Sometimes, guessing pays off. Sometimes, it doesn’t. This time it did.
Nice chart, Arindam. What is the stock?
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Paul,
Thanks for your question, and I’m surprised you didn’t recognize the chart and its ticker, given your interest in stocks in the basic materials industries. It’s an ETF that I stumbled onto when I was putting together a watchlist for the energy sector.
Here’s its chart again. The green arrow on 11/21 is my entry. As you can see from the hanging man candle for that day, I caught the bottom, or close enough for the girls I go dancing with.
Thanks for the tip, Arindam. I had missed that one. Of course in St Louis we think Peabody, ticker BTU, is wonderful. Nice stock up trend from Nov 20, but earnings trend is down.
Why are people buying coal stocks? Trump extending service life of coal fired plants?
Paul,
Simply Wall Street likes BTU. And what they say of BTU in terms of its financial health and decent balance sheet is true of many companies in the Basic Materials sector, which is one of the reasons I started edging into mining stocks a couple years back. They are real companies, doing real things, not the fluff, nonsense, and hype of much of the tech sector.
My stock selection process is this. A price chart has to say the company is over-sold. Financial statement analysis has to say the company is under-valued. Analysts have to agree that the company has decent earnings prospects. In short, TA, FA, and general market conditions have to agree.
That vetting process doesn’t always produce winners. But then, nothing does, because much of what passes for ‘investing’ is just ‘gambling’ in the worse sense of that term. i.e., a bet that the Fed can and will keep printing to support asset prices, which are so disconnected from fundamentals as to be shadows and fictions.
As to an answer to your question of why coal as a commodity is catching a bid, I haven’t the slightest idea other than all hard assets are catching a bid as the $US dollar, as a mere fiat currency backed by nothing but military threats, continues to lose use in global trade settlements. That decline of confidence in the $US dollar explains the run up in gold, but not in silver, which really is just a supply/demand commodity story that been interesting to follow.
E.g., in the past couple of weeks, the Fed printed $40 billion to provide liquidity to the banks who are/were short silver. How that printing will play out is anyone’s guess. But it does underscore, once again, that the US is a trash and trinkets economy with an unsustainable Debt to GDP ratio of 124%, or far ahead of even Zambia and Zimbabwe and not that far behind Venezuela in terms of its debts and lack of genuine economic productivity.
Strong earning from TSMC is giving tech stocks a boost. AI correction over done according to some. Reddit down on reports of ad concerns vs the big guys. But I like the earnings trends. I’ll hang on for a while longer.
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I wouldn’t call TSM’s projected earnings growth “strong”. They are estimated to be (-32%) below the average for the semiconductor industry. And yet to play out is the impact of the silver shortage on the chip industry. Squeaky clean financials though.
RDDT’s earnings growth is projected to be twice that of TSM’s. But Reddiit, like FB, X, etc., is another of the companies whose “services” I never use, hence, never track and have no interest in being a fractional owner of.
I think we know the social sites have a fad component. At anytime users can find a new one they like better and move. The big ones have the capital to buy up competitors and maintain their lead.
I watch earnings growth. Those that succeed can do well or may be acquired. If growth flattens then you worry.
Paul,
I couldn’t care less whether online social sites prosper or lose market share and, hence, revenues/earnings. I regard the “social sites” as being totally unnecessary, if not an actual evil that does far more harm than good. So I don’t track or buy shares in them, just as I don’t buy shares in defense contractors, tobacco companies, or the drug cartels (Pfizer, etc.).
Call that a ‘moral filter’ or a ‘preferences filter’ as you choose. But that’s a screen I use to select which sectors/industries I track and which I avoid. If that means I make less money than I might have, I couldn’t care less. Dirty money is dirty money, and I don’t want any part of it.
Yes, if I’m less than a 5% owner, my buying shares or not has zero impact on a company policies, just my boycotting a company’s products or services has zero impact on their bottom line. But when my avoidance is paired with thousands or millions of others, it does have an impact, as the Bud Light episode shows.
Michelob Ultra is now number one in US. Bud Light seems to be recovering. In St Louis you can always get Bud Light. But they are pushing Busch light now too.
They have three ads at the Super Bowl. We shall see if the clydesdales make it this time. Usually they are the stars.
Paul,
BUD is recovering? You gotta be kidding.
As the chart below shows, Anheuser went “woke” April '23 and alienated their base. 2 years and 9 months later, their stock price has gained an underwhelming 5.44%, or less than cash would have gained sitting in a bank account.
Yes, for sure, booze sales are down across all categories, with some vintners last year not even bothering to harvest their grapes. But BUD’s revenue decline was due to its own misjudgments, not to changing tastes or aging demographics.
The reasonable prediction is that they will never fully recover due to their offending and insulting their customers. Not good marketing, never mind it was a pretty crappy product to begin with.
Yes, and BUD just announced they are closing three of their 12 US plants due to declining demand for alcohol by younger generations. The closing plants are mostly in the northeast. You might suspect declining sales in Canada has something to do with this.
We used to have a beer discussion board on the old boards. But beer has never been very popular w TMF participants. AB Inbev is still largest in the US followed by Molson Coors. Constellation Brands got Corona and Modelo in the US after AB bought the 51% they didn’t own in Mexico. (They are reporting weaker sales maybe due to immigration raids.) Pabst has most of the smaller old brands but only 3% market share. Boston Sam Adams is mostly made by Molson (Miller) under contract. Has maybe 2% share.
Craft beers were quite a fad for a while. That seems to be fading in my area. Several have closed here recently.
Bottom line is beer is going out of style. Beer drinkers are aging. Younger people have other preferences. Maybe marijuana. But beer is still popular at sports events–especially baseball.
Paul,
OTOH, I never understood the disdain some demographics have for beer (as to opposed to other, supposedly, upper classy beverages). OTOH, I never understood the willingness of some to drink beer by the case.
In its many varieties, it’s a very flexible beverage that pairs well with many meals. And it has a long, long culinary history and heritage. But you’re right about its declining sales (and liquor generally). My neighbor is a distributor for McMenimens, and he reports that the younger generation has rotated to other drinks.
I remember that beer board TMF used to have and would look for what investment possibilities there might be. But I never found anything for which I wasn’t already too late, which is the problem with trying chase after “hot stocks”. By the time something bubbles up in the news, I’m too late to turn a low-risk profit. So I ignore the news and look for what’s out of current favor.
Beer is a mature industry. Part is cyclical. I think Boston Beer is the best example. I keep an eye on beer as an economic indicator. Supposed to do well in a recession.
Beer comes from grain. Makes it strong in the Midwest especially where Germans settled. Beer gardens were part of the social culture—pre-prohibition.