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Happy Wednesday afternoon to everyone on The Street. Here's a snapshot of where markets ended the trading session, plus tomorrow's trade idea delivered to you today.

• 🟩 | US Stocks Rose on Wednesday. The Dow rose over 200 points after new inflation data showed that consumer prices increased by 2.9% year-over-year, the lowest reading since March 2021.

• 📈 | One Notable Gainer: Kellanova’s stock popped 8% following reports that M&M owner Mars will acquire the company in a deal valued at roughly $36 billion.

• 📉 | One Notable Decliner: Shares of Alphabet tumbled 2% on news that the Justice Department is considering breaking up Google after a judge determined that the company has an illegal search monopoly.

• 🤔 | Tomorrow's Trade: Lame or Lucrative? Scroll down for more.

• 🎧 | Listen Online: Just click the “Listen Online” link at the top, and you can listen to this letter on the go!

Plus, today’s partner can help you take control of your financial operations. Take their demo to learn how, and they will send you a Blackstone Griddle!

MARKET MOVERS

Victoria’s Secret, Flutter, & Arm Holdings

EAT (-11%) Brinker International’s stock sank after it missed fourth-quarter earnings estimates, and its full-year guidance fell short as expenses rose (YF)

VSCO (+16%) Shares of Victoria’s Secret surged higher after hiring former Savage and Fenty CEO Hillary Super as its new chief executive (Forbes)

FLUT (+8%) Shares of FanDuel parent Flutter jumped a day after it reported better-than-expected Q2 earnings and lifted its full-year outlook (Investopedia)

ARM (+2%) Arm Holdings saw its stock rise after Intel sold its $1.8 million stake in the British chip firm (YF)

ILMN (+2%) Illumina’s stock climbed following an upgrade from TD Cowen, which raised its rating on the stock to Buy from Hold (Investing.com)

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OVERHEARD ON THE STREET

WSJ: U.S. inflation edged lower in July, likely sealing the case for the Federal Reserve to cut interest rates at its next meeting in September.

CNN: Texas Attorney General Ken Paxton sued General Motors, alleging the carmaker illegally collected and sold drivers’ data to insurance companies.

AP: Elliott Investment Management is launching a proxy fight with Southwest Airlines and plans to nominate 10 candidates for the 15-member board.

CNN: Boeing posted a rare win over Airbus in July orders for new planes, but it still badly trails its rival in orders so far this year.

QZ: Google's former CEO blames remote work for the company losing its AI edge, saying “working from home was more important than winning.”

TOMORROW’S TRADE IDEA, TODAY

Lame or Lucrative?

Underappreciated and Underestimated

In today’s world of AI, semiconductors, and incredible technological advances, stocks like Parker-Hannifin (PH) can get overlooked. The company makes parts for all kinds of machines like airplanes and tractors. Its stock has returned 29% on average per year over the past five years.

Analysts believe this trend will continue thanks to its well-managed capital, strengthening margins, and the airline industry’s recovery.

According to Ray Lin of Fuller Thaler Asset Management, many investors view the company as a relic of the past, but he believes that couldn’t be further from the truth.

Five-Year Plan

According to Lin, the company has seen positive free cash flow and profitability for the last 30 years in a row. Despite that track record, Lin believes analysts have underestimated its potential – leaving the door open for significant surprises.

Current CEO Jennifer Parmentier took the helm in 2023, and shares jumped 60% that year. Her five-year plan includes growing sales between 4% and 6% annually and improving margins to 27%.

Wall Street is projecting around 10% annual earnings growth over the next few years, which doesn’t account for M&A or the company’s history of margin growth.

Conservative Estimates

Shares are currently trading at around 20 times 2025 expected earnings, and an average price target suggests around 13% upside from Monday’s close. However, the company recently reported strong fiscal Q4 earnings, potentially pushing both of those numbers higher.

Parker’s 2025 guidance implies that EPS will hit $26.65, but management has been historically conservative. For instance, its 2024 EPS guidance was at $22.40, but the figure came in at $25.44.

Parker has been a solid investment choice for a long time, and despite its boring nature, the company has the foundation to continue its upward trend.

Take a demo, get a Blackstone Griddle

Financial operations heating up? BILL Spend & Expense can help you take control. Automate expense reports, set budgets across teams, and get real-time insights into company spend. Take a demo to learn how and we'll give you a 28" Blackstone Omnivore Griddle—so you can take control of your next barbecue, too.

Request a demo

ON OUR RADAR

FC: Both Texas and federal officials have reportedly found that SpaceX violated environmental regulations by discharging wastewater at its Starbase facility.

NPR: Meta has shut down CrowdTangle, a tool to monitor and report hate speech and election interference efforts.

Reuters: Total household debt increased by $109 billion or 0.6% to $17.8 trillion in the second quarter of 2024.

Bloomberg: Apple TV+ generates less viewing in one month than Netflix does in one day.

YF: Boeing was forced to slow production at its 737 factory because of an issue with junction boxes, which are used to route electrical cables through planes.

YESTERDAY’S POLL RESULTS

Are you bullish or bearish on Airbnb (ABNB) over the next 12 months?

🟩🟩🟩🟩🟩🟩 Bullish 🐂 

🟨🟨🟨🟨⬜️⬜️ Bearish 🐻