The Long Term Investor

Costco earnings.

Costco earnings beat profit estimates while revenue misses slightly, stock dips

https://finance.yahoo.com/news/cost...nue-misses-slightly-stock-dips-215824124.html

(BOLD is my opinion OR what I consider important content)

"Costco (COST) once again bulked up its earnings as it reported fiscal 2024 Q2 results.

The wholesale club posted adjusted earnings per share (EPS) of $3.92, soundly beating estimates of $3.62. Revenue came in at $58.44 billion, up 5.7% year over year, but slightly lower than expectations of $59.04 billion, per Bloomberg data.

Same-store sales, excluding gas and foreign exchange, jumped 5.8%.

In the US, same-store sales growth came in higher than expected at 4.8%. Canada beat estimates with 9% same-store sales growth, while international stores posted a higher-than-expected increase of 8.2%.

Membership fees, a key revenue stream, came in at $1.11 billion, up from $1.03 billion a year ago. That's also a jump from Q1, which brought in $1.08 billion.

A Costco Gold Star membership costs $60 per year, while an Executive Membership goes for $120. Some on the Street predicted last year that Costco would raise fees this summer.

Prior to earnings, Telsey Advisory Group senior managing director Joe Feldman told Yahoo Finance Live that "Costco is leading the way right now" as it continues to perform well, catering to a "a more affluent consumer" who seeks value.

E-commerce continues to gain momentum as well. In Q2, the company saw digital sales grow more than 18% compared to a year ago.

Costco's shares are up over 60% compared to last year, handily beating the S&P 500's (^GSPC) 29% gain. The retailer currently has 875 warehouses, with 603 locations in the US and Puerto Rico.

The earnings rundown:

Here's what Costco reported in its fiscal second quarter versus Wall Street estimates, according to Bloomberg data:

• Net sales: $58.44 billion versus $59.04 billion
  
• Adjusted EPS: $3.92 versus $3.62 expected
  
• Same-store sales growth: 5.8% versus 4.65% expected
  
  • US same-store sales growth: 4.8% versus 4.09% expected
    
  • Canada same-store sales growth: 9% versus 6.31% expected
    
  • Other international: 8.2% versus 6.17% expected"
    

MY COMMENT

A meaningless slight miss on Revenue.....but....everything else including EPS nicely up. In addition.....somewhere....I saw that their memberships were UP nicely. A very good thing for their future profits, sales and revenue. So I would call it a BEAT with mixed Revenue.

 

RG

I like that they are joining the SP500 and are now BIG CAP
I like that they are a strong partner with NVDA and tend to grow along with NVDA.
I like their momentum.
I like their news and financial coverage.......a contributor to momentum
I like the upward trend in just about all their financials.
I really liked their last earnings.
I like their management
It is an AI play.

About the ONLY negative I saw is their margins...currently about 17%.....up from about 15.5% for 2019 to 2013.

So I am into the stock for a smaller than normal position......to try it out.....since it is a relatively young company. I am still watching WMT, as a possibility for the future. I need another non-tech stock......but at this time I am not willing to give up the big gains I am getting elsewhere.

Here is info that is a significant part of my purchase reasoning.

https://www.fool.com/investing/2024/03/06/supermicro-to-join-sp-500-is-it-a-buy/

BOLD is my opinion OR what I consider important content)

Super Micro Computer (SMCI 3.12%) has been around for more than 30 years, but just recently this company has taken center stage -- and delivered many "firsts," such as its first $2 billion quarter. Earnings have been on the rise thanks to this company's behind-the-scenes but crucial role in the world of artificial intelligence (AI). Supermicro provides complete information technology (IT) solutions for customers working in the space -- including servers, storage systems, and more.

And just days ago, Supermicro scored a big win. It was chosen to join the S&P 500 index -- news that drove the stock price to an 18% gain in just one session. That's after already soaring more than 2,000% over the past two years.

Now, you may be wondering if it's time to buy Supermicro as it's confirmed as being part of the elite group of companies powering today's economy -- or if the recent spectacular gains have made this top tech stock too pricey. Let's find out.

AI supercharges Supermicro's earnings

First, let's talk more about Supermicro's recent business successes and future prospects. The company has progressively grown earnings over time, showing that even prior to the AI boom, this player steadily attracted customers and built its reputation as a quality provider of IT solutions. But earnings clearly took off as companies started to invest more in AI and opted for full-rack solutions to support their projects.



SMCI Revenue (Annual) data by YCharts


Supermicro's systems integrate servers, networking, storage, and other elements, and the company optimizes, tests, and validates these platforms -- all of this equals efficiency and ease of use for the customer. The products also include Supermicro's liquid-cooling technology, a plus for AI workloads that create a lot of heat.

Customers also like the fact that Supermicro customizes these systems, meaning each platform perfectly matches the particular customer's needs.

On top of this, Supermicro has speedily brought its products to market, and they always accommodate the latest technology from chip giants such as Nvidia and Advanced Micro Devices. How does Supermicro manage this? The company works hand-in-hand with these companies, monitoring their product developments and launch dates so that it can offer their latest innovations in Supermicro's own platforms. This has resulted in booming demand for Supermicro.

To keep up with demand, the company says it's adding two new production facilities close to its Silicon Valley headquarters and a new facility in Malaysia that will focus on lowering costs and increasing volume

Supermicro says it's on track to double its AI portfolio in the coming months, integrating new releases from chipmakers such as Nvidia's H200 graphics processing unit (GPU).

A doubling of sales year over year

All this has prompted Supermicro to forecast fiscal full-year revenue of at least $14.3 billion, which would represent a doubling of sales from the prior year's level. So, it's clear business is looking good for Supermicro, and if predictions of the AI market reaching more than $1 trillion by the end of the decade are right, this momentum could continue. The company's close work with chipmakers is a wise move, allowing it to offer customers a complete package with the latest innovations.

Now let's consider the entry into the S&P 500 and why this represents good news for a company. First, it's a bit symbolic, showing the company is a key player in today's economy and generally is delivering profits -- this could encourage a broader range of investors to buy the stock. Cautious investors, for example, may feel more comfortable choosing a tech company that's met the S&P 500 membership criteria.

Second, managers overseeing funds that track the S&P 500 will have to buy shares of Supermicro so that their funds will accurately reflect the index's composition. This means we could see some positive momentum as these investors pick up shares of the tech company -- and these investors will hold on to the shares, so they represent a source of stability.

Is Supermicro too expensive now?

Let's get back to our question: Is now a good time to buy Supermicro? It's true the stock has soared in recent times, and as a result, it now trades for 50x forward earnings estimates -- up from as low as 15 earlier this year.

That may look expensive, but it's important to consider the company's long-term potential. Analysts expect double-digit growth annually over the coming five years, and Supermicro's collaboration with chip leaders and trends in demand seem promising. As mentioned, the AI market is set to soar in the coming years -- this could drive more earnings gains at Supermicro.

All of this means that today, in spite of the recent run-up in the stock price, Supermicro still looks like a solid buy for the long-term investor, offering a great way to bet on the AI revolution."

MY COMMENT

I will say it is an aggressive speculative stock. Not for everyone....that is why I am only in for $50,000. I do see it as a SPLIT candidate.....right now....but there is no saying this will happen. It would certainly attract more buyers at a lower entry price.

Over the next 6-12 months I can always turn it into a medium term hold and take my initial investment out.....assuming I have a good profit.....if I am not seeing it as a long term hold.

I bought at $1035 and today it closed at $1159.....right now after hours it is at $1194. BUT....after hours mean NOTHING. It and PLTR are my most tentative holdings.

 

Sounds good to me.

Powell says the Fed is ‘not far’ from the point of cutting interest rates

https://www.cnbc.com/2024/03/07/pow...from-the-point-of-cutting-interest-rates.html

"Key Points

• Fed Chair Jerome Powell said inflation is “not far” from where it needs to be for the central bank to start cutting interest rates.
• “I think we’re in the right place,” Powell said of the current policy stance."

 

I hope so Zukodany. I am also looking to see COSTCO and SUPER MICRO also split soon. BUT.....me "looking for something to happen" is meaningless.

 

Well another good open today.....as we pick up where we left off yesterday.....with a good rally. Poor COSTCO....down by about $41 at this moment. If I had some money it would be going into COST today or next week.

NVDA on a TEAR as usual today.....up by $30......SUPER MICRO......up by $50 today.

PLUS.....most of the other big cap tech monster stocks that I happen to own are ALSO up nicely today. Life is good. Hitting news highs right and left recently.

 

For those following my little adventure with SUPER MICRO.

Why Super Micro Computer Stock Rallied (Again) Wednesday Morning

https://finance.yahoo.com/news/why-super-micro-computer-stock-171204075.html

How Soon Will Super Micro Computer Stock Hit $2,000?

https://finance.yahoo.com/news/soon-super-micro-computer-stock-110500072.html

Don’t Chase Super Micro Computer Stock. You’re Too Late.

https://investorplace.com/2024/03/dont-chase-super-micro-computer-stock-youre-too-late/

SMCI: Super Micro Stock Jumps 3% on Upgrade. Here’s Why Shares are Up 10X in One Year.

https://www.tradingview.com/news/tr...ade-here-s-why-shares-are-up-10x-in-one-year/

Super Micro Computer Stock Hits New High Amid Optimism About AI-Related Growth

https://www.investopedia.com/super-...amid-optimism-about-ai-related-growth-8605262

Up 1,000%, Is Super Micro Computer Stock (NASDAQ:SMCI) Still a Buy?

https://www.tipranks.com/news/up-1000-is-super-micro-computer-stock-nasdaqsmci-still-a-buy

Super Micro Computer Stock Is Rising Again Today. Is It Still a Good Buy?

https://finance.yahoo.com/news/super-micro-computer-stock-rising-193741231.html

 

The jobs report.......the GASP......big event this week. Yeah....right.

February jobs report: US economy adds 275,000 jobs, unemployment rate hits 3.9%

https://finance.yahoo.com/news/febr...jobs-unemployment-rate-hits-39-133253114.html

(BOLD is my opinion OR what I consider important content)

The US economy created more new jobs than expected in February, while an increase in the unemployment rate for the first time in four months and downard revisions to job growth in prior months suggested signs of some softening in the US labor market.

Data from the Bureau of Labor Statistics released Friday showed the labor market added 275,000 nonfarm payroll jobs in February, significantly more additions than the 200,000 expected by economists. Meanwhile, the unemployment rate increased to 3.9% from 3.7% in January. This marks the first move higher in the unemployment rate in four months as it now sits at its highest level seen in the last two years.

A revised 229,000 jobs were added in January, according to the report, down from the 353,000 initially reported. In total, revisions showed there were 167,000 fewer jobs added in the December and January than previously expected.

Meanwhile, wages increased 0.1% on a monthly basis in February, slower than the 0.2% economists expected.

The downward revisions of previous months' job gains, coupled with the lower-than-anticipated wage growth, led one economist to conclude the Fed will be less concerned that a strong labor market will drive a resurgence in inflation.

"Alongside the rise in the unemployment rate to a two-year high and a much weaker rise in wages, there is less reason now to be concerned that renewed labour market strength will drive inflation higher again," Capital Economics chief US economist Andrew Hunter wrote in a note to clients.

Elsewhere in the report, the labor force participation rate stayed flat at 62.5%, while the average weekly hours worked increased from 34.1 to 34.3.

The largest jobs increases in Friday's report were seen in healthcare which added 67,000 jobs in February. Meanwhile, government employment added 52,000 jobs.

On Wednesday, Federal Reserve Chair Jerome Powell described the labor market as "relatively tight" but noted that "supply and demand conditions have continued to come into better balance" during his semiannual testimony in front of lawmakers on Capitol Hill.

Markets entered Friday's report betting that the first Fed interest rate cut will come in June, per the CME FedWatch Tool. For the year, investors are pricing in a range of three to four rate cuts, per Bloomberg data."

MY COMMENT

Good news for fans of a FED rate cut. I am expecting June to be the first one. BUT....that is a long way off in the news cycle of the modern world.

 

Here is the primary take on the jobs report.

"Stocks climbed on Friday after the February jobs report showed an uptick in the unemployment rate, bolstering investor confidence that the Federal Reserve will cut rates following its June meeting."

https://finance.yahoo.com/news/stoc...ise-after-february-jobs-report-134312058.html

 

We started today with good gains at the open. BUT....I am expecting the bears and traders to take a run at the markets perhaps about mid to late morning and try to drive the gains either down or away. I believe it will fail since the obvious market BIAS right now is to go up and support the bull market. BUT........whatever.

 

Looks like the GOLD rally continues. I dont see GOLD as an investment since it does not compound and just sits there.....as a lump of metal. It kind of reminds me of Bitcoin.

Gold extends record run with $2,200 in sight after US jobs data

https://finance.yahoo.com/news/gold-extends-record-run-2-141759089.html

 

Here is another bit of positive short term news today.....the Ten Year Treasury. It is DOWN. Right now it is at 4.085%. It is heading back into the 3% range....after another little speculator and trader pop.

 

Feel free to argue otherwise if you believe so. BUT....this is what I believe.

Fact‐Check: Taxes on the Rich

https://www.cato.org/blog/fact-check-taxes-rich

(BOLD is my opinion OR what I consider important content)

"In his State of the Union address, President Biden is expected to discuss raising taxes on the rich. As he often does, Biden may claim that the rich pay lower tax rates than firefighters or school teachers or that the rich pay a tax rate of just 8 percent.

A Reuters story on the State of the Union address parrots the White House theme without any independent fact‐checking: “The average American worker paid about a 25% tax rate in 2022, the OECD reported. White House research found the wealthiest individuals paid about 8% from 2010 to 2018.”

White House “research”? The 8 percent is a concoction by Biden political appointees at odds with data from the US Treasury, Congressional Budget Office (CBO), Internal Revenue Service, and Joint Committee on Taxation. All these official sources find that tax rates on high earners are much higher than tax rates on lower‐ and middle‐income folks. Let’s look at the Treasury and CBO data.

The first chart shows Treasury estimates for 2024 by income decile and the top 1 percent. The tax rates are all federal taxes (income, payroll, excise, and other) divided by family income. The top 1 percent will pay an average rate of 31.5 percent this year, compared with 10–12 percent in the middle and about 0 percent at the bottom. The rates near the bottom can be negative because of refundable tax credits.




The second chart shows Congressional Budget Office estimates for the low‑, middle‑, and high‐income quintiles and the top 1 percent. The tax rates are federal income, payroll, and excise taxes divided by household income.

The average tax rate on the top 1 percent has hovered around 30 percent for four decades.

Average tax rates on the low‐ and middle‐income quintiles have trended downward. Households in the low quintile pay no net federal taxes, while households in the middle quintile paid about 13 percent in recent years prior to 2020. Tax rates plunged in 2020 due to “recovery rebate credits” handed out that year, which were refundable tax credits.

In sum, Treasury and CBO data show that federal tax rates at the bottom average about 0 percent or less, tax rates in the middle average less than 15 percent, and rates at the top average around 30 percent. Average tax rates at the top are twice the tax rates in the middle.





False claims about tax rates on high earners are remarkably persistent given the easy availability of the official data'

MY COMMENT

FACTS are stubborn things. BUT....this is all I have on this issue and more importantly how the government and the ECONOMY is funded. It is those evil corporations and the evil rich that are the backbone of funding and production for our capitalistic system. They are also the creators of employment for the country.....outside of government jobs.

BUT....that is all I have....so if you have a different view....feel free to post it with no argument from me.

 

WELL....the profit takers swept in and tanked the markets today. NVDA and other AI stocks just got too far out there and it was just too attractive to cash in some shares for the traders, and speculators.

I ended with a BIG FAT loss today thanks to....NVDA (-5.55%) and COST (-7.64%)....these two are my largest positions and I paid the price today. I did nave two stocks up today...AAPL and GOOGL. Yes BIZARRO world.

I also got hammered by the SP500 by 2.79%....yes....2.79%.

 

A losing week for ALL the averages.

DOW year to date +2.67%
DOW five days (-0.63%)

SP500 year to date +8.03%
SP500 five days (-0.14%)

NASDAQ 100 year to date +9.05%
NASDAQ 100 five days (-1.50%)

NASDAQ year to date +8.93%
NASDAQ five days (-1.10%)

RUSSELL year to date +3.47%
RUSSELL five days (-0.24%)

You cant win them all. No big deal.

I ended the week with a GAIN in my entire account.....YEA. I was year to date for my entire account +20.08% last week. As of the close today my entire account is at year to date....+21.86%.

 

HAVE A GREAT WEEKEND EVERYONE.