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 Gainers📈 & Losers📉

Our Biggest Gainers & Losers of the Day in the $100,000 Build Portfolio

For the 15th November 2024:

• Stop Flexin’ Bro🤔

• Big Numbers, No Love💔

Stop Flexin’ Bro🤔

A 9.4% gain….. but I’m still not impressed.

Samsung announced a $7.2 billion stock buyback, their first since 2017. I usually love when companies do stock buy backs. Why? Because of this formula.

Stock buybacks = less shares in the market = higher value of existing shares.

Good old supply & demand at work.

When should we expect this to start happening?

Well, they’ve said the plan is to spend 10 trillion won over the next year. 3 trillion won ($2.2B) is earmarked to be used ASAP.

What’s made them think this is a good idea now? Well, first let’s see what’s going on with Samsung.

What’s been happening with Samsung? 🤔 

Take a look at this chart. It doesn’t look great. If the trend is your friend then this one looks like an enemy.

Stock price is at a 4 year low so what’s going on?

In short - AI Chips. Samsung’s been left in the dust by SK Hynix & TSMC, who’ve had a much better time taking advantage of the AI hype.

If you believe in your company then buying back your stock at 4 year lows makes sense. You don’t know when you’ll get an opportunity like that again. But is this the best use of capital when you’re behind the competition? I don’t know. It doesn’t feel like it.

I feel like Samsung are posturing with buybacks, trying to get some positive sentiment going their way. Like they’ve slapped duct tape on a leaky bucket.

And it’s worked! I mean, look at the stock price today. 📈 

But What Now?!

Short term? This news will probably keep some wind in their sails & I’d expect a few more green days out out of it.

Long term? I think it really depends on whether they fix their growth strategy. They’re the worst performing stock in global chip makers & need to take a long hard look in the mirror. Or ideally at the competitions test papers. 👀 

Right now, they’re my second worst performing stock in the portfolio & make up about 0.6% of the total account. I’ll hold my current positions to avoid using the “Buy High, Sell Low” strategy but unlikely to add to it anymore unless we get a proper growth trigger.

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Big Numbers, No Love💔 

My biggest stinker today did a similar number to to Samsung… just red.

Applied Materials (AMAT) hit us with a classic “good news, bad news” earnings. An investors compliment sandwich.

They gave us all they had in the foreplay with Q4…. then gave us a limp forecast for Q1. That’s what the market thought, anyway.

I actually don’t think it was too bad. Definitely not bad enough to deserve a near double figure drop imo. But here’s the numbers. See what you think.

Q4: The Good Stuff 📈

1/ Earnings: $2.32 per share vs. $2.19 expected. That’s a clean beat.

2/ Revenue: $7.05B vs. $6.96B forecasted. That’s also a beat.

Investor’s had their confetti in their hands ready & then AMAT kept going with their forecasts….

Q1: The Buzzkill 📉 

1/ Earnings Outlook: $2.11–$2.47 per share (midpoint = $2.29). Barely beat the $2.28 expectation. Still a beat though. What more do you want?!

2/ Revenue Outlook: $6.75B–$7.55B (midpoint = $7.15B). Below the $7.24B analysts wanted.

In plain English, earnings should be about right but they’re going to generate less revenue to do it. For that to really be a super negative thing, we’d have to get into where that missing revenue is going.

Why It Matters💡

When you’re investing, it’s about where your going, not where you’ve been. (I promise I didn’t get that from some cringe motivational Instagram page.)

If you take that attitude, you’ll end up buying less hype trains with no legs.

I don’t think the forecast was bad. If anything, I think it’s OK. The problem is (or good thing if you’re buying) that an AI or semiconductor stocks right now have expectations of perfection.

Anything less has everyone screaming “It’s a Bubble!” & dumping the stock.

This is not doom & gloom for AMAT. They make the stuff that powers the chip industry & have huge customers like Intel & TSMC. They’re plugged into the AI & energy-efficient computing trends which is only going to grow, too.

Short term dips ≠ long-term doom with this one. It’s a moody Wall Street reaction.

I’ll be listening to Warren Buffett & “Be Greedy when others are fearful” with this one.

That’s all! See you same time tomorrow 👋 

P.S Hit reply & let me know what you thought of today’s newsletter. All feedback is welcomed ❤️