- The Street Sheet
- Posts
- 🌬️ Winds of Change
🌬️ Winds of Change
Plus, two very different responses to economic uncertainty...
Happy Sunday to everyone on The Street.
With a new presidential administration looming and inflation ticking back up again, there’s no shortage of uncertainty on the horizon. Some of us will respond by stocking up on safe-haven assets, others by stocking up on Costco’s Emergency Food Buckets.
No judgment either way! But if you’re one of the latter, did you know, you can now get Costco’s Gold Star membership for just $20? By purchasing the $65 membership through StackSocial, you can get a $45 digital gift card in return.
Just think of how many Emergency Food Buckets you could buy with that. (Hint: a little more than half of one.)
Before we dive in, here’s a quick word from our sponsor:
Sponsored By 10 East
10 East, led by Michael Leffell, allows qualified individuals to invest alongside private market veterans in vetted deals across private credit, real estate, niche venture/private equity, and other one-off investments that aren’t typically available through traditional channels.
Benefits of 10 East membership include:
Flexibility – members have full discretion over whether to invest on an offering-by-offering basis.
Alignment – principals commit material personal capital to every offering.
Institutional resources – a dedicated investment team that sources, monitors, and diligences each offering.
10 East is where founders, executives, and portfolio managers from industry-leading firms diversify their personal portfolios.
Could Cboe Grow?
Volatility Is a Tailwind
According to Deutsche Bank analyst Brian Bedell, Cboe Global Markets (CBOE) could get a boost from post-election market volatility. Bedell raised his rating to a Buy and gave the stock a $222 price target, representing an 11% upside from current prices.
Bedell expects Cboe to grow its revenue through 2025 as political uncertainty stokes increased demand for index and volatility investment options.
Options on the Rise
Options trading has been gaining popularity due to recent accessibility on platforms like Robinhood (HOOD). Product innovation has stoked the flame as well. Bedell believes these factors will lead to organic revenue growth for Cboe.
The analyst is projecting revenue to grow by 8% in 2025 and another 6% in 2026, raising initial estimates of 6% and 3%, respectively. Should Bedell’s predictions come true, Cboe may well find itself with positive operating leverage and stronger margins.
Turning Things Around
This quarter, Cboe has been the worst-performing stock of all those Bedell covers. Nevertheless, he remains bullish on its outlook post-election.
According to the analyst, the stock has a high correlation to equity market movements which should bode well for its growth prospects.
Bedell is also confident in the company’s management, stating that strategic leadership decisions should drive further growth. In a landscape rampant with post-election plays, the analyst believes that this stock provides a unique buying opportunity for investors.
Are you bullish or bearish on Cboe Global Markets (CBOE) over the next 12 months? |
The Winds of Change
The Trump Discount
Danish wind turbine company Vestas Wind Systems (VWDRY) saw its stock price drop dramatically following Donald Trump’s election victory. This was largely due to investor fears surrounding Trump’s preference for oil and gas over renewable energy.
Now, some analysts believe investors may have overreacted and the stock could be oversold. Experts believe a major sector downturn is unlikely, and now could be a great opportunity to buy the stock at a discount.
Not Losing Orders
Sydbank’s Jacob Pedersen said he doesn’t expect any changes to the Inflation Reduction Act to hurt Vestas’ revenue. He says the company already has plenty of orders on the books for at least the next two years.
Additionally, Pedersen believes that the legislative uncertainty could result in customers placing advance orders, which should aid in shoring up Vestas’ revenue through at least 2027.
The analyst gave Vestas stock a Buy rating and reiterated that average analyst price targets suggest over 50% upside.
Fundamentals Should Improve
Deutsche Bank analysts John Kim and Gael de-Bray chimed in on the stock, admitting that the current US political climate is not ideal for Vestas. On the other hand, they observed that the stock’s current trend reflects a “worst-case scenario” more than reality.
Additionally, like the rest of the world, Vestas has had to grapple with inflation increasing the cost of materials and labor. This has hurt its margins and profits, but prices are starting to come down. Analysts expect its fundamentals to improve over time as a result.
Whatever this next presidential term holds, many analysts believe investors have overreacted when it comes to Vestas.
Are you bullish or bearish on Vestas Wind Systems (VWDRY) over the next 12 months? |
Benefiting From Bitcoin
Moving in Lockstep
Japanese investment bank Nomura has identified several Japanese stocks that are sensitive to Bitcoin price fluctuations. These stocks include exchange operators, semiconductor companies, and IT players, all of which are currently underperforming Bitcoin.
Analysts have estimated that Trump’s recent election could drive Bitcoin up to $100,000. The cryptocurrency has already risen more than 150% this year. Trump’s proposed pro-crypto initiatives were a big part of his campaign, and as a result, analysts are bullish on the asset.
Indirect Correlation
Nomura used regression analysis to identify Japanese stocks highly sensitive to Bitcoin price changes.
The results spanned several sectors, and some of the resulting stocks did not have direct ties to Bitcoin. But, as expected, certain stocks like semiconductor and IT companies that directly benefit from increased Bitcoin mining did make the list.
Using FactSet data, the Japanese firm compiled a list of 10 stocks it thinks have significant upside should Bitcoin continue to explode.
Top Stocks
Of those 10 stocks, three of the top picks were Micronics (MJPNF), SoftBank Group (SFTBY), and Towa Corporation (TOWCF).
Micronics’ average analyst price target is $46.05 per share, which represents around 85% upside from the semiconductor company’s current prices. As another semiconductor pick, Towa’s price target suggests around 67% upside.
Financial giant SoftBank Group made the list largely due to its massive investment in AI. The investment holding company’s price targets suggest roughly 30% upside, with 16 of 20 analysts covering the stock giving it a Buy or Overweight rating.
With Bitcoin prices soaring, buying the cryptocurrency outright might not be the only way to ride its wave.
Which stock do you think will outperform over the next 12 months? |
Sponsored By 10 East
10 East, led by Michael Leffell, allows qualified individuals to invest alongside private market veterans in vetted deals across private credit, real estate, niche venture/private equity, and other one-off investments that aren’t typically available through traditional channels.
Benefits of 10 East membership include:
Flexibility – members have full discretion over whether to invest on an offering-by-offering basis.
Alignment – principals commit material personal capital to every offering.
Institutional resources – a dedicated investment team that sources, monitors, and diligences each offering.
10 East is where founders, executives, and portfolio managers from industry-leading firms diversify their personal portfolios.
Which industry do you think will take the hardest hit from a Trump presidency?
🟩🟩🟩🟩🟩🟩 Clean Energy
🟨⬜️⬜️⬜️⬜️⬜️ Alcohol
Are you bullish or bearish on Roblox (RBLX) over the next 12 months?
🟩🟩🟩🟩🟩🟩 🐂 Bullish
🟨🟨🟨⬜️⬜️⬜️ 🐻 Bearish
Which stock do you think will outperform over the next 12 months?
🟨🟨🟨🟨⬜️⬜️ Carvana (CVNA)
🟩🟩🟩🟩🟩🟩 Caterpillar (CAT)
Reply