HI Market View Commentary 12-05-2022
Last Monday Keve Said “ we were mostly unprotected” = Christmas Rally, stock were heading up with Fed comments from Powell that they would slow down and less basis points
Biggest Concern Dec 14 Rate Hike “VERBAGE”
First quarter HI sucked = transfer o Schwab was AWEFUL,
June Tough month, hard to read, matched the market
Sept on to now We KICKED BUTT
Banks are short more than $1 trillion in capital, says this analyst, who fears the shortfall will only get worse
NOVEMBER 30, 2022
The new year is almost upon us, and one consideration for where to invest is the banking sector, whose margins benefit from higher interest rates, not the much sought-after valuations.
Here’s Christopher Whelan, president of Whelan Global Advisors, to counter that idea. Which makes the bold case that banks had a capital shortfall of more than $1 trillion at the end of the second quarter.And it’s only getting worse as the Fed keeps raising interest rates.
This claim may surprise those who think that the US banking industry has roughly $2.2 trillion in capital. But he breaks that statistic in several ways. First, he notes, there is a distinction between book equity and tangible equity, which are used by banking regulators to assess solvency. Excluding items such as goodwill and deferred tax assets, this is a narrower definition, reducing the total from $2.22 trillion to $1.49 trillion.
Then, drawing on Federal Deposit Insurance Corp. data, he subtracts accumulated other comprehensive income. “Thanks to QE and now QT, all types of assets have become a negative return proposition for banks and non-banks alike. If the coupon pays less than the funding cost, you are losing money,” he says. Huh. This takes the capital to $1.23 trillion.
Now comes the more controversial part. First, he attributes market losses on loans and securities created during 2020 and 2021 to the impact of this year’s Fed rate hike. This right has been enough to push banks into bankruptcy, with some $1.74 trillion lost from marking to market.
Bank holdings of U.S. Treasury securities, mortgage-backed securities and state and municipal securities also lost $794 billion when marked to market. Put it all together on Whelan’s calculations, and banks have a shortfall of $1.3 trillion in the second quarter.
Granted, and this is very important, banks are not required to mark their assets to market. So worry about what this exception is not infinite – banks are allowed to ignore mark-to-market losses as long as they have the ability and intention to do so. Whelan says, “Even if the bank keeps these low-coupon assets created during maturity, cash flow losses and poor returns in the portfolio during 2020-2021.”
He did a similar analysis on JPMorgan Chase JPM,
Which he calls one of the better managed banks. Jamie Dimon’s group has a $16 billion shortfall in the second quarter — and a $58 billion loss if the mark-to-market adjustment is higher at 17.5% — on Whelan’s numbers.
The big question is when those asset sales might happen. “The sale of assets will be gradual, but lenders may be forced to issue on collateral that is 20 basis points underwater,” he told Marketwatch in an email. And what is now shaky is set to get worse. “Higher rates ultimately make the mess bigger,” Whelan said.
DIS – Why protecting DIS around $98 and we also have cash available for more shares
BIDU – Why are we in BIDU
UAA – 50% upside from the closing lows of $6.65
COST 12/08 AMC
MU 12/20 AMC
A recession is a significant, widespread, and prolonged downturn in economic activity. A common rule of thumb is that two consecutive quarters of negative gross domestic product (GDP) growth mean recession, although more complex formulas are also used.
The Big Picture
Last Updated: 02-Dec-22 15:31 ET | Archive
Valuation matters and that won’t change in 2023
2022 has been challenging year for investors to say the least. Rising interest rates have been at the heart of the challenges, yet they may soon give way to declining earnings estimates as a driving force.
No matter the challenge — rising interest rates or declining earnings estimates — the connection all year has been that valuation matters. We don’t see that changing in 2023.
How Things Have Changed
Entering 2022, the S&P 500 traded at 21.5x forward 12-month earnings. It did so with the target range for the fed funds rate at 0.00-0.25%, the 10-yr note yield at 1.51%, and the Federal Reserve still buying at least $40 billion per month of Treasury securities and at least $20 billion per month of agency mortgage-backed securities.
That was also a time when the Fed’s median estimate for 2022 PCE inflation was 2.6% and 2.7% for core-PCE inflation. The median estimate for the terminal rate, meanwhile, was 2.1%.
Oh, how things have changed.
The target range for the fed funds rate is now 3.75-4.00% (and headed higher), the 10-yr note yield is 3.51% (but it had been as high as 4.23%), and the Federal Reserve is letting $60 billion per month of Treasury securities and $35 billion per month of agency mortgage-backed securities roll off its balance sheet.
The Fed’s median estimate for 2022 PCE inflation has changed to 2.8% and 3.1% for core-CPE inflation. The median estimate for the terminal rate is 4.60%, but Fed Chair Powell recently said that is likely to be revised higher with the updated Summary of Economic Projections later this month. The fed funds futures market for its part sees a terminal rate in the neighborhood of 5.00% by mid-2023, according to the CME FedWatch Tool.
Today, the S&P 500 trades at 17.7x forward twelve-month earnings. The sticking point as we enter 2023 is that the stock market still isn’t “cheap.” In fact, it trades at a slight premium to its 10-year historical average of 17.1x, according to FactSet.
That’s a sticking point because the earnings estimates for the next 12 months are not static. They are dynamic and we believe they will be subject to downward revision as the lag effect of the Fed’s rate hikes hits home for borrowers, employee layoffs increase, the housing market weakens, excess personal savings dwindle, and other countries feel the strain as well of rising interest rates, high inflation, and reductions in discretionary spending.
2022 has proven to be a tougher year for the stock market than it has for the economy. Granted we saw GDP contract in the first and second quarters, driven in large part by weakness in government spending and the change in inventories, yet the contraction occurred at a time of undeniable strength in the labor market. In the first and second quarters, the unemployment rate averaged 3.8% and 3.6%, respectively.
Note the unemployment rate was lower in June (3.6%) than it was in January (4.0%), and yet real GDP was negative for the first two quarters. That’s why many market watchers pooh-poohed the idea of the U.S. economy being in a recession.
Real GDP growth ran at an annualized 2.9% in the third quarter, and as of this writing, the Atlanta Fed GDPNow model is estimating 2.8% real GDP growth for the fourth quarter.
The road ahead, however, is expected to get bumpier, again as the lag effect of the Fed’s rate hikes, and the rate hikes by central banks in other developed markets like the eurozone, Australia, the UK, and Canada, hit home. We can’t forget either that an intended aim of the Fed’s rate hikes is to weaken demand and that the Fed sees a necessary weakening of the labor market as part of the solution for getting inflation under control.
The Fed has been playing catch up all year with its rate hikes, taking the unprecedented route of raising the target range for the fed funds rate by 75 basis points at four consecutive meetings. That’s why the market sees it as a relief that the Fed is apt to raise the target range for the fed funds rate by “only” 50 basis points at the December 13-14 FOMC meeting.
That would pull the target range to 4.25-4.50%. If the fed funds futures market has it right and the terminal rate is in the neighborhood of 5.00%, then it can be said today that the Fed is almost done with this rate-hike cycle. What can’t be said today is that the Fed will be cutting rates soon.
The Fed certainly isn’t saying that. The party line is that it will reach a higher terminal rate and then hold it there for a while to be sure inflation is coming back down to its 2.00% target.
Earnings Estimates Being Reined In
Market rates have adjusted to the Fed’s hawkish mindset. That has hurt stocks and it has helped savers (finally!). Those higher rates, though, will remain a competitive headwind for stocks in 2023 and a constant headwind for the economy.
Inversions all along the Treasury yield curve, whereby short-term rates yield more than long-term rates, are being viewed by many participants as ominous harbingers of the economic environment since inversions typically occur in front of recessions.
And recessions bode poorly for earnings growth.
Citing Yale University professor Robert Shiller’s data, Bloomberg notes that the average peak-to-trough earnings drop in a recession since 1960 has been about 31%. According to FactSet, the current consensus calendar 2023 earnings estimate for the S&P 500 ($230.98) computes to 5.7% growth versus calendar 2022.
It is evident in the chart above that analysts have been reining in their 2023 earnings expectations since the middle of 2022 when the estimate approximated $250.00. Even so, there is still headway above 2022 expectations that does not line up with a recession environment. The Treasury market, therefore, is either overly pessimistic about where the economy is headed in coming months or equity analysts are overly optimistic.
This dichotomy will be the basis for a market that moves in fits and starts in 2023.
What It All Means
It is hard to see a market trading at 17.5x calendar 2023 earnings as trading at a true value given the economic writing on the wall, a Fed that is still intent on raising rates, and knowing that many companies have yet to issue FY23 earnings guidance.
That guidance will start flowing in late January during the fourth quarter earnings reporting period and we expect to hear a lot of cautious-sounding guidance tied to the macroeconomic environment that forces estimates lower.
How low they go is the $64,000 question. The answer will depend on just how weak the economy gets. What China does with its zero-COVID policy, what Russia does with its war on Ukraine, and what the Fed does with its monetary policy are some wild cards for the growth outlook. They can be game changers for the stock market — for better or worse.
2022 has been a major struggle for the stock market and it isn’t over yet. Fortunately, December has a good reputation for typically being a good month for the stock market, so perhaps a bad 2022 can end on a high note.
Stocks will still have their share of struggles in 2023, presumably more so in the first half of the year than the second half as deteriorating economic conditions collide with inflated earnings estimates. Nevertheless, we expect the economy to have a bigger struggle in 2023 than the stock market for several important reasons:
- The stock market has wrung out a lot of excess from the pandemic stimulus bubble already in 2022.
- In a tougher economic environment, higher-quality companies that are profitable, have solid free cash flow, and pay dividends should exhibit relative strength — and that generally encompasses more large-cap companies.
- Deeper cuts to earnings estimates will hurt at first and that will be reflected in lower stock prices, but they should ultimately invite better stock performance as the year unfolds since investors will have more confidence that they are buying stocks at a true value in front of an inflection in earnings growth (and monetary policy) as opposed to buying into value traps that exist before there is a deeper cut to earnings estimates.
The stock market is entering 2023 at a lower valuation than it entered 2022, but it isn’t cheap yet. It will have to wrestle with more cuts to earnings estimates, which means there will be more cuts to stock prices. There will be opportunity in those cuts, however, knowing that it is always darkest before dawn.
To that end, low valuations matter just like high valuations, only they matter more in producing better long-term returns for investors.
Where will our markets end this week?
DJIA – Bullish
SPX –technically bullish
COMP – Bullish looking to cross bearish again
Where Will the SPX end December 2022?
Tues: AZO, TOL,
Wed: GME, SPWH
Thur: ACGO, DOCU, LULU, MTN, COST
Mon: Factory orders, ISM Services
Tue Trade Balance
Wed: MBA, Productivity, Unit Labor Costs, Consumer Credit,
Thur: Initial Claims, Continuing Claims,
Fri: PPI, Core PPI, Michigan Sentiment, Wholesale Inventories
How am I looking to trade?
Currently have protection on for downward market movements, SPY puts in accounts for possible earnings disappointment
www.myhurleyinvestment.com = Blogsite
firstname.lastname@example.org = Email
Who will be Disney’s next CEO? Here are the top contenders to succeed Bob Iger
PUBLISHED SUN, DEC 4 20228:00 AM EST
- Disney’s board and CEO Bob Iger are aiming to find his next successor over the next two years.
- There are several internal and external candidates who could take over the role.
- Here is a look at some of the top contenders to be Disney’s next CEO.
Disney reappointed Bob Iger as its chief executive recently, abruptly replacing his hand-picked successor Bob Chapek, and giving Iger an early goal — find a new replacement during the next two years.
Iger’s attention has quickly turned to the other part of his mandate from the board — the immediate challenges facing Disney’s business, such as the company’s reorganization, cost structure and the future growth of its streaming business. But that hasn’t quelled speculation about who his successor could be.
Media industry executives and company observers are putting together a roster of potential candidates Iger and the board will likely consider in deciding whom to groom for the role next. The pool of possibilities include former Disney executives who were previously considered the future of the Mouse House before being passed over for Chapek, a few internal rising stars and some sleeper picks who are either close to the creative community or already have ties to the company.
Another possibility some consider is that Iger, whose return was applauded by Wall Street and employees, sticks around longer than his two-year contract.
Here’s a look at some of the people who could be next in line to lead Disney.
Calling up from the bench
Before calling Iger, Disney’s board considered a few internal candidates to replace Chapek, but ultimately decided they were too new to take on the various pressures on the company, CNBC previously reported.
One of the candidates considered was Dana Walden, said people familiar with the matter who were not authorized to speak publicly on the topic. She is the head of general entertainment content and in charge of creating original entertainment and news programming for Disney’s streaming platforms, broadcast and cable networks.
Walden’s been known to have a hands-on role with content creators. In Iger’s first memo to employees following his reinstatement, he mentioned Walden as among the top lieutenants who would work with him on Disney’s new structure, which would put “more decision-making back in the hands of our creative teams and rationalizes costs.”
“Disney will likely choose a successor that leads with talent relationship capabilities,” said Eric Schiffer, CEO and chairman of Patriarch Organization and Reputation Management Consultants. “The downfall of Chapek is he maimed Hollywood relationships.”
One of the notable missteps made by Chapek during his quick turn as CEO was his handling of Scarlett Johansson’s pay dispute.
Walden took on her role in June after her boss, Peter Rice, was ousted after clashing with Chapek. Like Rice, Walden came to Disney in 2019 as part of the company’s acquisition of 21st Century Fox’s assets.
When she was promoted, Chapek had called Walden “a dynamic, collaborative leader and cultural force who in just three years has transformed our television business into a content powerhouse.” At the time, Disney’s board had put its support behind Chapek. Still, Walden lacks experience on business decisions, and has focused her time on the creative side.
Meanwhile, Rice may be interested in returning to the company in some capacity and has remained in contact with Iger, people close to the matter said.
Alan Bergman, who’s been with Disney for more than 25 years, is another potential candidate, the people have said. He is the chairman of Disney’s studio content and spearheaded the integration of Iger’s acquisitions into Disney’s overall content pipeline. He also was mentioned in Iger’s first memo.
In addition, Bergman has rapport with many creatives in Hollywood. Disney relies on those relationships, and he might have a softer hand in dealing with talent and agents than what was seen with the Chapek and Johansson dispute. Unlike other top executives at Disney, however, Bergman doesn’t have experience in many other divisions and has focused much of his career on studio content.
Another Disney insider floated as a possible candidate has been Josh D’Amaro, people familiar with the company have said.
D’Amaro is head of Disney’s parks, experiences and products, the same position Chapek held before becoming CEO. His long track record at the company — he began his career at Disney in 1998 and his positions have mostly centered around resorts — could bode well for him.
As does his charisma. D’Amaro is generally well-liked by his peers and the cast members at the parks and considered a strong leader. While there have been complaints by guests at Disney’s domestic parks that prices are steep and the ticket-reservation system is flawed, few have blamed D’Amaro. Instead, Chapek has taken the brunt of criticism, with guests and analysts assuming the former CEO was responsible for setting strict guidelines for driving more revenue at the parks and resorts.
Still, D’Amaro doesn’t have the creative experience that Iger is often lauded for. His resume is concentrated on the resorts and parks businesses.
Rebecca Campbell, who’s currently in charge of Disney’s international content and operations, is another candidate that Iger may favor, people familiar with the matter said.
The executive, who has worked in various divisions of the company after starting on the local TV side in 1997, is also well-liked. However, while she also has experience running the streaming business in Disney+’s earlier days, she was removed from the position and may not have the hands-on business experience to make the tough decisions facing the company’s media business.
If Campbell or Walden were to ascend to the CEO position, it would be the first time Disney had a woman in the top job.
A dark horse candidate from within the organization would be Sean Bailey, the president of Disney Studios, one observer said. Bailey, who’s maintained a relationship with Iger, is well-liked by the creative community.
Kevin Mayer and Tom Staggs were former Disney executives who were also in the running for the job before Iger settled on Chapek in early 2020.
Both left the company after being passed over. Many had pegged Mayer in particular as the likely successor. His name has once again floated back to the top of the list.
“This problem didn’t have to happen,” Engine Gaming and Media Executive Chairman Tom Rogers said on CNBC recently, ticking off the attributes needed for someone in this role, such as understanding the media business, a streaming track record, ability to build up franchise content and being a deal-maker.
“They had that person, it was Kevin Mayer,” said Rogers, the former president of NBC Cable. “They still have that person, he’s still the right choice. The board made a mistake, I hope they don’t make that mistake again.”
Mayer had been Disney’s longtime head of strategy, and was involved in deals like the 21st Century Fox acquisition.
Before Mayer left, he had one of the most important jobs at the company — developing and launching Disney+. Since leaving Disney, he had a short stint as CEO of TikTok and later joined billionaire Len Blavatnik’s investment firm Access Industries and became chairman of sports streamer DAZN.
Mayer and Staggs also run the entertainment startup Candle Media, where they’ve flexed their M&A experience with recent deals like Reese Witherspoon’s Hello Sunshine and children’s content maker CoComelon.
For Mayer or Staggs to return to Disney, Iger would likely have to acquire Candle Media. Mayer has outstanding obligations to acquired companies and has no interest in leaving his current job, according to people familiar with the matter. It’s possible Iger could see CoComelon as a good intellectual property fit for Disney+, although Iger said at a town hall Monday he isn’t interested in any mergers or acquisitions for Disney in the near future.
Somewhat outside of the Disney bubble, Mattel CEO Ynon Kreiz could be another contender, the Disney observer noted. Kreiz has sold two companies to Disney: Fox Kids Europe, which sold a majority stake to Disney in 2001, and Maker Studios in 2012.
BlackRock unit says it’s time for a new portfolio playbook, and reveals how to position
PUBLISHED THU, DEC 1 20228:16 PM ESTUPDATED FRI, DEC 2 20222:34 AM EST
BlackRock’s ETF division says the investing environment has fundamentally changed, which has “profound implications” for portfolios looking ahead.
In its 2023 investor guide, Blackrock’s iShares, one of the largest providers of exchange-traded-funds in the world, said the era of cheap money is over, and the higher-rates-for-longer regime is here to stay.
“Elevated levels of inflation should prevent the Fed from easing aggressively, even if a recession takes hold,” Gargi Pal Chaudhuri, head of iShares investment strategy Americas at BlackRock, wrote in the Nov. 30 note.
“Although markets continue to trade on the possibility of a Fed ‘pivot,’ we think central bank authorities will raise and then hold rates in restrictive territory throughout 2023 – waiting for the long and variable lags of monetary policy tightening to feed through into the economy.”
This shift brings with it “profound implications for portfolio construction,” Chaudhuri said. “It is time to consider a new portfolio playbook.”
She lists three ways investors can play this shift in markets.
1. Work your cash; buy bonds
Chaudhuri said it was time to rethink the role of bonds, as a higher-rate environment sees fixed income yields rise.
“This is likely to drive a shift back into fixed income, as it returns as an investable asset class,” she wrote. “The rapid shift higher in yields has created significant opportunities in high-quality, front-end fixed income exposures.”
BlackRock also said investors can earn income in the “comparative safety” of cash-like instruments through ultra-short duration securities.
2. Reallocate away from growth stocks
Growth stocks, such as Big Tech, were an investor favorite in an era of low rates. But this year, tech stocks have been among the worst-performing sectors.
Many investors remain hung up on the question of when to get back into the sector, but Chaudhuri said could be misguided.
″‘Dip-buying’ is often conflated with the question of ‘when do I buy tech again?’” she said. “This implicit question fails to recognize the regime shift that has taken place: the accommodative monetary policy that drove the decade-long outperformance of growth (and large-cap technology in particular) is over.”
As a result, BlackRock favors taking a defensive position on a tactical basis, preferring stocks such as health care and energy producers, as well as small-cap stocks which it says are trading at the largest discount relative to large-cap equities since 2001.
BlackRock isn’t alone in recommending investors go defensive; Goldman Sachs recently said investors should continue to position themselves defensively going into 2023 as the stock market hasn’t yet hit its trough.
In its 2023 outlook, Blackrock’s iShares added that value-style equities provide exposure to the real economy – embodying “a mature segment of the overall market – one that is more defensive in nature with higher earnings yields and less sensitivity to the U.S. consumer.”
Infrastructure and agricultural producers are two such sectors, BlackRock said.
3. Live with inflation
Inflation is set to stick around, given the continued strength coming from services and shelter, according to BlackRock.
“Even as the Fed’s tightening begins to bite and economic activity begins to slow, we believe inflation will likely remain above the Fed’s 2% target due to the stickiness of prices within services and other key consumption basket components, like shelter,” Chaudhuri said.
Investors should own inflation-linked bonds given this environment, BlackRock said.
“After spending a few years in negative territory, [Treasury Inflation-Protected Securities] real rates have repriced higher and have regained their role of providing a potential ballast in a multi-asset portfolio,” it said.
Top Wall Street analysts say buy these stocks during a market downturn
PUBLISHED SUN, NOV 27 20229:24 AM EST
Even though the holiday week ended on a positive note for stocks, more volatility is likely in the cards.
All eyes are on November’s upcoming payrolls report, due out Dec. 2. Further, the Federal Reserve’s Dec. 13-14 meeting looms ahead, and investors await the central bank’s next steps on its monetary policy campaign. There is still plenty of time for stocks to churn before the year ends.
This means investors need to shift their focus toward longer-term prospects instead of fixating on near-term gyrations in the market. See below for five stocks picked by Wall Street’s top pros, according to TipRanks, a platform that ranks analysts based on their previous performance.
However, after the company posted its quarterly results, Susquehanna analyst Christopher Rolland noticed that Nvidia is “getting back on track.” This prompted him to reiterate a buy rating on the stock and raise the price target to $185 from $180. (See Nvidia Dividend Date & History on TipRanks)
While elevated channel inventories are still a problem, Nvidia foresees them falling back to normal levels from the next quarter onward. Other than that, Rolland was fairly satisfied with the quarterly performance and trends. Nvidia’s gross margin guidance amid lower revenue run rate impressed the analyst, who said that this “may be indicative of significantly higher ASPs (average selling price) for both new gaming and data center products.”
The analyst said that of the four major end markets (auto, datacenter, professional visualization, and gaming), at least three are expected to grow at three times the rate of the overall semiconductor market.
Rolland is ranked 26th among more than 8,000 analysts tracked on TipRanks. His track record over the past year shows a success rate of 69% and average returns of 21.8% per rating.
Another of Rolland’s stock picks is semiconductor company Marvell Technology (MRVL), which is slated to post its third-quarter fiscal 2023 results on Dec. 1. Ahead of the print, the analyst identified several dampening factors that are expected to be a near-term sore point. Keeping that in mind, Rolland trimmed the price target to $75 from $90.
The company’s nearline HDD business is expected to have remained weak in the quarter, due to a large inventory build. Overall, the analyst expects Marvell to have had a slightly disappointing quarter, despite some tailwinds from the North American rollouts of 5G infrastructure. (See Marvell Stock Chart on TipRanks)
Looking beyond the quarter, Rolland sees several upsides to Marvell. “We believe the start of India’s 5G deployments could be a positive for the narrative (with revenue to come later in 2023). Marvell’s 5G products continue to ramp at both Samsung and Nokia (two large customers), as the networking businesses at both companies beat expectations,” the analyst said.
Rolland reiterated his buy rating on the company.
Costco (COST) operates an international chain of warehouse clubs that offer branded and private items from various product categories. Recently, in light of food inflation, slowdown, and other economic forces, Bank of America analyst Robert Ohmes analyzed the company’s prospects and emerged bullish.
“We expect high food inflation to drive continued share gains for the warehouse club channel (including Costco) given the strong value proposition and price positioning on overlapping SKUs vs. mass and traditional grocery,” said Ohmes. (See Costco Website Traffic on TipRanks)
The analyst pointed out that Costco churns out more than 20 new clubs a year. Further, he expects solid trends in customer traffic and membership renewal rates to continue. Even in the international markets, continued growth in same-store sales is a positive for the company
Ohmes is ranked at No. 854 among more than 8,000 analysts on TipRanks. The analyst has delivered profitable ratings 56% of the time, and each one has generated average returns of 8.3%.
Earlier this month, project management tool provider Monday.com (MNDY) delivered banner quarterly results, which buoyed the confidence of investors and analysts alike. Among the Monday.com bulls was Tigress Financial Partners analyst Ivan Feinseth, who reiterated a buy rating on the stock.
Feinseth noted that the company’s performance stands to gain from consistently strong customer adoption rates. Furthermore, Monday.com’s competitive advantage lies in its low-code/no-code Work OS. He also maintains that easy integration and user-friendliness of the platform will continue to attract significant customers and boost revenue growth. (See Monday.com Financial Statements on TipRanks)
“Ongoing innovation and growth will continue to drive MNDY’s already strong brand equity together with its high-margin SaaS (Software as a Service) subscription-based revenue model will drive an ongoing acceleration in Business Performance trends which will drive an increasing Return on Capital, further gains in Economic Profit, and long-term shareholder value creation,” said Feinseth.
He is ranked 232nd among more than 8,000 analysts on TipRanks. Feinseth has issued profitable ratings 60% of the time, and each has delivered 11.3% returns on average.
Entertainment company Disney (DIS) is another stock on Feinseth’s buy list. The analyst recently reiterated a buy rating and $177 price target on the stock, mainly encouraged by the return of former CEO Bob Iger, who is expected to drive “a return to creativity dominance.”
Moreover, the solid content roster is expected to drive the company’s growth. Feinseth is also upbeat about Disney’s ongoing investments in its theme park upgrades, new technology and ongoing content development, which he thinks will continue to drive the company’s performance. (See Walt Disney Hedge Fund Trading Activity on TipRanks)
“DIS will continue to drive increasing theme park attendance with ongoing park upgrades and introductions of new attractions; the ongoing leverage of its advanced reservation system is driving capacity optimization and greater revenue yield, and its Genie and Genie+ virtual park assistant significantly increase guest experiences,” said Feinseth.
The analyst highlights Disney’s strong balance sheet, cash flow generating capabilities and practical capital-allocating strategies. These are helping the company invest in content development, new theme park attractions and other growth-driving efforts.