Category: General

The Changing Landscape of Brick-and-Mortar Stores in Today’s Economy

Posted on by The INO.com Team

After registering two consecutive months of declines of 0.2% and 1%, on May 16, the advance sales report showed a recovery of 0.4% in retail sales for April. However, this modest rebound missed the Dow Jones estimate of a 0.8% increase. In this article, we will explore what this tepid growth means for the prospects of brick-and-mortar stores in today’s economy.

U.S. domestic consumption has been on a roller coaster ride over the past three years. People have gone from not being free enough to spending practically-free money to spend like there’s no tomorrow.

That, in turn, led to a not-so-transitory inflation, the hottest since the 1980s, forcing the Federal Reserve to implement ten successive interest-rate hikes in a little over a year to take the Fed funds rate to a target range of 5% to 5.25%.

With the stash of stimulus cash fast dwindling, average American consumers have been forced to rein in their urge to splurge to prevent inflation from biting harder. The Survey of Consumer Expectations for April carried out by the New York Fed showed that the outlook for spending fell by half a percentage point to an annual rate of 5.2%, the lowest since September 2021.

Could online retailers fare better with a complementary offline presence?

  • Yes
  • No
  • Can’t Say

While consumption may be undifferentiated from a macroeconomic perspective, businesses have evolved to tailor their offerings to cater to various consumer segments. Despite current economic uncertainties and hardships, high-income segments have been relatively unaffected, with affluent patrons queueing up for finer things in life on offer from the likes of Tiffany & Co. and LVMH.

However, middle-income consumers have been forced to go bargain hunting to squeeze out the maximum possible value from money which has gotten dearer. Hence, they have been forced to trade down to budget-friendly retailers, leaving the businesses that offer something in between wrong-footed and stranded.

The divergent prospects between off-price retailers and their middle-of-the-road peers are evident from the Street expectation regarding business performance. The fiscal first quarter revenues of Burlington Stores, Inc. (BURL) are expected to grow by 13% year-over-year compared to an 8.7% year-over-year decline at Macy's, Inc. (M).

Although budget retailers have lost sales from low-income consumers, that loss has been offset by increased business from the middle-income consumer segment. Continue reading "The Changing Landscape of Brick-and-Mortar Stores in Today’s Economy" →

Buy, Hold or Sell: A Deep Dive Into NVIDIA Corp. (NVDA)

Posted on by The INO.com Team

California-based chip designer NVIDIA Corporation (NVDA) has had an outstanding 2023. The stock has continuously outperformed the S&P 500 and more than doubled year-to-date.

The company went public on January 22, 1999. However, it was not until the pandemic that the tailwind of crypto mining resulted in a surge in demand for its chips and the stock price. This time around, NVDA is riding the waves of Generative AI and Large Language Models (LLMs) that began with the release of ChatGPT to the general public towards the end of the last year.

NVDA is set to release its financial results for the first quarter of the fiscal year 2024 after the bell on May 24. To understand how the business would fare and how its stock price could be impacted after and beyond the upcoming earnings, let’s understand how the global provider of graphics, computation, and networking solutions has grown from being a major player in the gaming industry to an AI giant.

During the dawn of the PC revolution, NVDA’s founder and CEO, Jensen Huang, realized the emergent applications and demand for accelerated computation on the horizon and designed its first high-performance graphics chip in 1997. However, given the relative scarcity of use cases, the fledgling chip designer chose to bet on visual effects and gaming and struck the jackpot.

In 1999, the company launched what it claims to be the first programmable graphics card, the GeForce 256, and popularized the term, Graphics Processing Unit (GPU). In 2000, the company was the first exclusive graphics provider for Microsoft and Xbox.

Since then, these GPUs have become the mainstay of high-resolution gaming and animation to form the primary business of NVDA and contribute around 80% of its revenue.

Moreover, crypto miners hoarded and bid up these gaming GPUs at the peak of crypto-mania. However, with the onset of crypto winter due to rising interest rates and increased regulation risk, those GPUs flooded back into the market. The resulting oversupply led to a 46% year-over-year decline in gaming revenue.
Continue reading "Buy, Hold or Sell: A Deep Dive Into NVIDIA Corp. (NVDA)" →

Is Getaround (GETR) a Buy After New Deal News?

Posted on by The INO.com Team

By December 9, 2022, when Softbank-backed car-sharing company Getaround, Inc. (GETR) went public by merging with InterPrivate II Acquisition Corp., a Special Purpose Acquisition Company (SPAC), it was already late to the party.

Due to the fading appetite, relative to its peak in 2020 and 2021, for SPACs amid increasing interest rates and persistent downward market volatility, GETR’s shares tanked as much as 65% on its debut.

Six months on, GETR completed its acquisition of the assets of HyreCar Inc. (HYREQ), a premier gig car-sharing marketplace. With the acquisition expected to contribute up to $75 million of run-rate annualized Gross Booking Value, is the stock worth buying? Let’s find out.

Launched in 2011, GETR is the world’s first connected car-sharing marketplace which aims to simplify sharing of cars and trucks through its proprietary cloud and in-car Connect® technology and enable the shift away from car ownership. Today, the company has a presence across 1000 U.S. and European cities.

Which of the value-adjusted assets listed below would you prefer to let out for passive income if you have the scope?

  • Residential real-estate
  • Commercial real-estate
  • Multiple cars

According to its preliminary unaudited financial results for the fiscal year ending December 31, 2022, GETR’s total revenues are expected to come between $59 million and $60 million. The company expects its service revenue for the year to be between $57 million and $58 million and its cash and cash equivalent to be around $64.3 million.

Since the company is yet to file its annual report on Form 10-K, on April 26, GETR received a notice from the New York Stock Exchange (NYSE) regarding its non-compliance to the continued listing standard that requires the filing of all required periodic reports with the Securities and Exchange Commission (SEC). Continue reading "Is Getaround (GETR) a Buy After New Deal News?" →

3 Food Stocks to Buy Instead of Beyond Meat (BYND)

Posted on by The INO.com Team

For the stock of Beyond Meat, Inc. (BYND), seemingly on a one-way descent, its high of $186.83 on January 26, 2021, seems like a distant memory. The precipitous decline in the company’s stock price has reflected the alarming decline in its top line, which is more than the category average due to the inflation-led slowdown.

Founded in 2009 by its CEO Ethan Brown, BYND targeted meat eaters with plant-based products that replicate animal meat in look, feel, and taste. The company partnered with grocery and restaurant chains to increase the reach and visibility of its products.

In the interest of sustainability, which of the following options would you prefer?

  • Consuming regular quantities of plant-based meat
  • Consuming animal protein in moderation and on occasions

The hype surrounding the brand, further accentuated by big-name celebrity endorsements, helped the company’s stock make a strong market debut in 2019.

However, the company’s single-minded pursuit of growth and expansion through innovative offerings came in lieu of mounting debt and cost overruns.

Moreover, the company’s tendency to overpromise and underdeliver also didn’t help. As a result, the company had to switch its priority from growth at any cost to sustainable growth with healthy cash flows.

However, this attempt to scale down while moving forward has resulted in revenue decline, loss of market share to competitors, and a consequent slump in share price.

While BYND deals with its struggles and charts an arduous path to profitability, here are some alternative food stocks to consider.

Nestlé S.A. (NSRGY) is a global nutrition, health, and wellness company. The company’s segments include Europe, the Middle East, and North Africa (EMENA); Americas (AMS); Asia, Oceania, and sub-Saharan Africa (AOA); Nestle Waters; Nestle Nutrition; and Other Businesses.

NSRGY's offerings include powdered and liquid beverages; water; milk products, and ice cream; nutrition and health science; prepared dishes and cooking aids; confectionery; and PetCare.

In 2017 NSRGY acquired Sweet Earth, a Calif.-based vegan foods manufacturer. In 2019, Sweet Earth announced the launch of its new vegan burger product, Awesome Burger, and its ground beef component, Awesome Grounds. Both products are currently distributed to supermarkets, restaurants, and universities.

For the fiscal year 2022, NSRGY’s total reported sales increased by 8.4% to CHF 94.4 billion ($104.66 billion), with organic growth coming in at 8.3% year-over-year. The company’s underlying EPS increased by 8.4% to CHF 3.42 during the same period.

For the first three months of 2023, NSRGY’s total reported sales increased by 5.6% year-over-year to CHF 23.5 billion ($26.05 billion). Organic growth came in at 9.3%, while acquisitions had a net positive impact of 0.3%.

Hormel Foods Corporation (HRL)develops, processes, and distributes a range of branded food products globally. The company operates through three segments: Retail, Foodservice, and International.

Back in 2019, HRL forayed into products that reduced meat consumption with its “Fuse Burger,” made from ground turkey and rice.

Despite a challenging start to the fiscal year 2023, persistent impact from inflationary pressures, supply chain inefficiencies, and lower-than-expected sales volumes, HRL’s sales and operating income for the first quarter came in at $3 billion and $289 million, respectively. The company’s diluted EPS came in at $0.40.

Tyson Foods, Inc. (TSN) is a protein-focused food company whose segments include: Beef; Pork; Chicken; and Prepared Foods.

In 2019, the company launched its line of meat-free and blended protein products called Raised & Rooted. After starting with nuggets made from a blend of pea protein powder and other plant ingredients, the brand diversified into blended burgers made with a combination of plant-based ingredients and Angus beef.

For the second quarter of fiscal year 2023, TSN’s sales demonstrated a marginal increase to $13.13 billion. On May 11, the company declared a quarterly dividend of $0.48 and $0.432 per share on its Class A and Class B common stock, respectively. The dividends would be paid out on September 15, 2023, to shareholders of record at the close of business on September 1, 2023.

The Role of China in the Global Stock Market and Its Impact on Investors

Posted on by The INO.com Team

Towards the end of last year, China surprised the world with an abrupt pivot away from the strict restrictions of its long-espoused “Zero-Covid” policy., including quarantine requirements for inbound visitors. Despite an initial surge in infections, global businesses rushed in, hoping to cash in on the economic recovery.

Sentiments were further boosted by steps to stimulate economic growth and domestic consumption, mapped during and around the annual Central Economic Work Conference. These steps also helped ailing Chinese developers ease their liquidity strains and revive home purchases.

These measures seem to be working. According to the data released by China’s National Bureau of Statistics on April 18, the country’s GDP grew by 4.5% in the first quarter of the fiscal year. This was better than the forecast of 4% and the highest growth since the first quarter of last year.

Six months on, while the country is still open for business, the momentum has visibly slowed. While China’s exports in April grew by 8.5%, the country’s imports declined by 7.9% year-over-year as growth in the service sector softened, and manufacturing contracted again in three months.

With the 50-mark separating growth and contraction, the Caixin/S&P Global services purchasing managers’ index fell to 56.4 in April from 57.8 in the previous month, and the Caixin China general manufacturing purchasing managers’ index fell to 49.5 in April.

China’s top leaders have also taken note. A translated state media readout of the Plitburo meeting said, “At present the positive turn in China’s economy is primarily one of a recovery. Internal drivers still aren’t strong, and demand is still insufficient.”

As a result of this patchy growth, analysts at Morgan Stanley foresee a significant dip in demand and output of Chinese steel that could result in a 28% decline in iron ore prices by the end of 2023.

With markets mirroring this moderation, Citi has pushed back its stock rebound forecasts, and its analysts expect Hang Seng to take until the end of September to reach 24,000. Continue reading "The Role of China in the Global Stock Market and Its Impact on Investors" →