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🤖 Bringing AI to the Battlefield
Plus, Goldman Sachs sees a "cool" opportunity.
Happy Sunday to everyone on The Street.
This past Friday brought some surprising news — Nestlé’s CEO Mark Schneider was abruptly ousted by the board and given just a 24-hour notice.
The abrupt firing comes after several months of Nestlé executives and board members questioning whether Schneider was a good fit for the company’s deeply rooted culture, as Schneider focused mainly on short-term gains and struggled to connect with customers during market visits.
Nestlé veteran Laurent Freixe will be stepping into the chief executive role and hopes to recover the brand’s reputation amidst a wave of negative publicity in Europe. Most notably, there was a massive public outcry after two children died from eating E. coli-contaminated pizza from one of the company’s brands.
Nestlé’s stock got a 5% boost on Friday following the news… leaving plenty of potential upside if CEO Laurent Freixe manages to turn the company around.
Plus, radical changes are coming. Today’s sponsor discusses 3 critical steps to safeguard your future before sweeping changes hit…
TOGETHER WITH WEISS RATINGS
$34 Trillion of debt, 20% dollar devaluation since 2020, $1 TRILLION spent every 100 days. If you thought things were already bad in the U.S., Dr. Martin Weiss reveals how the next crisis could lead to unprecedented government control and financial surveillance. But there's still time to act.
Chilling Out
A Cool Opportunity
Lineage (LINE) went public about a month ago, and the real estate investment trust (REIT) already has a stampede of bulls from Wall Street’s biggest banks.
The REIT operates cold storage centers for food businesses. In other words, Lineage has some very large refrigerators.
LINE currently trades around $87 per share, but several analysts see the stock moving into triple digits in the future.
I Got the Power
Goldman Sachs (GS) is leading the stampede.
The bank told investors there are several characteristics that “will allow [Lineage] to have some pricing power, driving revenue growth.”
Goldman applauded the REIT’s locations, and its ability to keep costs down. The bank’s price target is $105.
Morgan Stanley (MS) is another bull raring to go. The investment firm dubs LINE a “top pick” and believes the real estate company has “the highest quality assets.”
Fast Forward
JP Morgan (JPM) and Bank of America (BAC) point to future fundamentals as reasons to hop aboard the Lineage train.
BofA argues that Lineage can produce high single-digit EBITDA growth through 2028.
JP Morgan says numbers for the back half of 2024 may not be exciting, but the megabank sees trends in the space that could allow Lineage to accelerate revenue in the future.
Bank of America gives the REIT a buy rating, while JP Morgan is overweight.
Experts caution that IPOs tend to be volatile in the near term following listing. It also should be noted that a handful of Wall Street firms were involved in the Lineage IPO.
What are your thoughts on Lineage? |
Bringing AI to the Battlefield
A Substantial Investment
The future of the battlefield involves AI-powered drones capable of operating without human assistance. The US government is pouring money into this technology, and a few companies stand to benefit.
Recent geopolitical conflicts have sped up the development of these drones, and according to BTIG Vice President Andre Madrid, the Department of Defense is in the middle of a once-in-a-generation transformation of its unmanned fleets.
The Department has requested $5.3 billion for FY 2025 for unmanned systems, and that number is expected to grow around 9.5% compounding each year through FY 2029.
Northrop Grumman
Northrop Grumman (NOC) is one company expected to benefit from that government funding. It utilizes unmanned systems across a number of its products, including its aerial vehicle built for the navy – the MQ-4C Triton.
Its B-21 Raider stealth bomber could be used by the Air Force in conjunction with the Collaborative Combat Aircraft program, among other CCA contracts.
Madrid has given Northrop Grumman a buy rating and a $565 price target, around 11% upside from its current price. Its average analyst price target is $520.35, and the stock is up about 16% this month.
General Dynamics
General Dynamics (GD) is another company that could see an influx of government funds. Its product lineup includes small and medium unmanned undersea vehicles, unmanned S-MET ground vehicles, and littoral combat ships.
The company received multi-billion dollar contracts from the DoD at the end of 2023 to help sustain certain parts of the Navy’s littoral combat ship fleet. Morgan Stanley (MS) analyst Kristine Liwag has given the stock an overweight rating with a price target of $345, about a 17% upside from current levels.
AI is changing everything, and the US military isn’t immune. As the country races to modernize, these companies could be in a unique position to benefit.
Which stock do you think will outperform over the next 12 months? |
Bullish on Japanese Banks
Silver Linings
Japanese stocks have had a rough go of it lately, but that doesn’t mean there aren’t any silver linings. According to analysts, SMFG (SMFG), one of the country’s largest banks, could be one of them.
Banks have been among the hardest-hit stocks in the Japanese market in response to a rate increase from the Bank of Japan. Despite some initial panic, the rate increase could benefit banks since they will receive higher yields on loans and investments.
Interest Rate Hikes
According to SMFG, the last two rate increases boosted its net interest income by approximately $475 million this fiscal year. It also said that each 0.1 percentage-point hike raises its net interest income by around 40 billion yen, or around $274 million.
The bank also continues to offload around $1.4 billion worth of equity holdings over a three-year period. These stocks have been dragging down SMFG’s overall returns for years. The liquidity generated from the selloff is funneled into stock buybacks – another win for investors.
Strong Fundamentals
SMFG’s return on equity has risen to 9.2% over the past three fiscal years, mostly as a result of profit growth. Net income is up 88% over the same period. The stock is trading cheaper than other comparable Japanese financial stocks. Its dividend yields 3.2% and the stock is trading at 0.96 times tangible book value.
As higher returns from interest rates roll in and its balance sheet is cleaned up, this stock could prove its value within a tumultuous market.
Are you bullish or bearish on SMFG (SMFG) over the next 12 months? |
TOGETHER WITH WEISS RATINGS
$34 Trillion of debt, 20% dollar devaluation since 2020, $1 TRILLION spent every 100 days. If you thought things were already bad in the U.S., Dr. Martin Weiss reveals how the next crisis could lead to unprecedented government control and financial surveillance. But there's still time to act.
Which stock will perform best in 2025?
🟩🟩🟩🟩🟩🟩 Eli Lilly (LLY)
🟨🟨🟨⬜️⬜️⬜️ Novo Nordisk (NVO)
Which stock do you think will outperform over the next 12 months?
🟩🟩🟩🟩🟩🟩 Apple (AAPL)
🟨🟨🟨⬜️⬜️⬜️ Netflix (NFLX)
🟨🟨⬜️⬜️⬜️⬜️ Uber (UBER)
Are you bullish or bearish on Intel (INTC) over the next 12 months?
🟩🟩🟩🟩🟩🟩 Bullish 🐂
🟨🟨🟨⬜️⬜️⬜️ Bearish 🐻
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