Author: Editor

Investors may want to use the pullback in infrastructure stocks as opportunity.

Over the last few weeks, several, including Vulcan Materials (VMC), Global X U.S. Infrastructure (PAVE), Nucor (NUE), Freeport McMoRan (FCX), Jacobs Engineering (J), United Rentals Inc. (URI), Caterpillar (CAT), and Marin Marietta Materials (MLM) have pulled back.

However, all have room to run as we near potential passage of a bill.

At the moment, nine Democratic House moderates could withhold their support for budget resolution until Speaker Pelosi allows the House to first vote on the $1.2 trillion infrastructure plan, as noted by CNN.  Perhaps this could push for a vote sooner than later. 

As we noted on August 10, the Senate-passed bill includes:

• About $110 billion of the bill will be used for roads, bridges, and other projects. 
• It will also set aside $66 billion to upgrade passenger and freight trains, and according to Newsweek, will help eliminate Amtrak’s maintenance backlog. 
• The bill will also include $7.5 billion for EV charging stations.
• Another $55 billion will be used to improve water infrastructure, including the replacement of lead pipes. 
• The bill will also include $17 billion for port infrastructure, and another $25 billion for airports, as also noted by Newsweek.

Again, we’d use any weakness in related stocks as opportunity.

After all, current infrastructure is in desperate need of repair.

In fact, according to Fortune:

The entire U.S. economy, all $20 trillion of it, relies heavily on our infrastructure in one way or another, through transportation, power grids, high-speed internet, ports, roads, and bridges. But much of this infrastructure hasn’t been updated in decades.  The American Society of Civil Engineers (ASCE), which grades U.S. infrastructure each year, gave the country a C- in 2021. 

There’s a water main break every two minutes, said the ASCE report, leading to losses of 6 billion gallons of treated water each day. Some 43% of our public roadways are in poor or mediocre condition. About 42% of all bridges in the country are at least 50 years old, and 7.5% are considered structurally deficient.”

We could easily go on…. Point is, we needed repairs yesterday.

The post Use Infrastructure Stock Weakness as an Opportunity appeared first on Morningology.

Online grocery shopping is on the rise.

Even with restaurants reopening, and consumers crowding food stores, more Americans are ordering groceries online, according to Gallup.

“In addition, fewer Americans than two years ago are dining at restaurants, but takeout and delivery from restaurants is steady and remains a popular activity,” Gallup notes. “The percentage of U.S. adults who now say they order groceries online for pickup or delivery at least monthly has doubled, from 11% in 2019 to 23% today. This includes 3% who do so more than once a week, 9% weekly, and 11% once or twice a month.”

Also, the number of Americans dining out is dropping, too.

At the moment, about 74% of Americans says they eat at a restaurant at least once a month, as compared to 87% in 2019. “The greatest decrease is in the percentage who say they eat out more than once a week, which has declined seven points to 17%.”

Delivery numbers could increase even more with virus numbers on the rise yet again.

Also, as we noted on March 24, 2021:

With millions of people ordering takeout far more frequently, the sector could balloon to a $400 billion valuation by 2024. Better, according to Euromonitor, it could surge to $1 trillion over the next decade.

In fact, according to Research and Markets:

“Online food ordering market in Europe has grown multiple folds in the last five years. Europe online food delivery facility is growing year on year due to the escalating utility of smartphone phone users and the internet penetration rate; it contributes to the enormous growth of this market. Besides, COVID-19 pandemic has drastically changed the way to order online food in Europe. As people are advised to remain at home and hotels are closed, so online food ordering has shown tremendous growth in this period.”

Some of the top stocks to consider on that news include Uber Technologies (UBER), Grubhub (GRUB), DoorDash (DASH), Blue Apron Holdings (APRN), and Waitr Holdings Inc. (WTRH)

The post The Top 5 Ways to Trade the Booming Online Grocery Market appeared first on Morningology.

Millions of students are headed back to in-person learning.

With it, back to school shopping season could create a significant catalyst for many of the top retailers. In fact, according to the National Retail Federation (NRF), “Consumers plan to spend record amounts for both school and college supplies as families and students plan to return to in-person classrooms this fall, according to the annual survey.”

Families with kids in elementary through high school are expected to spend nearly $850 on average on school gear. That’s about $59 more than last year. Total back to school spending is expected to balloon to $37.1 billion, up from $33.9 billion.

In addition, according to NRF, “College students and their families plan to spend an average of $1,200.32 on college or university items, an increase of $141 over last year. Over half ($80) of this increase is due to increased spending on electronics and dorm furnishings. Total back-to-college spending is expected to reach a record $71 billion, up from $67.7 billion in 2020.”

Some of the top retailers to consider are:

Target. Corporation (TGT)

Target Corporation (TGT), where Chairman and CEO Brian Cornell just said, “Back-to-school and back-to-college are off to really strong starts,” as quoted by Yahoo Finance. “Backpacks and lunch boxes are selling and school uniforms are on the top of that list. We’re seeing a really strong start, and that’s continued as we move into the third quarter. I think it’s going to be a really robust back to school and back to college season.”

The company just posted net sales of $25.16 billion, as compared to expectations for $24.51 billion. Comparable sales were up to 8.9%, as compared to estimates for 8.2%. The company added, that, “second quarter comparable sales rose 8.9%, fueled by a 12.7% increase in the number of transactions.”

Kohl’s (KSS)

While we wait for Kohl’s (KSS) next earnings report, we’ve seen the company has had a great start to the year.

“We are very pleased with our strong start to 2021 with both sales and earnings materially exceeding expectations. Along with a favorable consumer spending backdrop, we continue to see our key strategic initiatives gain traction and resonate with customers. We saw momentum build through the quarter, especially in our stores where we continue to elevate the experience. We are eagerly preparing for the upcoming launch of our Sephora partnership as well as the introduction of several new exciting brands this fall,” said Michelle Gass, Kohl’s chief executive officer. “We are positioned to capitalize on growth opportunities during the balance of 2021 and remain firmly on track to achieving our 2023 strategic goals. Based on our first quarter results, we are raising our full year 2021 guidance.”

Bed Bath & Beyond (BBBY)

BBBY recently reported strong first quarter results.

Mark Tritton, Bed Bath & Beyond’s President and CEO said, “We have started the year in a position of strength and are clearly on track to accomplish our goals. 2021 marks the first year of our three-year transformation following the groundwork we laid in 2020 – a year of historic and necessary change for this organization against the backdrop of unprecedented challenges due to COVID-19. For the first quarter, we delivered our fourth consecutive quarter of comparable sales growth with gross margin expansion exceeding our expectations. These results demonstrate continued momentum with our strategies as we progress towards the goals we outlined at year-end and at our Investor Day.”

Of course, Amazon.com (AMZN) is likely to be a major beneficiary as well. In fact, according to eMarketer, the company could capture up to 85% of US back to school digital shopping.

The post Back to School 2021: The Top Stocks to Consider Now appeared first on Morningology.

Fear is back.

With Afghanistan, rising pandemic numbers, packed hospitals, poor retail sales, and renewed global lockdown concerns, fear is back in a big way. Not helping, July retail sales fell 1.1%, which was worse than expectations for a 0.3% drop.

With regards to the virus, the number of global cases is now up to 208 million, with nearly 4.4 million deaths. In the U.S. alone, there are 36.8 million cases to date, with 622,437 deaths recorded, according to Johns Hopkins.

Worse, “Florida has seen a surge in cases in recent weeks because of the highly contagious delta variant of the coronavirus, which has led to a major increase in state hospitalizations. By next week, 68% of hospitals are expected to reach a critical staffing shortage, according to an Aug. 9 survey by the Florida Hospital Association,” as reported by USA Today.

In short, things are a real mess all around the world.

No wonder the Dow is down about 300 points at the moment.

Until there’s clarity, investors may want to consider hedging for volatility with:

ProShares Ultra VIX Short-Term Futures ETF (UVXY)

The ETF was designed to match two times (2x) the daily performance of the S&P 500 VIX Short-Term Futures Index. The UVXY now trades at just $24.25.

iPath S&P 500 VIX Short-Term Futures (VXX)

The VXX ETN provides exposure to the S&P 500 VIX Short-Term Futures Index. The VXX last traded at $27 and could easily run well above $30, near-term with the chaos.

ProShares VIX Short-Term Futures ETF (VIXY)

ProShares VIX Short-Term Futures ETF provides long exposure to the S&P 500 VIX Short-Term Futures Index, which measures the returns of a portfolio of monthly VIX futures contracts with a weighted average of one month to expiration. The VIXY last traded at $22 and could run above $30, near-term.

The post The Top 3 Ways to Hedge for Madness in the Markets appeared first on Morningology.

The green energy boom is thriving.

We already know the green hydrogen boom could be worth more than $1 trillion.

Goldman Sachs called hydrogen a “once in a lifetime opportunity,” adding, the addressable market could be worth up to $11.7 trillion in the next 30 years.

Analysts at Bank of America says green hydrogen could be worth more than $11 trillion by 2050. The firm compared green hydrogen to smartphones pre-2007 and the Internet prior to the dot-com boom, as also highlighted by CNBC.

Raymond James’ analyst Michael Glen said 2021 could be a “watershed moment” for hydrogen. In fact, he expects to see far more hydrogen-related announcements going forward from companies and countries all around the world.

Now, we’re finding opportunity in “green ammonia.”

At the moment, ammonia production is responsible for about 1.8% of the world’s carbon dioxide emissions, as reported by CNBC.

In an effort to reduce that, three Norwegian companies including Statkraft, Aker Clean Energy, and Yara launched HEGRA, which will focus on decarbonizing an ammonia plant.

“The broad idea behind the initiative is that it will use renewable energy to generate ammonia at scale. The ammonia would then be used to produce carbon-free fertilizer. Statkraft also described green ammonia as ‘a promising zero-emission fuel for the maritime sector,’” reported CNBC.

At the moment, we’re hard at work looking for ways to trade the opportunity.

The post Green Ammonia May be the Next Big Investment Opportunity appeared first on Morningology.

Keep an eye on vaccine stocks again.

After a brief pullback, Moderna (MRNA), BioNTech (BNTX), and Pfizer (PFE) could see higher highs, near-term. All after the US FDA approved vaccine boosters for the immunocompromised, and as the virus continues to make its rounds around the world.

With regards to the virus, as of August 11, the U.S. seven-day average of daily new cases came in at 113,357, according to the US Centers for Disease Control and Prevention (CDC). That number is up 24.3% week over week, and about 876% from June 2021.

Plus, according to CNN, more than 98% of US residents live in areas where there’s a “high” or “substantial” risk of transmission.

In addition, “the State Department is telling citizens to avoid 10 of the [European] continent’s countries, and the European Union is considering shutting its doors once again to Americans, as U.S. cases soar,” according to The Washington Post.

Also, the US FDA is hoping to help, approving boosters for the immunocompromised.

In fact, according to USA Today, “The less than 3% of Americans who are severely immunocompromised should be able to get an extra dose of the Pfizer or Moderna vaccine. People who are on medications or have diseases that suppress their immune system may not have gotten adequate protection from their earlier doses of vaccine and are more likely to mount a response to an additional dose, the Food and Drug Administration determined.”

With all of that in mind, we’d use any signs of weakness in vaccine stocks, as a reason to buy – especially with these companies raking in billions of dollars.

According to Reuters, “Analysts have forecast revenue of over $6.6 billion for the Pfizer/BioNTech shot and $7.6 billion for Moderna in 2023, mostly from booster sales. They eventually see the annual market settling at around $5 billion or higher, with additional drugmakers competing for those sales.”

“The vaccine makers say that evidence of waning antibody levels in vaccinated people after six months, as well as an increasing rate of breakthrough infections in countries hit by the Delta variant, support the need for booster shots,” they added.

The post Use Weakness in Vaccine Stocks as an Opportunity – Here’s Why. appeared first on Morningology.

Copper markets could get red hot, we noted yesterday.

All thanks to infrastructure plans, renewables, and electric vehicles. In addition, copper prices could push even higher, as a strike in Chile threatens to tighten global supplies.

“Two unions at Codelco’s Andina copper mine in Chile said on Wednesday they would walk off the job in less than 24 hours after rejecting the latest contract offer from the state-owned miner following a five-day period of government-mediated talks,” said Reuters.

“Codelco, the world’s largest copper miner and a major earner for Chile, said it had made the best offer it could,” they added.

At a time when the world must have more copper, this strike could easily create a sizable shortfall, and send prices higher, near-term.

In addition, surging copper prices could lead to higher taxes in Chile.

In fact, according to Bloomberg, “Chile’s lower house approved introducing progressive taxes on copper sales in what could become one of the heaviest levies in global mining, potentially stalling investments and boosting prices.”

As we also noted yesterday, some of the top copper stocks to consider include Freeport McMoRan (FCX), Southern Copper (SCCO), BHP Group (BHP), and Riot Tinto (RIO). You may also want to keep an eye on the Global X Copper Miners ETF (COPX).

The post Chile is About to Spark a Massive Copper Price Rally appeared first on Morningology.

Lithium stocks are on fire.

In early July, we mentioned that the International Energy Agency just warned that, “At least 30 times as much lithium, nickel and other key minerals may be required by the electric car industry by 2040 to meet global climate targets.”

We also mentioned that demand was expected to outstrip supply by 20% over the next four years, reports Benchmark Mineral Intelligence, as noted by Reuters.  We also noted some of the best ways to trade the boom was with Albemarle (ALB), Lithium Americas (LAC), and American Lithium (LIACF) to name a few. 

Since then:

• ALB ran from $167 to $235
• LAC ran from $14 to $17.94

While LIACF has remained flat since our note, other lithium stocks are still exploding higher. 

Fueling the fire, President Biden unveiled an executive order targeting 50% of U.S. new car sales to be electric by 2030, as reported by Barron’s.

According to the White House on August 5, “Specifically, the President will sign an Executive Order that sets an ambitious new target to make half of all new vehicles sold in 2030 zero-emissions vehicles, including battery electric, plug-in hybrid electric, or fuel cell electric vehicles. The Executive Order also kicks off development of long-term fuel efficiency and emissions standards to save consumers money, cut pollution, boost public health, advance environmental justice, and tackle the climate crisis.”

That alone could fuel a multi-year boom for lithium. 

The post This is Why the Lithium Bull Market is Far From Over appeared first on Morningology.

Copper markets could get red hot.

With infrastructure plans, and an aggressive push for renewables, copper prices should push higher. For one, remember, “Copper will be crucial in achieving decarbonization and replacing oil with renewable energy sources, and right now, the market is facing a supply crunch that could boost the price by more than 60% in four year,” reports Business Insider.

Electric vehicles, for example, use four times as much copper as petroleum-based cars.

Two, according to Goldman Sachs, copper is “poised for another leg” higher as headwinds fade, and demand increases. The firm also believes the copper market is still tight, and says we could see a 430,000 tonne deficit by the second half of the year.

By 2022, they added, we could run into a 200,000 tonne deficit.

Three, the other problem could be Peru and Chile.

At the moment, the two account for nearly 40% of global copper production. Unfortunately, they may force miners elsewhere, given plans to potentially raise taxes on copper mining.

Look at Chile for example.

According to Bloomberg, “The world’s top copper-producing nation has long been one of the most reliable mining jurisdictions. Yet lawmakers in pandemic-scarred Chile’s lower house have just approved a progressive royalty on copper sales so onerous that it is described by miners as “akin to expropriation.”

With that in mind, there’s still plenty of time to invest in copper stocks, such as Freeport McMoRan (FCX), Southern Copper (SCCO), BHP Group (BHP), and Riot Tinto (RIO). You may also want to keep an eye on the Global X Copper Miners ETF (COPX).

 

The post The Top Ways to Trade a Red-Hot Copper Rally appeared first on Morningology.

About $110 billion of the bill will be used for roads, bridges, and other projects. That’s good news for companies such as Vulcan Materials (VMC), Nucor (NUE), and US Steel (X).

It will also set aside $66 billion to upgrade passenger and freight trains, and according to Newsweek, will help eliminate Amtrak’s maintenance backlog. This should be good news for stocks including Norfolk Southern (NSC) and CSX Corporation (CSX).

The bill will also include $7.5 billion for EV charging stations, which should benefit stocks such as Chargepoint (CHPT) and Blink Charging (BLNK). Another $73 billion could be spent on power grid infrastructure. Microgrid stocks like CleanSpark (CLSK) could benefit.

Another $55 billion will be used to improve water infrastructure, including the replacement of lead pipes. This could be beneficial for ETFs such as the Invesco S&P 500 Global Water Index (CGW), which according to Invesco, “is based on the S&P Global Water Index (Index). The Index is comprised of developed market securities including water utilities, infrastructure, equipment, instruments and materials.”

The bill will also include $17 billion for port infrastructure, and another $25 billion for airports, as also noted by Newsweek.

However, according to The Wall Street Journal, “The bill still faces a potentially rocky path in the House. House Speaker Nancy Pelosi (D., Calif.) has said the chamber won’t take it up until the Senate also passes a separate $3.5 trillion antipoverty and climate plan, a challenging negotiation of its own that could take months.”

It’ll be interesting to see how this all plays out. You’ve got to love politics.

The post Here’s What’s in the Infrastructure Bill appeared first on Morningology.