Happy Sunday to everyone on The Street.

It was a weird week on the earnings front, but then again not really. The TLDR: Major retailers handed in strong bottom-line results, but revenue pulled back slightly, and forward guidance wasn't great.

For example, Target crushed profit expectations, but sales slipped. A similar trend played out with Home Depot. Walmart also topped third-quarter earnings and revenue estimates but sounded a note of caution.

Walmart's Chief Financial Officer John David Rainey told Reuters that shoppers cut back on their spending in the latter half of October, but they started buying again in early November, particularly on apparel and home goods, which have been less popular for most of the year.

"This gives us reason to think slightly more cautiously about the consumer versus 90 days ago," Rainey said on the conference call.

Why? Americans are juggling shrinking savings, rising credit card debt, and stubbornly high prices. To that end, retail sales fell 0.1% in October, the first drop in seven months. We told you two weeks ago the American consumer is showing signs of financial strain, as delinquency rates on loans are on the rise.

PRESENTED BY FOREMOST LITHIUM

"Rock Solid" Results: Foremost Lithium Reports Promising Exploration Results

Foremost Lithium, (NASDAQ: FAT, CSE: FAT) a North American hard-rock lithium exploration firm, recently reported on its rock sampling efforts at several properties.

The results were overwhelmingly positive.

Foremost Lithium's recent findings underscore the potential of North America's hard-rock lithium exploration. As the world increasingly relies on renewable energy sources and electric vehicles, demand for high-quality lithium suitable to readily facilitate that transition is likely to continue alongside.

Click here to see how Foremost Lithium is leading the charge.

Review

U.S. stocks rose slightly on Friday, ending the week comfortably in the green, with all three major indexes finishing sharply higher, and the S&P 500 and Nasdaq Composite climbing more than 2%.

For the day, the Dow Jones Industrial Average was unchanged, rising just 2 points, while the S&P 500 and Nasdaq added 0.1%. In earnings news, shares of BJ’s Wholesale slipped 4.8% after posting mixed earnings.

In company news, shares of Volvo fell 12.3% to a record low after its Chinese parent company Geely initiated the sale of some 100 million shares to increase liquidity.

Meanwhile, shares of the EV charging company ChargePoint plummeted 35.5% after the company announced that it lost its CEO, and its current-quarter sales would significantly fall short of expectations.

Elsewhere, United Auto Workers at Stellantis officially ratified a new labor deal. The new contract includes a minimum 25% wage increase and was supported by more than two-thirds of the automakers’ unionized employees.

In economic data, the number of building permits rose slightly in October. The Northeast region saw the largest increase in new permits. Housing starts also increased in October, with the largest gain coming from multi-family units.

Preview

• Tuesday

  • FOMC Minutes will provide more insight into the Fed's view on the economy, and its decision to keep rates unchanged at its last meeting.

  • Existing Home Sales for October: They fell last month to their lowest level since 2010 in September.

• Wednesday

  • Durable Goods Orders will shed light on demand for big-ticket items. 

  • Weekly 30-Year Mortgage Rate Update: It has fallen roughly 30 basis points since reaching a high of 7.9% in October.

  • Jobless Claims: Last week’s report showed initial claims rose to their highest level since July.

  • Final Consumer Sentiment for November: Preliminary numbers showed the fourth decline in a row.

• Friday

  • Monthly composite, services, and manufacturing PMIs.

Earnings Spotlight

• Monday

  • Zoom (ZM) and Agilent (A): Last quarter, Zoom lowered its forecast due to a stronger U.S. dollar, which grew even stronger in the third quarter.

• Tuesday

  • Retailers bonanza: Abercrombie & Fitch (ANF), Best Buy (BBY), Dick's Sporting Goods (DKS), Kohl's (KSS), Nordstrom (JWN), Lowe's (LOW), and Urban Outfitters (URBN).

  • Tech: NVIDIA (NVDA), Baidu (BIDU), and HP (HPQ). NVIDIA reported a 171% increase in data center revenue last quarter, and forecasted another 170% rise in Q3.

• Wednesday

  • Deere (DE). In its previous earnings, the world's largest farm equipment maker saw a 34% increase in net sales.

• The New York Stock Exchange is closed on Thursday for the Thanksgiving holiday, and Friday’s trading session is shortened.

One Man’s Trash…

Built for Success

Copart (CPRT) is a company that specializes in turning junked cars into profit. Yes, “junked” is how you say it. 

They operate the world’s largest auction for salvaged vehicles, selling cars for parts or overseas use in less-regulated auto markets.

Insurance companies recoup cash by selling totaled vehicles to Copart. Since accidents are happening at a fairly predictable rate, there’s no shortage of inventory. After the sale, Copart resells these autos in online auctions.

Cruising Along

Copart has a record of continuous growth over the years, and shares are up more than 50% in 2023 alone. 

Copart's business model is fairly resilient to fluctuations in used-car prices, which have been trending downward. The company's fees are dynamically adjusted based on a vehicle's selling price, effectively mitigating the impact of price declines through increased sales volume.

The company also essentially controls the market with IAA, which provides Copart with significant market share and visibility into industry trends. For context, IAA was acquired by Ritchie Bros. in March.

The dawn of EVs and self-driving cars also helps Copart’s cause, as they are totaled by insurance companies more often than traditional vehicles because their technology makes them very expensive to repair.

The Numbers Don’t Lie

In 2023, the junk car auctioneer recorded all-time high earnings per share, which have nearly tripled over the last five years. The company is expected to post another record number in FY 2024 as well, on top of expected 8% growth in revenue. 

These numbers have analysts bullish on Copart as an investment opportunity. Coined as “recession-resistant,” the undercover junk company could be that treasure we’re all looking for.

Time To Gobble Up These Stocks?

Tried and True Turkey

With Thanksgiving around the corner, now is the time to start looking at which companies stand to profit from seasonal consumer spending. 

Hormel (HRL), an American food company with a primary focus on protein products, is first on the list. More than just the traditional turkey offering, Hormel offers plant-based proteins, organic options, and nut butters. 

Amidst a 30% stock dip over the last year and lack of investor confidence due to inflation and a rise in the popularity of weight loss drugs, the protein producer could profit from a hot Q4. Not to mention it’s the second largest supplier of turkey in the country.

Raise a Glass

Next up is U.K.-based liquor provider Diageo (DEO). 

Diageo sells many well-known liquors including Johnnie Walker, Ciroc, and Baileys. The company also boasts an annual dividend increase going back to 1998, a track record good enough to put the company on the list of British Dividend Aristocrats. 

Diageo’s stock has been down lately, largely due to a decreased revenue outlook attributed to struggles in Latin American and Caribbean markets. 

Holiday cheer brings an increase in alcohol sales, and the stock’s currently undervalued price makes it a great buying opportunity for investors.

The Almighty Dollar

Rounding out the list is American discount store Dollar General (DG). 

With the possibility of a recession on the horizon, many consumers will be looking for discounted shopping options and Dollar General fits the bill. 

Recently Dollar General has struggled with operations and staffing, resulting in the stock's price being cut in half over the past year. But an economic downturn could solve this staffing problem.

Discount stores have historically done very well in tough economic times. 

With Thanksgiving and Black Friday shopping around the corner, investors can take advantage of the unique positions of these stocks.

PRESENTED BY FOREMOST LITHIUM

"Rock Solid" Results: Foremost Lithium Reports Promising Exploration Results

Foremost Lithium, (NASDAQ: FAT, CSE: FAT) a North American hard-rock lithium exploration firm, recently reported on its rock sampling efforts at several properties.

The results were overwhelmingly positive.

Foremost Lithium's recent findings underscore the potential of North America's hard-rock lithium exploration. As the world increasingly relies on renewable energy sources and electric vehicles, demand for high-quality lithium suitable to readily facilitate that transition is likely to continue alongside.

Click here to see how Foremost Lithium is leading the charge.

Water is Scarce. There's An ETF For That

Demand is Growing for World’s Most Precious Resource

Analysts at BofA are encouraging investors to dive into a fund that focuses on water. 

The First Trust Water ETF (FIW) comprises companies that generate revenue from potable water (aka drinking water) and wastewater. With water scarcity on the horizon, the bank believes it's a good play for investors to get exposure to this sector.

Bank of America points out that water demand is increasing faster than population growth. BofA expects GDP growth to raise water demand by 400% in the next 25 years. 

Along with population growth, three industries are heavily driving demand for water: food, technology, and fast fashion.

An Impressive Track Record

The First Trust Water ETF hasn’t disappointed investors recently. It’s up more than 70% in the past 5 years and is averaging an annual return above 10% over the last 10. 

The ETF is made up of industrials and utilities, with top holdings including Roper Technologies (ROP), Ferguson (FERG), and Ecolab (ECL). 

Roper is a tech firm that includes a subsidiary that aids utility companies in watching their water use. Ferguson, an industrial company, develops water management equipment. Ecolab generates revenue by helping customers utilize water and energy more efficiently.

Higher Rates and Slowing Economy Could Dry up Returns

The Federal Reserve’s tightening campaign has added more risk to the ETF. FIW is primarily made up of utilities and industries. Those sectors are in the crosshairs when rates rise and the economy slows. 

The fund is up about 3% this year, in contrast to a return of around 15% for the S&P 500.

But Bank of America strategists are encouraging investors to ignore short-term volatility and turn their attention to the bigger picture.

Last Week's Poll Results

Which U.S. oil stock would you rather own?

 🟩🟩🟩🟩🟩🟩 🛢️ Chevron

🟨🟨🟨🟨⬜️⬜️ ⛽ Exxon

Which company do you think is most likely to see gains this holiday season?

🟩🟩🟩🟩🟩🟩 👕 Urban Outfitters (URBN)

🟩🟩🟩🟩🟩🟩 🎯 Target (TGT)

🟨🟨🟨⬜️⬜️⬜️ 👚 The Gap (GPS)

Are you bullish or bearish on Vestis (VSTS) over the next 12 months?

🟩🟩🟩🟩🟩🟩 🐂 Bullish

🟨🟨🟨⬜️⬜️⬜️ 🐻 Bearish

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