vestact posted: " Market Scorecard Yesterday, US stocks gained in a broad-based rally. The markets these days are like a box of Quality Street chocolates - you never know what you are going to get until you take a bite. Vestact client portfolios rose by about 2.4%,"
Yesterday, US stocks gained in a broad-based rally. The markets these days are like a box of Quality Street chocolates - you never know what you are going to get until you take a bite. Vestact client portfolios rose by about 2.4%, depending on the mix of stocks that they hold.
Travel companies were among the strongest performers after a judge threw out the requirement to wear masks. Elsewhere, Plug Power shares rose 9.9% after the alternative energy company said it had struck a deal with Walmart to supply them with hydrogen-fuelled forklifts.
After another busy day, the JSE All-share closed up 0.61%, the S&P 500 advanced 1.61%, and the Nasdaq jumped by 2.15%.
Our 10c Worth
One Thing, From Paul
Johnson & Johnson reported quarterly earnings yesterday and promptly traded up to a new all-time high, above $185 per share. Almost all Vestact clients own this one, so this is very good news.
Earnings were better than expected, thanks mostly to sales of blood cancer drug Darzalex and psoriasis drug Tremfya. The medical devices unit also did well, racking up sales of $7.0 billion, with contact lenses and artificial-knee replacements notably improved.
The company threw out its prior guidance for sales of Covid-19 vaccines, but group profit forecasts were only slightly changed. It seems that people don't care as much about Covid as they used to.
The dividend pay-out was hiked by 6.6% to $1.13 per share. That's just for the quarter; the annual dividend yield is about 2.4%.
Keep in mind that Johnson & Johnson still plans to separate its consumer-health division into a standalone business, leaving the parent company with its prescription drug and medical device units. That split will likely come in 2023, and we'll let you know what to do when that happens. For now, just continue to buy and hold!
Michael's Musings
Last night Netflix reported very disappointing numbers. The share price of the company is based on the expectation of continued subscriber and profit growth and guidance was for the addition of between 2.5 million to 4 million new paying accounts. Instead they reported a drop in accounts of 200 000, including the deactivation of 700 000 accounts in Russia. Even taking those into account, this was a big miss.
Three of their four geographic regions showed a diminution in subscriber numbers; only the Asia-Pacific region grew.
The company noted that their recent price hikes were not well-received, given current inflation pressures. Overall revenues still increased, because the price hikes were larger than the percentage drop in subscribers. That might be fine for a legacy industry like cigarettes, but for Netflix, the market wants growth.
Netflix has over 220 million household subscribers, but estimates that another 100 million households are freeloading with a "borrowed" password. So they know and love Netflix content, they just don't pay for it. Even getting some of these households to sign up properly will make a significant difference for Netflix.
We have held this stock through many surges and falls, and will bide our time. Streaming services still have massive upside, and it remains to be seen how profitable the industry will be.
Semiconductors are integral to the online economy which is why their lack of supply over the last two years has impacted a variety of industries. Ever wonder why new cars have been so hard to buy lately? It's most likely because the car manufacturer is waiting for their chip supply to arrive.
The solution to high prices is high prices. Companies are immediately incentivised to ramp up supply which should, in turn, bring prices down. The chip manufacturers have been working extremely hard to sort out all the Covid-induced bottlenecks and this article suggests they are finally succeeding.
Bright's Banter
Just Eat Takeaway.com said it's thinking of selling part or its whole stake in Grubhub, as the food-delivery company struggles post-pandemic. This has been prompted by a plunge in its shares which suggests that investors have lost faith in its plans for a full consolidation with the US unit.
The company also lowered its projections for 2022, saying gross transactions will only grow by mid-single digits in percentage terms, year-on-year, down from mid-teens. This is a good example of when growth happens too quickly, too soon, the expectations stay artificially elevated and then reality sinks in, share prices re-rate lower.
Just Eat and Deliveroo reports show that people are ordering less online as things normalise and people go out more. This is good for other parts of the economy which rely on physical presence. As Uber shareholders, we also need to lower our expectations going forward, but what is lost on the food side will be made on the ride side, that's the beauty of diversification.
A rare piece of artwork by Michelangelo is headed to auction. The previously unrecognised drawing is expected to fetch around $33 million at Christie's on the 18th of May in Paris - The Italian Renaissance master is back.
Signing Off
Asian markets doing their usual thing this morning, some up, some down. The standout performer is Japan, where the Nikkei 225 was up nearly a percent.
US equity futures are down sharply, perhaps reacting to Netflix's big after-hours slump. This is earnings season, which always packs a few surprises. We're looking forward to Tesla's numbers after the market close this evening.
The Rand is trading at around R14.94 to the greenback.
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