Can we talk about Tesla for a second? Elon Musk’s electric car maker passed $2,000 per share yesterday ahead of the company’s share split. The stock should enter the S&P 500 but let’s compare its numbers to Apple when it hit the $300 billion-mark. AAPL had twice as much revenue and five times as much EBITDA as Tesla when they both crossed the $300 billion mark. I mean price-to-earnings for TSLA is 1038x, while Apple is 36x.
That’s a very bright and shiny future we are paying for…
Jobless claims jumped back up above 1 million. A second stimulus package in Congress has stalled, but this new data could get everyone back to the table. I don’t think either side wants to see a serious pullback ahead of the election. Claims were up in 36 states and that essentially means we are seeing a widespread economic slowdown.
If we do see a second deal, those big box retailers we highlighted yesterday – Target, Walmart, Costco, Home Depot, and Lowe’s — all do well with taking a cut of working people’s stimulus checks. Walmart even said its second quarter quarter bump was largely due to the stimulus checks sent out earlier in the Spring.
Now, something that I forgot to mention yesterday was a report out of Copenhagen. Moller-Maersk, the world’s largest shipping company, saw its revenue decline in the second quarter. No surprise there but the company’s CEO Soeren Skou saw “high uncertainties” in global trade in goods for the rest of the year.
Right, this makes sense. So, I did some digging and found that Global trade in goods is certainly down, but global trade in services is going up.
This grossly undervalued segment is roughly two-thirds of global GDP and nearly half of all employment. Technologies that ease remote work or aid online services and e-commerce like Twilio (highlighted yesterday) or even Shopify are in high demand. A report from Oxford Economics saw overall services trade increasing by $1.9 trillion between now and 2025. Soon, B2B services will intensify as businesses around the globe look for the best digital services to stay competitive.
In our mind, Splunk is the epitome of the global service trade boom. The company offers easy cloud-based data analysis software that can tailored for different industries and platforms. The stock price is up almost $100 since April 1st.
AP is an engineering firm making specially forged steel products. We don’t know much about that industry, but the metrics here are solid. Vanguard and Blackrock are holders of this stock and we think the discounted cash flow ratio is the reason why.
A 5G “picks and shovels” stock here. RESN handles the guts of the network making advanced radio frequency filters, and while you might have no idea what that is…well, you can’t have 5G without it. There is an upcoming bottleneck in RF filters and you might see RESN in high demand. The stock is up $1.50 or 111% since April 1st.