Bespoke Stock Scores — 8/27/24
Daily Sector Snapshot — 8/27/24
Chart of the Day – Persistent Breadth
Bespoke’s Morning Lineup – 8/27/24 – Stuck
See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week trial to Bespoke Premium. CLICK HERE to learn more and start your trial.
“We can draw lessons from the past, but we cannot live in it.” – Lyndon B Johnson
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Depending on the index, equity futures are trading within 0.1% above or below unchanged this morning as treasury yields move slightly higher. The only economic reports on the calendar this morning are FHFA House Prices and Consumer Confidence. Besides these two reports, investors continue to look ahead to Nvidia (NVDA) earnings after the bell on Wednesday. It’s hard to remember a time when there was so much anticipation regarding one company’s earnings report, but besides Apple (AAPL) over the years, it’s also hard to remember a stock in recent history that has garnered as much of an iconic status.
For anyone frustrated with the slower momentum in the US economy, consider yourself lucky we’re not Germany. Q2 GDP in Europe’s largest economy and the third largest in the world contracted by 0.1%, which was in line with expectations. The latest quarterly print represents the latest example of an economy stuck in the mud and not going anywhere. Look at the chart below of quarterly GDP in Germany since the start of 2014. For nine quarters, quarterly GDP prints have alternated between gains and losses.
The chart below shows historical streaks where German GDP alternated between growth and contraction, and at nine quarters in a row now, the current streak is unlike anything seen since East and West Germany reunified in the early 1990s. It’s over twice as long as the next longest streak of four quarters. Not only that, but unless there are revisions to prior quarters, the streak will either extend to ten next quarter, or the economy will be in a technical recession (back-to-back quarters of negative GDP)!
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$10,000 in NIKE (NKE)
In today’s “$10,000 in…” series, we’re taking a look at NIKE (NKE).
NIKE, Inc. (NKE) was founded in 1964 as Blue Ribbon Sports by University of Oregon track athlete Phil Knight and his coach Bill Bowerman. Initially, the company operated as a distributor for the Japanese shoemaker Onitsuka Tiger, selling shoes out of Knight’s car at track meets. In 1971, Blue Ribbon Sports rebranded as Nike, named after the Greek goddess of victory, and introduced the iconic “Swoosh” logo. The company rapidly expanded its product line and marketing efforts, becoming a leading athletic footwear and apparel brand. Nike went public in December 1980, with its initial public offering (IPO) marking the beginning of its ascent as a global sportswear powerhouse.
Below is a look at the growth of a hypothetical $10,000 investment in shares of NKE at the start of 1990 (ex any initial trading costs) with dividends re-invested back into company shares. As of 8/26/24, $10k in NKE at the start of 1990 would be worth $1,534,600 today. That’s a gain of more than 15,000%.
While going from $10k up to $1.5 million is nothing to sneeze at, this was actually above $3 million at NKE’s peak in late 2021. Shares are currently in a 52% drawdown and are about where they were trading five years ago in August 2019.
As always, past performance is no guarantee of future results!
We wrote more about NIKE (NKE) and its potential as a turnaround play in a recent Bespoke Chart of the Day. To read it, simply sign up for a trial to one of the two Bespoke membership options shown below. Click here or on the image below to sign up for a two-week trial today!
The Closer – AI and Interest Rates, Durable Goods, Positioning – 8/26/24
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Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we lead off with a look at the relationship between tech and rates (page 1). We then review today’s durable goods data (page 2) followed by a preview of this week’s Treasury issuance (page 3) and the latest positioning data (pages 4 – 7).
See today’s full post-market Closer and everything else Bespoke publishes by starting a 14-day trial to Bespoke Institutional today!
Daily Sector Snapshot — 8/26/24
Chart of the Day: NVIDIA (NVDA) Enthusiasm
Record Contractionary Streak for Texas Manufacturing
The Dallas Fed released its latest regional manufacturing survey this morning. At the headline level, the report showed the region’s manufacturing activity was stronger (or less worse) than expected with the index for general business activity rising to -9.7 versus -16.3 expected and -17.5 previously. That is also now the highest reading since January 2023.
Although that result was stronger than expected and relative to the past few years, the index remains in negative territory meaning it was a 28th consecutive month of contractionary readings. As shown below, that now surpasses the 27 months ending November 2009 for the longest streak of contractionary readings in the survey’s history.
Additionally, headed into this month, the spread of the current and future General Business Activity indices was close to a record low meaning that the region’s firms reported much more optimistic expectations for the months ahead than what they are currently observing. Historically, it has been common for expectations to be stronger than current conditions, but not to such an extreme degree as last month. With the increase in the current conditions index concurrent with a 10-point drop in the expectations index in August, the spread has narrowed dramatically, rising from a first-percentile reading into the 13th percentile.
That improvement in General Business Activity occurred with strong breadth across most of the report’s categories. As shown in the table below, for current conditions, every index was higher month over month except for Employment which dropped 7.8 points. Not only were most indices higher, but several of those monthly jumps rank in the top 10% of all MoM moves on record. Thanks to those big increases, four indices went from contraction, back into expansion: Unfilled Orders, Shipments, Production, and Inventories. Again, the actual level of expectation indices has been stronger, but breadth in August was more mixed with half of the categories falling month over month and the other half rising. That being said, the 10-point drop in General Business Activity stood out as an outlier in terms of the size of the decline.
As noted above, multiple indices went from contraction to expansion in August, and most were related to demand. While the new orders index is still in contraction at -4.2, the expectations index for that category has climbed to the strongest level since March 2022. The Unfilled Orders index was even more impressive with the index’s 27.6 point MoM jump ranking as the second largest on record behind September 2005 when it rose by over 30 points. While that is only the first expansionary reading since last September, it’s the highest reading in 25 months. Meanwhile, expectations rose to the highest level since June 2021. In all, the report indicated that conditions are not yet improving, albeit there are some silver linings under the hood.
The Triple Play Report — 8/26/24
An earnings triple play is a stock that reports earnings and manages to 1) beat analyst EPS estimates, 2) beat analyst sales estimates, and 3) raise forward guidance. You can read more about “triple plays” at Investopedia.com where they’ve given Bespoke credit for popularizing the term. We like triple plays as an indication that a company’s business is firing on all cylinders, with better-than-expected results and an improving outlook. A triple play is indicative of positive “fundamental momentum” instead of pure fundamentals, and there are always plenty of names with both high and low valuations on our quarterly list.
Bespoke’s Triple Play Report highlights companies that have recently reported earnings triple plays, and it features commentary from management on triple-play conference calls, company descriptions and analysis, and price charts. Bespoke’s Triple Play Report is available at the Bespoke Institutional level only. You can sign up for Bespoke Institutional now and receive a 14-day trial to read this week’s Triple Play Report, which features 26 new stocks. To sign up, choose either the monthly or annual checkout link below:
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SharkNinja (SN), a home appliance maker, is an example of a company that recently reported an earnings triple play. In fact, the triple play on 8/8 marked its fourth straight. The stock has been strong this year, up 75.6% from where it began 2024. On 8/8, SN shares surged 17% in reaction to the quarterly triple play.
Looking at the snapshot below from our Earnings Explorer, SN could not have asked for a better start since separating from JS Global in July of 2023 and becoming its own publicly traded company. With four consecutive triple plays, the stock has had increasingly positive share-price reactions.
You may very well have an SN product or two in your home given the popularity of the company’s vacuums, blenders, air fryers, ice cream makers, and other appliances. The release of the Ninja SLUSHi for making frozen drinks recently went viral on social media. Cleaning product sales grew nicely while international sales surged 46%, up triple digits in Germany and France specifically. Entry into the premium coffee market with the Ninja Luxe Café is expected to drive further growth, especially in Europe. You can read more about SN and the 25 other triple plays in our newest report by starting a Bespoke Institutional trial today.
Bespoke Investment Group, LLC believes all information contained in these reports to be accurate, but we do not guarantee its accuracy. None of the information in these reports or any opinions expressed constitutes a solicitation of the purchase or sale of any securities or commodities. This is not personalized advice. Investors should do their own research and/or work with an investment professional when making portfolio decisions. As always, past performance of any investment is not a guarantee of future results. Bespoke representatives or clients may have positions in securities discussed or mentioned in its published content.