It Girl Identity: Issue 24

It Girl Identity Newsletter

Grab your peppermint mocha and dive into this week’s market movers, learn to analyze stocks, and check out our curated recommendations from It Girl Identity!

What’s Moving Markets

Earnings season is still moving markets, and we see lagging results from big names like Walmart, Target, SMCI, and Nvidia. Investors look towards economic indicators this week for a bigger picture on the economy.

What’s Up

• Walmart (WMT): Walmart released earnings on Wednesday and showed strong growth coming from the resilience of low-income consumers. Their sales rose 5.8% in the last quarter, beating expectations and gained 7% for the week overall.

• Super Micro Computer (SMCI): SMCI bought itself more time from a NASDAQ delist amid delays in filing financial reports. They also replaced BDO as their public auditor after their previous one, EY, resigned in October, and later announced plans to file their overdue 10-K and 10-Q. SMCI is up 78% for the week.

• GAP (GAP): GAP raised their annual sales outlook after seeing a rise in profits after years of sluggish growth. This is due to a reconstruction of their apparel business, partnerships with Balenciaga, and the role of CEO Richard Dickson who is famous for reviving Barbie for Mattel. After earnings, the stock jumped 13%.

• Top S&P 500 Gainers: Super Micro Computer (SMCI) +78%. Keysight Technologies (KEYS) +14%. Vistra (VST) +14%. CoStar Group (CSGP) +12%. Deere & Company (DE) +12%.

What’s Down

• Target (TGT): Target also released earnings on Wednesday, but with a strong contrast to Walmart, as sales and profits missed expectations. Even with price cuts and the upcoming holiday season, consumers still spent less both in stores and online, and Target cut their annual forecast for revenue. Their stock dropped 17% for the week as the worst performer in the S&P.

• MicroStrategy (MSTR): MicroStrategy fell 16%, its worst day since April 30, after Citron Research announced a short position. MicroStrategy, a software company, has become synonymous with Bitcoin after investing billions of dollars into the cryptocurrency, even selling debt to finance the purchases. However, as Bitcoin continues to near the $100,o00 mark, MSTR regained losses at the end of the week.

• Top S&P 500 Losers: Target (TGT) -17%. Ulta Beauty (ULTA) -7%. Intuit (INTU) -7%. The AES (AES) -7%. Incyte (INCY) -5%.

Markets & Economy

• DOJ Wins Against Google: DOJ ruled against Google and argued that they should divest Chrome to curb a search monopolization and also pushed for Google to stop giving preferential treatment to Chrome for Android users. As Google remains vulnerable, OpenAI is considering heightening the already increased competition between their two companies by launching its own web browser, as it already entered the search market with SearchGPT. Alphabet stock dropped 4.2% for the week.

• Nvidia Forecast: Despite rising sales and profits, Nvidia earnings couldn’t meet investors’ highest expectations, sending their stock down 3% for the week with concerns of sustaining performance among manufacturing struggles and supply constraints. However, their new generation of chips, Blackwell, is forecasted to see high demand and billions in revenue from partners Microsoft, Meta, and Google. Additionally, Elon Musk’s xAI raised $5b in its latest funding round for a total valuation of $50b, aided by large investors such as Qatar’s sovereign wealth fund. Musk cited that he plans to use excess cash to purchase 100,000 NVIDIA chips to train their AI models.

• Labor Market: US weekly jobless claims reached a 7-month low of 213,000 after dropping by 6,000 and beating expectations. On the other hand, continuing claims surged to 1.9 million as a 3-year high. This hints at underlying employment instabilities and impacts on consumer spending, and leaves economists cautious about the overall health of the job market. Investors are watching the GDP and PCE indexes on Nov 27th for more insight to determine the Fed’s next move.

• Pepsi Acquiring Sabra and Obela: Pepsi is acquiring the remaining 50% stake in both Sabra and Obela, both joint ventures with Strauss Group started in the early 2000s that manufacture, distribute, and sell dips and spreads. Pepsi is following a common theme of transforming its portfolio to drive innovation and meet growing demand for healthier choices and on-the-go options that have been increasing in popularity post-pandemic.

Earnings Calendar

This Week's Major U.S. Economic Reports & Fed Speakers

Here is a quick breakdown of this week’s Fed Speaker events and economic indicators, what they mean, and their forecasts!

Tuesday, November 26

• S&P Case-Shiller Home Price Index (20 cities) (Sep): (Previous: 5.2%).

• Consumer Confidence (Nov): Forecast: 113.0 (Previous: 108.7).

• New Home Sales (Oct): Forecast: 720,000 (Previous: 738,000).

Wednesday, November 27

• Initial Jobless Claims (Nov. 23): Measures the number of new claims for unemployment benefits, indicating job market health. Forecast: 215,000 (Previous: 213,000).

• Durable-Goods Orders (Oct): Forecast: 0.5% (Previous: -0.7%).

• GDP (First Revision) (Q3): Forecast: 2.8% (Previous: 2.8%).

• Personal Income (Nominal) (Oct): Forecast: 0.3% (Previous: 0.3%).

• Personal Spending (Nominal) (Oct): Forecast: 0.4% (Previous: 0.5%).

• Pending Home Sales (Oct): Forecast: 1.8% (Previous: 7.4%).

• PCE Index (Oct): Reflects changes in prices of goods and services consumed by individuals. A lower rate indicates weaker inflation pressures. Forecast: 0.2% (Previous: 0.2%).

  • PCE (Y0Y): Annual change in the PCE index, reflecting inflation trends over the year. Forecast: 2.3% (Previous: 2.1%).

  • Core PCE Index (Oct): Measures price changes excluding food and energy, which can be volatile. Provides a clearer view of inflation trends. Forecast: 0.3% (Previous: 0.3%).

  • Core PCE (Y0Y): Annual change in the core PCE index, focusing on long-term inflation trends. Forecast: 2.8% (Previous: 2.7%).

  Sources: Nasdaq, Markets Insider, WSJ, Market Watch

How to Analyze Stocks

1. Business Model: This is how a company makes money, and helps you see if the company has a clear path to profit.

2. CEO Behavior/Management Capability: Look how well the company is managed, such as signs of level-headedness and good decision-making. If the CEO behaves like Anxiety from Inside Out, it might not be a great investment choice. Remember that strong management can guide a company to success and rise in stock prices.

3. Sustainable Competitive Advantage: Identify what makes the company unique compared to its competitors, such as a unique product, strong brand loyalty, or cost advantage. For example, Nvidia (NVDA) has a competitive edge in AI due to its long-standing production of GPUs since the 90s, giving it a significant market share lead over competitors. This advantage is crucial for maintaining market position and staying ahead of rivals.

4. Attractiveness of Industry: Understand the industry's potential for growth. For instance, Artificial Intelligence (AI) is currently a rapidly growing industry.

5. Risks: Check if your potential investments face legal issues, regulatory risks, competition, or changes in the market.

6. Balance Sheet: This shows a company's financial position at a specific point in time, detailing its assets, liabilities, and equity. Look for the balance sheet in a company's annual report or on financial websites.

   • Here’s the link to Lululemon’s balance sheet in their 2023 Annual Report as an example: Lululemon (LULU) 2023 Annual Report.

   • How to Check: Use the "Find" function by pressing Control + F (or Command + F on Mac) once you are in the report to search for specific items quickly.

   • Check These Six Things: 

     • Assets: Check the composition—tangible (like buildings) or intangible (like patents). High-quality assets are essential for long-term value.

     • Liabilities: Note the types and amounts. High debt levels or significant short-term obligations can indicate financial stress.

     • Equity: Represents the net value of assets after liabilities. Positive equity indicates the company's overall value.

     • Debt-to-Equity Ratio: Compares total debt to total equity, showing the company's ability to cover debt. A lower ratio is better.

     • Current Ratio: Compares current assets to current liabilities, indicating short-term liquidity. A ratio above 1 means the company can cover short-term debts.

     • Working Capital: The difference between current assets and liabilities. Positive working capital means the company can cover short-term obligations.

7. Profitability: Shows how profitable the company is. You can find this info in the company's financial statements, particularly the income statement.

8. Historical Growth/Outlook: Check the company's past and projected growth rates. Look for this info in the company's financial reports or analyst reports.

9. Valuation: Determines the true value of a company's stock. You can find valuation metrics in financial websites such as Yahoo Finance or analyst reports.

Disclaimer: Information shared here is for educational purposes only. Consult a financial advisor for personalized advice.

It Girl Recommendations

What better than reading about finance but listening about it! Here are some of our favorite finance podcasts:

1. Market MakeHer: Learn about markets and investing from two females - a beginner investor and a 15-year finance expert. (Female-Lead: Jessica Inskip and Jessie DeNuit)

2. Private Equity Deals: Listen to interviews with top money managers across private markets. Dive deep into deals, companies, and the global economy. (Ted Seides)

3. The Wall Street Skinny: “A smart and entertaining peek into the world of investment banking, sales & trading, private equity, hedge funds and more.” Hear about corporate fashion, what moves markets, and job tips. (Female-Lead: Kristen and Jen)

4. Word On the Street: Hear from Barclays Bank about latest news and events in financial markets. (Barclays)

Corporate Fashion Inspo

Get cozy on your way to the office with our curated coat recommendations!

1. Top Left: Aritzia

2. Top Right: Zara

3. Bottom Left: Banana Republic

4. Bottom Right: Banana Republic

Follow Our Other Socials

• TikTok

• Instagram

• LinkedIn

• Benable

• Amazon Storefront

See you next Monday, It Girls!

With Love,

It Girl Identity