The week ended relatively flat, with the S&P 500 up around 1%. Oddly enough, the solid jobs report on Friday announcing an unexpectedly higher than anticipated 528,000 new jobs created sent the market into an immediate dive. By comparison, data for June showed 372,000 new jobs created. The unemployment rate is now around a decade rock bottom low of 3.5%.
The immediate sell-off after the strong labor market numbers were released indicates that inflation is likely to continue, and the Fed will be forced to hike rates again at their next meeting on September 20. While a 50 basis point hike is already expected, the Fed may increase the Fed Funds target rate by 75 basis points – or even more. This is bad news for stock valuations, especially of high growth, low income companies that will get devalued as interest rates rise the value of their future cash flows decrease. The rate hikes in 2022 will go down as the fastest increase in interest rates in over a generation.
Continued strength in the employment market may be a good sign in that a recession is unlikely in the near term, but the threat of double-digit inflation will likely hold back stock prices. Many analysts are looking at a continued bear market to accelerate in September.
Play of the Week
The LevelFields platform reported 49 companies announcing a dividend increase. Leading the performance table was Reinsurance Group of America, Inc. (RGA), a global provider of life reinsurance coverage. The stock saw a 8.68% rally on the back of its announcement to increase its quarterly dividend to 9.6%.
- RGA’s annual operating income totaled $391 million, or $5.78 per diluted share, compared with an adjusted operating income of $274 million, or $4.00 per diluted share, the year before.
Reinsurance Group of America (RGA): Dividend Increase Drives Stock
Enerplus Corporation (ERF), a Canadian-based oil and gas producer, announced a 16% increase in its quarterly dividend.
ERF shares surged 8.15% on the news of the dividend increase
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Stock Buybacks
Bristow Group Inc. (VTOL), a leading global provider of vertical flight solutions, announced a new $40.0 million stock repurchase program.
VTOL shares rallied 12.62% on the news of the buyback – as well as the release of Q4 results showing increased revenues and earnings beating analyst consensus.
VTOL Flies High
Where Are They Now?
Back on December 30, 2020, the LevelFields platform reported that Celsius Holdings (CELH), a provider of healthy energy drinks, was being added to the S&P Small Cap Index. The Company rose 13% on the news that day, and has been on an absolute tear since then, gaining over 140%.
Celsius is a favorite here at LevelFields and we own a number of shares. The Boca Raton, FL based company has been growing revenues and income by triple digits. In its last report, it reported revenue growth of 217%. While the stock is very volatile, it surged 11% last week on news that Pepsi took a 8.5% stake in the company. The deal is significant in that the $7B market cap Celsius can now enjoy the global distribution of Pepsi. If Celsius follows the footsteps of Monster Beverage Corp (MNST), it could be poised for 700% returns from here over the long term.
Looking Ahead
Highlights from the LevelFields Calendars section and beyond.
Friday, Aug. 12
Quhuo Limited (QH)
IPOs:
Monday, Aug. 8
Magic Empire Global, Ltd. (MEGL),
Thursday, Aug. 11
Forza F1, Inc. (FRZA)
Notable Earnings Releases:
Monday, Aug 8
Tyson Foods Inc. (TSN), Barrick Gold Corp. (GOLD), Viatris, Inc. (VTRS), Dominion Energy, Inc. (D), HF Sinclair, Corp. (DINO),
Tuesday, Aug 9
Norwegian Cruise Line, Inc. (NCLH), Ralph Lauren Corp. (RL), Spirit Airlines, Inc. (SAVE), Hilton Grand Vacations, Inc. (HGV), Emerson Electric Co. (EMR)
Weds, Aug. 10
Honda Motor Corp. (HMC), Bright Health Group (BHG), Brf.-Brasil Foods S.A. (BRFS),
Thursday, Aug. 11
Six Flags, Inc. (SIX), AerCap Holdings, N.V. (AER), US Foods Holding Corp. (USFD), Kelly Services, Inc. (KELYA), Cardinal Health, Inc. (CAH)
Friday, Aug. 12
China Automotive Systems, Inc. (CAAS), Spectrum Brands Holdings, Inc. (SPB), Broadridge Financial Solutions, Inc. (BR),
The LevelFields Team