KEY POINTS
OVERALL MARKET
The stock market ends the day in the red as fears of inflation and Chinese regulation strike the market.
The market indices ended the day in the red.
A few forces are at play: Regulatory crackdowns are continuing in China, and the U.S. listed stocks are losing billions as the week goes on. The International Monetary Fund, a financial institution with input from 200 countries involved, warned that inflation is not transitional, the road to recovery is very uncertain and subject to unforeseen effects, like supply chain issues. The Federal Open Market Committee of the Federal Reserve commenced its monetary policy meeting today. Economists and investors are awaiting the announcement tomorrow of the Fed’s plan of action going forward. It is not surprising that the market is not giddy. GET THE DAILY MARKET RECAP
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Regardless of the pandemic, the pet care industry is continuing to grow evident by PETS, CHWY, or TRUP stocks.
A report by the American Pets Product Association says that the great growth seen during the pandemic is due to continue through the rest of 2021. Food and treat sales had gone up 10% last year, as consumers pivoted to purchasing their pet products online who continue to do so regardless of the reopening.
This overall market optimism kept Petmed Express (PETS) investors happy, despite a disappointing earnings report released yesterday. Income didn’t top last year’s same quarter, but it appears to be a hiccup in a reopening market. The company's CEO, Mendo Akdag, blamed a spike in advertising costs and a loss of sales to veterinarians that have reopened their doors for Petmeds underperforming operations. This positive outlook on growth presents a good buying opportunity. While Petmed may have not killed it this past quarter, things are still looking good judging by the company’s stock card. Under Strong Operations, you can see great ratings for its cash flow and debt situation. It doesn’t have the best track record for returns on investments for shareholders, but at least the company is well-managed. Like I mentioned before, the healthcare and pet care markets are both expected to see plenty of growth. The market's direction may also mean good news for other pet stocks like Trupanion (TRUP) and Chewy (CHWY). Most people keep their pets even after a pandemic. So, if you got into buying stuff online for your pet, you’ll probably stick to it. I own Trupanion shares and plan to hold on to them. Chewy is on my watchlist too. Before moving to the loser stocks, let’s take a quick stop to explain why TAL Education (TAL) and New Oriental Education (EDU) are up. Based on our research, it seems short-sellers who benefited from the rapid price drop are not closing their positions to lock their gains and that means a hike in price due to covering shorts. This isn't the usual short squeeze we have talked about. It's just short-sellers enjoying their profit by selling at a really low price. WHAT'S DOWN?
Earnings calls with disappointing outlooks hurt a few companies today, namely Teladoc (TDOC), UPS (UPS), and Logitech (LOGI).
On the loser side, a few solid companies turned red today after their recent earnings showed signs of a slowdown in growth. Here are three I noticed on today’s loser list of stocks on the site:
Teladoc (TDOC) stock is down after hours. It released an earnings report today that disappointed investors. While revenue grew, net loss was more than 5x worse than the previous year. It wasn’t quite shaping up, and that wasn’t the only company that took a dive this afternoon. UPS (UPS) beat forecasts with its earnings report, showing an increase in revenue as well. But, like Teladoc, the stock dropped. It closed the day with a 7% loss as management made it clear that they expect to see a slowdown in growth over the rest of the year. FedEx (FDX) and UPS operate more or less side by side in the same market, and this pessimistic outlook brought down FDX share prices as well, down 5%. Another similar situation happened for Logitech International SA (LOGI). The stock dropped over 10% after its earnings report yesterday. Operating income grew 146% year-over-year as more people needed computer accessories during the pandemic. However, management maintained its future guidance on sales growth, expecting numbers to remain flat, going no more than 5% in either direction. Such growth is in line with the sector growth as you can see on the company's Stock Card. The Technology and Computer Hardware sectors are expected to see a 5% growth rate, and with supply chain issues still affecting the industry, it’s a good thing management isn’t raising investor hopes too high. All these companies are worth watching depending on your strategy, especially if the sell-off continues. STOCK CARD ON SOCIAL MEDIA
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