🔥Weekly Portfolio Update 10.05.21🔥
Key Events in The Portfolio, Market Updates of The Week and More!
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📮Portfolio Weekly Performance Report
✅ Key Events in The Portfolio
Big Tech tumbled while bank sectors rallied
Last Tuesday, Treasury Secretary Janet Yellen’s comment regarding rate hikes on the fear of economy overheating had sent the tech-heavy Nasdaq index tumbling by around 2% as investors dumped their tech stocks.
Although Yellen did clarify soon after that she sees no inflation problem brewing and made remarks to downplay earlier comments; investors had remained largely sceptical towards the future of tech sectors in the stock market as the fear of inflation lingers.
Shopify and Amazon were down by 6.25% and 5.07%, respectively by the end of last week.
Meanwhile, we have seen the bank stocks continued to gain last week, as Bank of America was up by 4.07% by the end of last week. Other banks such as JPMorgan and Wells Fargo were up 4.83% and 3.31%, respectively.
Bank sectors, as general, had performed spectacularly well so far this year, as they moved on from the worst-case scenarios that loomed over the sector last year. We have seen a 30% year-to-date gain in the SPDR S&P Bank ETF which beat the 10% in the S&P500 index.
Disney and Alibaba report earnings
Disney will report its Q2 2021 earnings late Thursday (May 13th):
Expected EPS: $0.28, fall 55.3% year-over-year
Expected Revenue: $16.1b , fall 10.6% from year-ago quarter
During the last quarter earnings report, Disney reported having a total of 146.4 million subscribers across its three streaming services (Disney+, Hulu, ESPN+). With the addition of the Star contents on Disney Plus early this year and an increase in its subscription pricing, it will be interesting to see if the entertainment and media conglomerate manages to keep up with its subscriber totals, especially after a disappointing subscriptions slowdown reported by Netflix.
Alibaba will report fiscal Q4 earnings early Thursday (May 13th):
Expected EPS: $1.82, climbing 40% from the same quarter last year
Expected revenue: $27.7b , surge 72%
Alibaba had a solid history of surpassing earnings estimates in the past quarters. With the regulatory headache being in its rearview mirror as the Chinese government shifted its pressure to the other tech giants, investors are expecting great growth in the companies’ various sources of revenue which include: Core commerce (Alibaba’s largest segment with 88% of revenue); Cloud computing (7% of revenue); and Digital media and entertainment (5% of revenue).
Make sure you don’t miss my analysis on Alibaba:
🔍Company Deep Dive #3 - $BABA (Alibaba)
With the antitrust investigation now in the rearview mirror, I think we, as the investors, should start to shift our focus to the potential rewards ahead of us as the company focuses on growing its businesses. After all, this discount on Alibaba stock won’t last forever. At today’s price point, I think the company is still fairly undervalued. I am glad that I managed to buy more and raise the proportion of $BABA in the portfolio to 10% about a week ago when the stock was still at $225.
Eli Lilly inches towards $200
After a brief fall in its stock price two weeks ago due to weaker-than-expected first-quarter earnings and guidance below consensus, the pharmaceutical stock had again rebound by 6.92% from a week ago.
Eli Lilly is one of the few companies I come across in my full-time job as a pharmacist. Judging from its well-diversified product lines, it is classified as a wide-moat drug company focusing on neuroscience, endocrinology, oncology, and immunology.
During FY2020, nine of the company’s blockbuster drugs had generated more than $1 billion in revenues each, while at least three more pipeline products are likely to reach blockbuster status during the next few years.
No matter what had driven its surge in stock price for the past week, the company remains a great addition to any portfolio that desires a great diversification into the pharma sector.
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🌏 Recap of the week
Record low jobless claim since the pandemic
The massive fiscal stimulus and rapidly improving public health situation had proven to have a great effect on labour market recovery as the number of Americans filing new claims for unemployment benefits hit a new record low of 498,000 in the week ended May 1. Not only had it beaten forecasts for a decline to 533,000 claims, it also fell below 500,000 for the first since the COVID-19 pandemic started more than a year ago.
Gross domestic product is expected to rise above its pre-pandemic level this quarter, while most economists expect a full recovery in employment in the second half of 2022. - reuters.com
Vaccine stocks tumbled on potential IP waiver
Shares of vaccine makers such as Moderna and Novavax had slumped 8.76% and 25.72%, respectively, by the end of last week after President Joe Biden announced plans to negotiate with the World Trade Organization to discuss waiving patent protection for the vaccines.
If it goes through, the IP waiver will allow other countries or companies to manufacture Covid vaccines using the same technological processes, such as the mRNA technologies utilised by Moderna.
However, the selloffs had largely been viewed as an overreaction given the lack of clarity of how soon or how much the IP waiver will impact the vaccine sales.
This will take months or years to set up, so the waiver would not have an immediate impact even if it were to go through - Chris Meekins, Raymond James analyst
Peloton stock bottoms at 50% correction
Peloton was one of the many pandemic stocks that multiplied a few times in value during the mad rally in 2020 but faced with an inevitable post-pandemic slowdown this year. The stock price had been on a downhill trend ever since the revelation about its struggle with extended delivery times. By the end of last week, the stock had fallen about 14.28% to a new bottom, which means it has officially been corrected more than 50% from its all-time high in January 2021.
The company reported better than expected earnings results on Thursday after the close of trading, which pushed the shares up briefly. However, the stock did fall back down to the low $80s by the end of the next day.
After weeks of refusing to recall the treadmills as urged by the U.S. Consumer Product Safety Commission following a series of accidents involving children, the company finally agreed to recall the treadmills. The decision will likely incur additional costs and unquantifiable knock-on effects that could threaten its sales growth, undoubtedly putting investors’ confidence under strain.
The company also faced fierce competition in the niche remote workout market. With Apple launching its Fitness+ streaming workout service and Lululemon Athletica acquiring Mirror which produces smart mirrors for remote workouts, the competition will only likely be greater.
🐦 Tweets to start the week
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Best, HaoNing