1 Utilities Stock Too Cheap To Ignore

Posted on by The MarketClub Team

It has been a challenging year for the stock market as most equities have witnessed a sell-off due to various macroeconomic and geopolitical concerns.

However, retail energy and renewable energy solutions provider Genie Energy Ltd. (GNE) has gained 84.7% in price year-to-date and 90.6% over the past year to close the last trading session at $10.29.

The stock’s strong performance can be attributed to the rise in energy prices that led to strong earnings for the company.

Post its third-quarter earnings, GNE’s CEO Michael Stein, said, “We reported record third-quarter profit metrics driven by strength in Genie Retail Energy (GRE), our domestic retail energy business. GRE continued to outperform in a volatile energy price environment. We were well-positioned with our customer book and hedges heading into the quarter and were able to drive a 54% gross margin and generate nearly $28 million in Adjusted EBITDA.”

Its Genie Renewables (GREW) segment also did well as it acquired site rights to 64MW solar projects and advanced them through its permitting processes.

“Given the challenging environment in the European energy market, we determined that the risk was beyond our acceptable tolerances. As a result, we exited our remaining international retail operations and no longer serve customers in Scandanavia,” he added.

GNE is trading at a discount to its peers. In terms of trailing-12-month GAAP P/E, GNE's 5.44x is 73.5% lower than the 20.53x industry average. Its trailing-12-month EV/S of 0.55x is 86.4% lower than the 4.05x industry average. Also, the stock's 2.07x trailing-12-month EV/EBITDA is 84.4% lower than the 13.30x industry average.

On November 30, 2022, GNE announced the acquisition of a portfolio of residential and small commercial customer contracts from Mega Energy. GNE’s CEO Michael Stein said, “Our strong balance sheet, with significant cash reserves, positions us to compete for additional books of business at favorable prices. We will continue to look for customer acquisition opportunities as specific markets become more conducive to growth.”

The acquisition helps it acquire new customers across seven states in the Northeast and Midwest. The portfolio comprises approximately 11,000 residential and commercial customer meters, and it is expected to be revenue and earnings accretive for the company immediately. Continue reading "1 Utilities Stock Too Cheap To Ignore" →

2 Retail Stocks Ready for a Santa Claus Rally

Posted on by The MarketClub Team

The Federal Reserve met broad expectations by reducing its interest rate hike to 50 bps this month. However, its emphasis on taming inflation further by raising interest rates in the foreseeable future has dampened the optimism that had kept markets buoyant in the run-up to yesterday’s announcement.

However, in the run-up to year-end festivities, consumer spending is also set to increase, thereby adding more wind to the sails of businesses that have been under pressure by aggressive interest rate hikes and other macroeconomic headwinds for a greater part of the year.

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Hence, it could be wise to buy The TJX Companies, Inc. (TJX) and Five Below, Inc. (FIVE) to capitalize on increased consumer spending during the holidays. These stocks show strong trends.

The TJX Companies, Inc. (TJX)

TJX is an off-price apparel and home fashion retailer in the United States and internationally. The company’s operating segments are Marmaxx; HomeGoods; TJX Canada; and TJX International.

TJX’s revenue has exhibited a 6.6% CAGR over the past three years. During the same time horizon, the company’s EBITDA and net income have also grown at 2% and 2.8% CAGRs, respectively.

During the nine months of the fiscal year ended October 29, 2022, TJX’s net sales increased 2.1% year-over-year to $35.42 billion. During the same period, the company’s net income increased 5% and 8.3% year-over-year to $2.46 billion and $2.08, respectively.

Analysts expect TJX’s revenue and EPS for fiscal 2023 to increase 2% and 9.3% year-over-year to $49.51 billion and $3.12, respectively. The company has surpassed consensus EPS estimates in three of the trailing four quarters.

Owing to its strong performance and solid growth prospects, TJX is currently commanding a premium valuation compared to its peers. In terms of forward P/E, TJX is currently trading at 25.41x compared to the industry average of 12.88x. Also, its forward EV/EBITDA multiple of 17.26 is higher than the industry average of 9.15. Continue reading "2 Retail Stocks Ready for a Santa Claus Rally" →

Fed Fears Inflation, Copper Fears Hawkish Fed

Posted on by Aibek Burabayev

Copper futures have closely followed the trajectory of the zigzag that was outlined this summer in the post titled “Copper Fears Recession”. Below is a copy of that monthly chart to refresh your memory.

Copper Futures Monthly

Source: TradingView

The majority of readers bet that the price would remain above $3. Within the same month, the price reached a valley of $3.13 and subsequently recovered. This vote is still valid as the price hasn't crossed that handle yet.

In the next weekly chart update, we will examine the outlook further.  

Copper Futures Weekly

Source: TradingView

This is a closer look at the second red leg down shown on a bigger time frame in the summer. When the first leg up within a bounce in copper futures was unfolding, it looked promising at the beginning. Continue reading "Fed Fears Inflation, Copper Fears Hawkish Fed" →

3 ETFs That Could Diversify Your Portfolio

Posted on by The MarketClub Team

Inflation cooled again last month after starting to decline in October.

The Labor Department reported that the Consumer Price Index (CPI) in November rose 7.1% increase year-over-year and was just 0.1% from the previous month.

Economists surveyed by Dow Jones expected prices to grow at an annual 7.3% and 0.3% over the prior month.

The favorable November inflation report kept the Fed on track to increase interest rates by a relatively smaller amount after four consecutive hikes of 75-basis-point magnitude.

In addition to the optimism surrounding the decline in the Fed rate hikes, December has proven to be a strong month for the stock market over the past 70 years. However, many experts still expect a mild recession next year.

Given the backdrop, it could be wise to take advantage of the uptrend in JPMorgan Ultra-Short Income ETF (JPST), IQ MacKay Municipal Intermediate ETF (MMIT), and VanEck Long Muni ETF (MLN) to diversify your portfolio this month.

JPMorgan Ultra-Short Income ETF (JPST)

JPST is an actively managed, ultra-short-term, broad-market bond fund that aims to maximize income and preserve capital.

The fund makes investments in fixed-rate, variable-rate, and floating-rate debt, including corporate issues, asset-backed securities, and debt pertaining to mortgages, as well as U.S. government and agency debt, including treasury securities.

JPST has $22.76 billion in assets under management. The fund has a total of 467 holdings. Its top holdings include U.S. Dollar with a 44.64% weighting, Fixed Income (unclassified) at 1.73%, BNP Paribas S.A. 3.5% at 0.94%, and Nordea Bank AB (New York) FRN at 0.81%.

JPST has an expense ratio of 0.18%, lower than the category average of 0.60%. Over the past six months, JPST's fund inflows came in at $4.14 billion. Also, it has a beta of 0.04, indicating extremely low volatility compared to the broader market.

JPST pays an annual dividend of $1.04, which yields 2.08% on prevailing prices. Its dividend payments have grown at a 16.9% CAGR over the past five years. The fund has a record of dividend payments for five consecutive years.

JPST has gained marginally over the past month to close the last trading session at $50.19. It has a NAV of $50.19 as of December 12, 2022. Continue reading "3 ETFs That Could Diversify Your Portfolio" →

FTX Disaster Could Be Good For Crypto Market

Posted on by Matt Thalman

The disaster we are all still watching play out with Sam Bankman-Fried and his cryptocurrency exchange FTX could actually be suitable for the longer-term viability of Bitcoin, Ethereum, and other cryptocurrencies.

I know it sounds crazy, and if you were an investor who had money in FTX, you are certainly not happy with this, but long-term, the size of the losses incurred by investors in FTX could benefit the crypto market in years to come.

Why?

Since massive losses were incurred, regulators are taking note and investigating what happened.

Sam Bankman-Freid has been arrested and charged with many crimes, including conspiracy, fraud, money laundering, and campaign finance violations.

However, while those charges against him don't have much to do with cryptocurrencies, it is likely that the investigation into how these crimes were committed and, more importantly, how he and his team at FTX were able to evade detection sooner will lead to some changes in the crypto world.

The change I'm referring to, which would boost cryptocurrencies and in some ways turn a bad situation into a good one, would be government oversight and regulation of the cryptocurrency markets.

Since Bitcoin, Ethereum, and all the cryptocurrencies came into existence, we have had no legitimate regulation or oversight of the industry.

While some believe that is a good thing, a lot of investors have been hesitant up to this point to jump into the world of crypto because there is limited to zero oversight. And I am not just talking about small retail investors who have sat on the sidelines, but big-time money managers who are not permitted to invest client funds in such investments due to their largely unregulated markets. Continue reading "FTX Disaster Could Be Good For Crypto Market" →