets 32% higher in pre-market trading on Monday, while Cleveland-Cliffs' shares fizzle with a 7% dip. Amidst this fiery contest, Esmark, Inc. makes a striking entrance, unveiling a $35/share public cash and exchange offer for U.S. Steel's stake, adding a fresh layer to the steel saga.
As the saga unfolds, Cleveland-Cliffs emerges as the frontrunner, securing the exclusive right to bid from United Steelworkers (USW), granting them a singular shot at acquiring U.S. Steel. The market spectacle continues, leaving investors on the edge of their seats, as the steel industry pens a new chapter of suspense and intrigue. Shares of $X are up 37% this week following the news.
TJX Surges as Off-Price Triumphs: Beating Estimates and Raising Outlook
TJX Companies ($TJX), the off-price retail giant, is celebrating a triumphant quarter, exceeding expectations and setting a robust tone for the sector. With Q2 adjusted earnings per share of $0.85 and revenues totaling $12.76 billion, TJX has impressively outperformed anticipated figures of $0.77 and $12.45 billion. The company's knack for capitalizing on bloated inventories from other retailers has proved prescient, attracting shoppers to its TJ Maxx, Marshalls, and HomeGoods stores. In an era of budget-conscious consumers, this value-driven strategy has led to a 4% rise in TJX shares this week, reaching all-time highs. Raised full-year outlooks for comparable store sales, pretax profit margin, and earnings underscore TJX's confidence in its continuing momentum.?
Ross Stores Delights with Strong Q2 Performance and Optimistic Outlook
Meantime, another budget-conscious store, Ross Stores ($ROST) has surged following its Q2 earnings report, exceeding expectations and offering a positive outlook. The company impressively beat EPS and revenue estimates, with noteworthy comp growth. The surprise came in its guidance: ROST, known for conservative predictions, provided a bright outlook for both the next two quarters. This forward-looking confidence is particularly striking, as ROST typically underpromises and overdelivers. Furthermore, Q3's EPS guidance even exceeded analyst projections, hinting at potential growth. The +5% same-store comps, primarily attributed to increased foot traffic, are remarkable in a challenging retail landscape. With its apparel and home focus, ROST's ability to attract cost-conscious consumers suggests adaptability to evolving spending habits. This promising performance sets a positive precedent for upcoming reports from other value-oriented retailers like Burlington, Big Lots, Ollie's Bargain Outlet, Dollar Tree, Dollar General, and Five Below. As TJX’s and ROST’s upbeat report reverberate, it sets an encouraging precedent for upcoming reports from peers like Dollar Tree, Burlington Stores, and Five Below.
Technically, ROST is a bullish kicker breakout. If price is able to remain above the breakout level at $116, and moves above Friday high, it will try testing upper resistance targets at $124, $130 and possibly go as high as $136.
Bill.com Beats the Beat: Earnings Highs and Mixed Notes
Bill.com ($BILL) reported a surprise Q4 (Jun) earnings performance, outplaying expectations. Earnings per share come in at $0.59, a stellar $0.18 above the FactSet Consensus, as revenues ascend by 47.8% to $295.98 million, besting the $282.18 million FactSet prediction. The fourth quarter witnesses a 9% YoY surge, recording $69.1 billion in total payment volume. FY24 guidance is cast in the same light with EPS above consensus, but revenues below consensus. As Bill.com's performance sparks varied price targets interpretations, BMO Capital Markets adjusts the target to $116, a note of deliberation harmonizing with the crescendo of robust figures. Meanwhile, Piper Sandler advises, "Bill.com should be bought on weakness," adding a compelling note to the tune.
Technically, BILL printed a bullish engulfing reversal pattern. If price is able to remain above 200 SMA, it will try to test upper resistance levels at $124.60, $140.44 and go as high as $158.
(Disclaimer:?BILL?is one of the stocks/ETFs we are currently trading/investing)
Applied Materials Resilience: Shaking Off Slump with Future-Focused Grit
Applied Materials ($AMAT) is engineering a spirited recovery as it turns the tide on recent market setbacks. The chip equipment giant, which encountered a bumpy road due to shifting sentiment after a Fitch downgrade, is back in action with an impressive Q3 performance and an inspiring Q4 outlook. While Q3 saw steady EPS at $1.90, $6.42 billion in revenue experienced a slight dip. However, the standout was the DRAM revenue, outshining close competitors' combined figures. As AMAT bets on AI and the semiconductor industry's regionalization, its confidence remains undaunted. Despite the softer chip demand and hiccups in the electronics sector, the industry's burgeoning excitement around AI's transformative power keeps propelling AMAT's journey forward. Amidst the ups and downs, with the boost from surging chip content and smart device trends, AMAT's path continues to illuminate with promise.
AMC Settles Shareholder Dispute: Payment Plan Approved Amid Market Fluctuations
AMC Entertainment ($AMC)'s rollercoaster ride persists after a court green-lighted an earlier settlement. Shareholders had contested the issuance of $APE units, alleging executives sidestepped their wishes by introducing preferred shares post a failed common stock vote. A previous settlement was rejected but now, after court approval, the company can proceed, compensating entitled shareholders with one Class A common stock for every 7.5 shares. The payment follows a reverse stock split on August 24 and $APE unit conversion on August 25. The move caused $APE shares to rise and $AMC shares to drop, signaling potential short-term dilution concerns. Despite this, executives defend the move as vital for long-term stability.
Unprecedented Tightening: US Banks Rein in Lending Standards Amidst Fed's Rate Hikes
U.S. banks are swiftly tightening lending standards due to the Federal Reserve's rapid rate hikes and regional banking challenges. Recent research reveals a substantial credit squeeze. The latest Senior Loan Officer Opinion Survey indicates a historic 51% of banks enforcing stricter lending standards for large and medium-sized firms, surpassing levels seen during the pandemic and the 2008 financial crisis. Additionally, loan demand has dropped more significantly compared to previous tightening phases.
Amazon Unveils AI-Powered Review Summaries for Products
Amazon ($AMZN) has introduced a novel tool leveraging generative AI to condense customer reviews. This feature identifies prevalent themes, delivering concise summaries on product pages. CEO Andy Jassy revealed Amazon's commitment to generative AI across all sectors to enhance growth prospects.
GM's $60 Million Investment Accelerates Affordable EV Battery Innovation
General Motors ($GM) has injected an additional $60 million into Mitra Chem, a firm committed to advancing U.S.-based battery development with iron-based cathodes. Mitra Chem utilizes AI to rapidly create and assess numerous cathode designs monthly, spanning sizes from grams to kilograms. This investment is set to expedite the introduction of innovative battery formulations to the market, holding the potential to drive down the cost of electric vehicle batteries. GM's strategic move reflects a broader push towards more affordable and efficient EV technology, underscoring the critical role of advanced battery solutions in shaping the future of transportation.
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