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During the late summer, when tropical waters are warmest, thunderstorms cluster to suck up the warm, moist air and move it high into the earth’s atmosphere. As a result, tropical circular winds spin around the eye, which is a low-pressure center 20 to 30 miles in radius characterized by eerie calm.When the tropical storm’s winds reach 74 miles per hour, these self-sustaining heat engines are called typhoons in the Pacific, cyclones in the Indian Ocean, and hurricanes in the Atlantic.
With June 1 marking the beginning of the hurricane season, these tropical storms are set to ravage the eastern seaboard. In addition to gusty winds that can wreak havoc, storm surges caused by water being pushed to the shoreline by those winds can rise 20 feet above sea level and extend for 100 miles to cause widespread loss of life and property.Moreover, with the ever-intensifying threat of global warming that’s causing sea levels to rise and the imminent spikes in global temperatures and extreme weather conditions due to the arrival of El Niño, it would be unsurprising to find hurricanes increasing in severity and climbing up the Saffir-Simpson Scale.
While hurricanes, like all natural phenomena, serve a higher purpose by circulating heat from the earth to the poles to regulate global temperatures, they have far-reaching negative implications for the broader economy and the investment world. However, there are businesses out there that thrive amid adversity by helping their customers tide over it.
Repair and restoration of homes in the aftermath of hurricanes could lead to a resurgence in the prospects of home improvement and heavy machinery businesses by deeming most of their offerings non-discretionary and indispensable.
Here are three stocks that could be propelled by hurricanes at their sails.
The Home Depot, Inc. (HD)
The home improvement retailer serves two primary customer groups: do-it-yourself (DIY) Customers and Professional Customers (Pros). Its offerings include building materials, home improvement products, lawn and garden products, repair and operations products, and associated services.Due to weak demand for big-ticket items and falling lumber prices, as consumers have delayed large projects amid rising mortgage rates and increased expenditure on services, HD missed its revenue expectations during the fiscal first quarter.
However, with the onset of the hurricane season and the tailwind of the switch from gas-powered to battery-powered outdoor tools, fueled by California’s ban on the sale of gas-powered equipment starting in 2024, and the passing of noise ordinances by an increasing number of cities and homeowners’ associations, HD has reaffirmed its fiscal 2023 guidance and established its market stability outlook.
Lowe’s Companies, Inc (LOW))
With new home purchases softening amid rising mortgage rates, home improvement projects will keep homeowners of an aging U.S. housing stock busier than usual this summer. Hence, the home improvement retailer is best positioned to make a tailwind out of this turbulence, with more than two-thirds of sales contributed by non-discretionary purchases, such as new appliances to replace broken ones.
As a result, LOW has surpassed its revenue and expectations for the first quarter of the fiscal year. Moreover, as with its peer mentioned above, the ongoing upgrade cycle driving sales of battery-powered outdoor tools has the potential to keep the momentum going.
Caterpillar Inc. (CAT)
The heavy-machinery manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives operates through its three primary segments: Construction Industries, Resource Industries, and Energy & Transportation.
While a boost in U.S. infrastructure spending kept order books full and helped CAT beat Street expectations with a 31% rise in first-quarter profit, increased restoration, relief, and rescue activity during the hurricane season could lead to a surge in demand for its construction industries segment which is engaged in supporting customers using machinery in infrastructure, forestry, and building construction.

With the pandemic in the rearview mirror, Independence Day has taken on an entirely new significance for most Americans this time. Americans appear to have gone above and beyond to compensate for the years spent indoors by making the most of the (unofficially) long weekend with short trips, camping, cookouts, pool parties, and eating out.
The increased demand for, and consequently expenditure on, services and experiences is also evident in the recent employment data, with leisure and hospitality adding 208,000 positions out of the expectation-beating private sector employment increase of 278,000 for May. The sector was also a notable contributor to the increase of 339,000 in non-farm payrolls for the month.
In view of the above, leisure stocks could be the beneficiaries of the increased levels of outdoor activities around the nation’s Independence Day. In this context, the following stocks that could witness significant upsides in the near term could be worth watching.
The Walt Disney Company (DIS)
While the global entertainment giant has recently been in the news for its ongoing feud with Gov. Ron DeSantis, outside the political and legal arena, DIS is going through a significant transition under the leadership of its returned CEO, Robert A. Iger.In addition to the Disney Entertainment and the ESPN divisions, the rest of DIS’ businesses will be organized under the existing parks, experiences, and products division.
As a result, DIS reported significant growth at its theme parks during the fiscal second quarter, which saw a 17% increase in revenue to $7.7 billion, with around $5.5 billion contributed by theme-park locations. Moreover, its cruise business also saw an increase in passenger cruise days as guests spent more time and money visiting its parks, hotels, and cruises domestically and internationally during the quarter.
Domino’s Pizza, Inc. (DPZ)
The global pizza chain operates two distinct delivery and carryout service models within its stores. The company operates through three segments: U.S. stores; international franchises; and supply chain. In addition to company-owned and franchised stores across the United States, its network of franchised stores is spread in 90 international markets.
Given the increased outdoor activity, while delivery sales will stabilize, carryout sales are expected to grow in the next twelve months. In view of the widespread reversal of consumer behavior to pre-pandemic patterns, on June 20, DPZ launched its Pinpoint Delivery service nationwide that allows customers to receive a delivery almost anywhere, ranging from parks and baseball fields to beaches, without a standard address.
American Airlines Group Inc. (AAL)
Being one of the major air carriers, AAL is reaping the bounty of the surge in leisure travel during the first summer in three years in which the pandemic is not making headlines.
With enough pent-up demand from consumers ever keener to redeem their pile of airline miles and other travel rewards on their credit cards through revenge travel, it’s unsurprising that AAL has turned to bigger airplanes, even on shorter routes, to help ease airport congestion and find its way around pilot shortages.
As a result of this tailwind, AAL’s revenue surpassed the airline’s cost to help it report a $10 million profit during the first quarter of the fiscal year. Moreover, with fuel prices yet to rise significantly due to a stuttering recovery of the Chinese economy and Memorial Day travel topping 2019 levels, the operator has raised its adjusted earnings outlook for the second quarter.
Nathan’s Famous, Inc.
NATH operates in the food service industry as an owner of franchise restaurants under Nathan’s Famous brand name. The company also sells products bearing Nathan’s Famous trademarks through various distribution channels.
Driven by post-pandemic momentum, for the fiscal year that ended March 26, 2023, NATH’s revenues increased 13.8% year-over-year to $130.79 million. During the same period, the company’s income from operations increased by 15.3% year-over-year to $34.45 million, while its adjusted EBITDA grew 16.8% year-over-year to come in at $36.38 million. As a result, net income for the fiscal came in at $19.62 million, up 44.3% year-over-year.

The struggles of Mullen Automotive, Inc. (MULN) to keep itself well-capitalized in a turbulent macroeconomic environment have been well-documented. As the company resorted to the issue of additional equity shares for infusion of fresh capital amid rising interest rates, its weighted average shares outstanding jumped from 17.47 million as of December 31, 2021, to 1.36 billion as of December 31, 2022.
As the fresh capital was being used to retire old debt that was getting more expensive to service, the consequent dilution of stake opened up a different can of worms for MULN. The electric vehicle (EV) manufacturer and distributor, yet to report revenue, witnessed a precipitous decline in its share price. The stock has plummeted 99.6% over the past year to its current range of just above 10 cents.
The stock performance makes for a grimmer read because this is after the announcement of a 1-for-25 reverse stock split that became effective on May 4, 2023, after a 180-day extension to the March 6 deadline from Nasdaq, to meet the $1 minimum bid price requirement for continued listing.
However, even the reverse stock split wasn’t enough to spare MULN’s blushes. With the company failing to meet the $1 minimum price on or 30 days preceding Russell 2000’s “rank day” on April 28, the index’s annual reconstitution became effective on June 23, leaving the embattled EV maker to fall by the wayside.
Faced with significant downward pressure due to outflows because the funds tracking the index must sell out of their stake in the company, and having until September 5 to regain compliance and remain listed on the exchange, the stock is apparently living on borrowed time caught between a rock and a hard place.
While MULN would need to proceed with another reverse stock split in its bid to regain compliance and tide over the current crisis, a look at its recent financial performance could give investors a clearer idea if a more enduring reversal of the fortunes of MULN is likely and whether it’s worth the wait.For the fiscal 2023 second quarter ending March 31, MULN’s losses from operations more than doubled to $67.89 million.
Although the company’s cash, cash equivalents, and restricted cash for six months ended March 31, 2023, came in at $86.75 million, which is greater than its current market cap of $30.52 million, and its total assets and liabilities have increased and decreased, respectively, over the same period, dilution of capital structure seems to be the nagging and fundamental issue behind the stock’s decline.
MULN’s weighted average shares outstanding for three and six months ended March 31, 2023, came in at 82.41 million and 68.26 million, respectively, compared to 2.06 million and 1.39 million for the prior-year period.
Hence, despite MULN announcing a moratorium on new financings for the rest of the year followed by the exercise of the final investment option of $100 million by Series D holders, thereby assuring investors of the adequacy of operating capital for almost two years, resale of up to 2.33 billion shares to make that happen neutralizes the progress made.
Therefore, in a nutshell, it appears that in a bid to keep itself afloat and well-financed, the struggling EV maker is simply substituting debt with equity and ending up in the vicious circle of share devaluation and reverse stock splits as a result of this Faustian bargain.
Bottom line
In view of the above, investors who have stayed married to their positions in MULN through this turbulence could find two rules and a simple sentence on investing by the Oracle of Omaha, whose favorite holding period is forever, beneficial:
“Rule #1: Never lose money.
Rule #2: Never forget rule No. 1.
‘You don’t have to make it back the way you lost it.’

According to a recent note from Fairlead Strategies, technology and consumer electronics giant Apple Inc. (AAPL) could witness a major upside in its stock. According to the agency, the stock has confirmed its breakout above the record high of $183. Consequently, its shares could jump to $254 by the end of 2024.
Given that this is one of those relatively-rare occasions in the world of investment research in which a forecast has been accompanied by a time horizon, in this piece, we evaluate the likelihood of this upside which could elevate iPhone maker’s market capitalization from its current levels of $2.96 trillion to $4 trillion.
AAPL has a lot going for it at this point in time. Its fiscal second-quarter earnings exceeded Street expectations, driven by stronger-than-expected iPhone sales.
The company, which has a history of revolutionizing products like the personal computer, smartphone, and tablet, has begun scripting the next key chapter in its success story with the announcement of its first product in the AR/VR market, the Apple Vision headset, which will sell for $3,499 when it is released early next year.
In addition, AAPL also announced its partnership with the game-development software maker Unity and unveiled a slew of other new products. Its year-ahead product roadmap includes the new Apple Watch Ultra along with the traditional fall launch lined up for the iPhone 15.The company is also reportedly beginning work on two new and bifurcated product lines, one second-generation high-end model that will be the continuation of the original Vision Pro and the other a lower-end version. It is also expected to ship new M3-powered laptops, and new OLED-screen iPads will ship by next year.
The Catch
With a strong product portfolio and a healthy pipeline, there seems to be little, if any, that can hinder AAPL’s progress from strength to strength. However, the company isn’t immune to macroeconomic headwinds.
AAPL reported $24.16 billion in net income during the quarter compared to $25.01 billion in the previous-year period. Moreover, sales have declined for two straight quarters, with total revenue down 3% from $97.28 billion in the prior quarter.
With macroeconomic challenges in digital advertising and mobile gaming, part of AAPL’s services business, finance chief Luca Maestri said the company expects overall revenue in the current quarter to decline about 3%.
Hence, brand equity apart, AAPL is quite an expensive stock to own based on fundamental financial performance.Pros Outweigh Cons
Regardless of the near-term and temporary softness and slowdown, traditional valuation metrics seem inadequate to gauge the quality of a compounding machine such as AAPL, which boasts a sticky user base with a retention rate of over 90% that assures the company adequate cash flow through repeat purchases and upgrades.
Moreover, AAPL’s board authorized $90 billion in share repurchases and dividends. It spent $23 billion in buybacks and dividends in the March quarter and raised its dividend by 4% to 24 cents per share.
Through relentless share repurchases, the company increased the existing shareholders’ stake by decreasing its float.
By decreasing the number of outstanding shares, AAPL has been increasing the remaining shares’ intrinsic value (and consequently the price) without a proportional rise in market capitalization. AAPL’s current market cap is $2.96 trillion, with 15.79 billion shares outstanding, compared to a market cap of $2.97 trillion, with 16.33 billion shares outstanding as of January 3, 2022.
Bottomline
Given the above, if the Federal Reserve and other major central banks manage to engineer the much coveted ‘soft landing’ and all else remains (at least) equal, there is a significant likelihood that AAPL can achieve a record share price by the end of 2024.

On June 15, news broke that Singapore Airlines Limited (SINGY) had expressed interest in increasing its 25.1% stake in the Tata Group-operated Air India, secured as part of its merger with Vistara that was announced in November 2022 and due to be completed by March 2024. The report claimed that SINGY could gradually increase its stake to 40% to have more skin in the game.
However, the report was soon followed by a denial by SINGY, with its spokesperson confirming that there is no change in SIA’s position from the November 2022 announcement.
However, Goh Choon Phong, the CEO of SINGY, reaffirmed his support by stating, “With this merger, we have an opportunity to deepen our relationship with Tata and participate directly in an exciting new growth phase in India’s aviation market.”
The salt-to-steel conglomerate Tata Group operates three airlines in India: Air India (with Air India Express as its low-cost subsidiary), Air Asia India, and Vistara (a 51:49 joint venture between Tata Sons and SINGY).
The merger of Vistara and Air India into a single entity (Air India), with SIA investing INR 20.59 billion, is under review by the Competition Commission of India (CCI).
With SIA’s expertise in operating a successful airline, particularly when dealing with powerful players such as IndiGo as well as international competition like Emirates and Qatar Airways, it is understandable why Air India might have reportedly been keen on a potential stake increase.Pinch of Salt
“If something cannot go on forever, it will stop.” The obviousness of this observation made by Herb Stein was what made it famous.In our June 13 article, we discussed how, despite air carriers turning to bigger airplanes, even on shorter routes and jumbo-jets, such as the Boeing 747 and the Airbus A380, being brought back to help ease airport congestion and work around pilot shortages, Delta Air Lines, Inc. (DAL) wishful extrapolation of the narrative of “revenge travel” could rapidly unravel.
While there remain valid reasons to doubt whether business travel is ever going back to normal and that the pent-up demand might not be enough to sustain the momentum, the battle for Indian skies comes with its own set of challenges.
When the facts, such as 90% of wage earners in India earn INR 25000 or below, the seemingly unending exodus of millionaires from India, and Indigo ordered 500 Airbus aircraft soon after Air India’s combined order of 470 aircraft from both Boeing and Airbus, are taken into consideration, it only takes willful suspension of disbelief to equate low penetration with growth potential.
Hence the possibility that civil aviation in India could be a bubble waiting to burst or at least a profitability sink for air carriers can only be ignored by investors, including SINGY, at their own peril.
Safer Alternative
With The Boeing Company (BA)still on the back foot and playing catch up to its European rival, Airbus SE (EADSY), the latter, with ROCE and ROTC better than the industry average, could be a common denominator that could give investors (relatively) safe exposure to the heated battle for a greater share of the pie of the Indian sky.

In our posts on May 25 and June 14, when we discussed how inflationary pressures and online retail is altering brick-and-mortar stores in today’s economy and resulting in widespread store closures, we found budget retailers, such as Walmart Inc. (WMT)to be relatively immune to the seismic shifts in the consumption ecosystem.
However, on May 18, it was disclosed that the big box retailer would be closing 21 stores in 12 states and DC this year , with four stores in Chicago being the latest to join the list owing to poor financial performance being cited by the company.
These closures would extend the trend of WMT closing a handful of stores across various states each year, with the company saying that the stores are “underperforming” without specifics.
Such developments could understandably dampen investor sentiments and confidence and even trigger panic regarding the retailer’s financial health. However, counterintuitively, in its earnings release for the first quarter of the fiscal year 2024, the big-box retailer surpassed expectations for both earnings and revenue, with sales rising by nearly 8%.
Encouraged by the strong performance, WMT also raised its full-year guidance. It anticipates consolidated net sales to rise about 3.5% in the fiscal year. It expects adjusted earnings per share for the full year will be between $6.10 and $6.20.However, it does not mean that the retailing giant has been completely immune to the bite of inflation. In fact, like a double-edged sword, it has cut both ways.
As we have discussed in a previous article, on the one hand, WMT has attracted new and more frequent shoppers, including younger and wealthier customers, who are turning to Walmart for both convenience and value.
However, on the other hand, as inflation factors into Americans’ spending decisions, the shift back to services is taking a bite out of sales of goods, particularly after a pandemic-fueled spending boom.
Moreover, spending trends weakened as the quarter continued, with the sharpest drop after February. Chief Financial Officer John David Rainey attributed that, in part, to the end of pandemic-related emergency funding from the Supplemental Nutrition Assistance Program and a decline in tax refund amounts.
Consequently, consumers have been buying fewer discretionary items, such as electronics and home appliances, and trading for lower-priced items. WMT’s sales have also reflected the shift toward groceries and essentials, with the former accounting for nearly 60% of the annual U.S. sales for the nation’s largest grocer.
In fact, WMT’s grocery business helped to offset weaker sales of clothing and electronics, as sales of general merchandise in the U.S. declined mid-single-digits, while sales of food and consumables increased low double-digits.
Another bright spot for the retail giant has been growth in online sales, which jumped 27% and 19% year-over-year for Walmart U.S. and Sam’s Club, respectively. According to Rainey, curbside pickup and home delivery of online purchases fueled the growth.However, the increase in volumes online and overall came at the cost of a year-over-year decline in the company’s first-quarter gross margin rate since food has slimmer margins than other merchandise.
In order to protect and preferably increase its margins, WMT has been doubling down on initiatives to increase the efficiency of its operations.As digital transactions now constitute about 13% and growing of its total annual sales in the U.S., WMT is cutting costs by reducing packaging.On June 1, in its push for greater sustainability and lesser waste generation, the company introduced new packaging by using paper mailers and technology that makes custom-fit cardboard boxes.
WMT will add made-to-fit technology in about half of its fulfillment centers and for customers at all of its stores by the end of the year. Moreover, the nation’s largest retailer will also allow customers to skip plastic bags when retrieving curbside pickup orders.
While, at scale, the company’s switch to paper mailers is expected to eliminate more than 2,000 tons of plastic from circulation in the U.S. by the end of January, the sustainability push can come with cost benefits.
For example, with made-to-fit packaging, each box requires less material and plastic air pillows that cushion an item— making truckloads more efficient. The box changes also reduce labor for workers who previously made and taped the containers by hand. As a result, the company can realize significant savings in energy and workforce costs.
In its push for greater efficiency, WMT has also been leveraging Artificial Intelligence (AI) and Machine Learning (ML) by deploying them to improve both the customer and employee experience by figuring out what the customer wants and how best to get it.
For instance, one autonomous floor scrubber travels around in each store, keeping floors clean and free of debris while capturing, in real-time, images of more than 20 million photos of everything on the shelves daily with inventory intelligence towers.
WMT has trained its algorithms to discern the different brands and their inventory positions, taking into account how much light there is or how deep the shelf is, with more than 95% accuracy. Therefore, when a product gets to a pre-determined level, the stock room is automatically alerted so that the item is always available.
According to Anshu Bhardwaj, senior vice president of tech strategy and commercialization at WMT, employee productivity has increased by 15% since deploying this AI last year.
Moreover, for years, WMT has also been leveraging the vast amount of data generated by its ever-increasing online traffic to optimize its shopping app with the help of AI.
Given the optimization levels the retail giant is achieving in its internal processes through the proactive deployment of technology, it’s unsurprising that it is laying off hundreds of employees at e-commerce facilities nationwide.
WMT has confirmed eliminating hundreds of jobs at five fulfillment centers in Pedricktown, New Jersey; Fort Worth, Texas; Chino, California; Davenport, Florida; and Bethlehem, Pennsylvania.
Bottomline
In order to immunize itself from the risk of getting disrupted, the country’s largest retailer has embraced what Joseph Schumpeter has aptly described as creative destruction.
While it could mean continual realignment for its workforce, WMT shows promise as an investable and future-ready business.

With the pandemic well and truly in the rearview mirror, for most Americans, the onset of summer can only mean one thing: increased consumption. However, e-commerce, albeit with a few hiccups in the supply chain, was able to satiate the appetite for goods through the pandemic.Hence, Americans are now going above and beyond to compensate for the years spent indoors trying to substitute real experiences with virtual ones. Think camping, cookouts, pool parties, and weekend trips.
Consumers are ever keener to redeem their airline miles on other travel rewards on their credit cards for new experiences through revenge travel.Consequently, airlines, such as American Airlines Group Inc. (AAL) , have turned to bigger airplanes, even on shorter routes, to help ease airport congestion and find their way around pilot shortages, while Ed Bastion, CEO of Delta Air Lines, Inc. (DAL) revealed, “We’ve had the 20 largest cash sales days in our history all occur this year.”
Moreover, as the consumer price index only grew by 4% year-over-year, which is the slowest in 2 years, a pause in interest-rate hikes by the Federal Reserve could add further momentum to the jump of 0.8% in spending in April.
The increased demand for, and consequently expenditure on, services and experiences are also evident in the recent employment data, with leisure and hospitality adding 208,000 positions out of the expectation-beating private sector employment increase of 278,000 for the month of May. The sector was also a notable contributor to the increase of 339,000 in non-farm payrolls for the month.
Given the above, leisure stocks could be smart investments to capitalize on the increased levels of outdoor activity. Here are a few stocks in the realm of traveling or recreational activities that stand to gain during the summer.
The Walt Disney Company (DIS)
While the global entertainment giant has recently been in the news for its ongoing feud with Gov. Ron DeSantis, outside the political and legal arena, DIS is going through a significant transition under the leadership of its returned CEO, Robert A. Iger.In addition to the Disney Entertainment and the ESPN divisions, the rest of DIS’ businesses will be organized under the existing parks, experiences, and products division.
As a result, DIS reported significant growth at its theme parks during the fiscal second quarter, which saw a 17% increase in revenue to $7.7 billion, with around $5.5 billion contributed by theme-park locations. Moreover, its cruise business also saw an increase in passenger cruise days as guests spent more time and money visiting its parks, hotels, and cruises domestically and internationally during the quarter.
Marriott International (MAR)
Under various brand names, such as JW Marriott, The Ritz-Carlton, and St. Regis, MAR operates, franchises, and licenses hotel, residential, timeshare, and other lodging properties through two geographical segments: U.S. & Canada and International.
Over the past three years, MAR’s revenue has grown at a 10.6% CAGR. During the same time horizon, the company’s EBITDA and net income have grown at 22.2% and 43.4% CAGRs, respectively.
On June 5, MAR announced its plans to further expand in the affordable midscale lodging segment, following its recent entry into the segment with City Express by Marriott in Latin America.
While the soon-to-be-launched brand has not yet been named, it is currently being referred to as Project MidX Studios. The affordable midscale extended stay brand is intended to deliver reasonably priced modern comfort for guests seeking longer stay accommodations in the U.S. & Canada.
Pool Corporation (POOL)
POOL is a wholesale distributor of swimming pool supplies, equipment, and related leisure products. The company also distributes irrigation and landscape products in the United States.
Over the past three years, POOL’s revenue has grown at a 22.1% CAGR. During the same time horizon, the company’s EBITDA and net income have grown at 37.5% and 37.2% CAGRs, respectively.
On May 4, POOL announced an increase in its share repurchase program to a total authorization of $600 million, along with a 10% increase in the quarterly cash dividend to $1.10 per share.
Acushnet Holdings Corp. (GOLF)
The Fairhaven, Massachusetts-headquartered company designs, develops, manufactures, and distributes golf products. It operates through four segments: Titleist golf balls; Titleist golf clubs; Titleist golf gear; and FootJoy golf wear.
Over the past three years, GOLF’s revenue increased at a 12.4% CAGR, while its EBITDA grew at 18% CAGR. During the same time horizon, the company’s net income has also grown at a 30.6% CAGR.
On February 7, GOLF announced the acquisition of the Club Glove brand, including trademarks, domains, and products, from West Coast Trends, Inc. Founded in 1990, Club Glove is the preferred choice by the overwhelming majority of PGA Tour, LPGA Tour, and PGA Club Professionals, and its patented travel gear has long been recognized among the industry’s most innovative and reliable products.
During the fiscal first quarter that ended March 31, 2023, GOLF’s net sales increased by 13.2% year-over-year to $686.3 million. During the same period, the company’s adjusted EBITDA increased by 22.3% year-over-year to $146.8 million, while the net income attributable to it grew by 15.2% year-over-year to come in at $93.3 million.
Johnson Outdoors Inc. (JOUT)
For Americans who find the great outdoors and road trips more akin to their idea of freedom and the spirit of adventure, JOUT manufactures and markets branded seasonal outdoor recreation products used primarily for fishing, diving, paddling, and camping. The company’s segments include Fishing; Camping; Watercraft Recreation; and Diving.
Over the past three years, JOUT’s revenue increased by 11% CAGR, while its total assets have increased by 11.6% CAGR during the same time horizon.
Due to an improved supply chain situation and increased travel, during the second quarter of the fiscal that ended March 31, JOUT’s net sales increased by 7% year-over-year to $202.1 million. During the same period, the company’s net income came in at $14.9 million, compared to $9.9 million during the previous-year quarter.

The redrawing of the global energy map and shifting geopolitical inclinations in the Middle East since the beginning of the conflict in Ukraine has been nothing short of a windfall for U.S. energy producers. The U.S. has “gone from (being) a very domestically focused market into an international powerhouse.”
The demand-supply imbalance is not as acute as a year back due to macroeconomic headwinds and the initial pent-up demand from China losing momentum amid its faltering economic recovery.
However, on June 4, while OPEC+, which pumps approximately 40% of the world’s crude, made no changes to its planned oil production cuts for this year, Saudi Arabia announced that it would implement an additional voluntary and (extendable) one-month 1 million-barrel-per-day cut starting this July.With this decision, the kingdom has reined in its production to 9 million barrels from 10 million barrels, putting upward pressure on crude prices that have been delicately balanced between demand and supply.
Moreover, the Federal Reserve has adopted a hawkish pause to hold rates steady until the economy absorbs the cumulative effect of the earlier ten interest-rate hikes. This could help businesses and consumers breathe a sigh of relief and translate to increased economic activity during the summer and, consequently, demand for energy.
However, the resulting increase in energy demand amid constrained supplies could play into the hands of and lead to short-term gains for U.S. energy producers. In this context, let’s look at a few well-positioned stocks to convert rising energy prices to increased shareholder returns.As an energy infrastructure company, Cheniere Energy, Inc. (LNG)is engaged in providing clean, secure liquefied natural gas (LNG) to integrated energy companies, utilities, and energy trading companies worldwide.
On May 16, LNG announced its entry into a long-term liquefied natural gas sale and purchase agreement with Korea Southern Power Co. Ltd (KOSPO). Pursuant to the agreement, KOSPO would purchase approximately 0.4 million tonnes per annum (mtpa) of LNG on a delivered ex-ship (DES) basis from 2027 through 2046, with a smaller annual quantity to be delivered starting in 2024.
On February 23, Cheniere Energy Partners, LP (CQP) announced that it initiated the permitting process for significant expansion of the LNG export facility at Sabine Pass, after which the total production capacity would increase to 20 mpta.
As a global energy services company, Weatherford International plc (WFRD) provides equipment and services used in the drilling, evaluation, well construction, completion, production, intervention, and responsible abandonment of wells in the oil and natural gas exploration and production industry as well as new energy platforms.
WFRD operates through three segments: Drilling and Evaluation (DRE), Well Construction and Completions (WCC), and Production and Intervention (PRI).On June 8, WFRD announced that it was awarded a three-year contract with Aramco to deliver drilling services. Under the contract, WFRD will deploy its drilling services portfolio to add value to Aramco’s drilling operations by minimizing OPEX, reducing risks, and optimizing production.
Nustar Energy L.P. (NS) is primarily engaged in transporting petroleum products, renewable fuels, and anhydrous ammonia, terminalling and storing petroleum products and renewable fuels, and marketing of petroleum products. Accordingly, the company operates through three segments: pipeline; storage; and fuels marketing.
As a testament to its future readiness, on May 3, NS announced its agreement with OCI Global to transport ammonia, which the latter would use to make fertilizer and produce DEF (Diesel Exhaust Fluid), which reduces emissions from diesel engines in cars, as well as light and heavy-duty trucks, farming equipment and other heavy machinery.
Moreover, with ammonia emerging as a likely candidate to capture, store, and ship hydrogen for use in emission-free fuel cells and turbines, NS’ expertise in the transportation of ammonia is expected to be a significant growth driver in the future.
Beyond The Horizons
In its latest Oil 2023 medium-term market report, the International Energy Agency (IEA) has forecasted that, under current market and policy conditions, crude oil demand will rise by 6% from 2022 to reach 105.7 million barrels per day in 2028 on the back of the petrochemical and aviation sectors.However, the agency also found that global oil demand growth will trickle nearly to a halt thereafter with the advancement of electric vehicles, energy efficiency, and other technologies.
However, until the modern economy and society can develop renewable energy technologies enough to rely on them exclusively, natural gas transported in bulk and consumed in liquified and compressed forms, respectively, will keep playing a crucial role as a bridge fuel to manage decarbonization goals and facilitate a seamless energy transition.

Delta Air Lines, Inc. (DAL) reported a wider-than-expected loss for the first quarter 2023. However, the carrier’s CEO, Ed Bastian, couldn’t sound more optimistic about its prospects. Two factors drove this dichotomy.
Firstly, the carrier cited its net loss of $363 million, or 57 cents per share, in what has seasonally been the weakest quarter of the year, partly due to a new, four-year pilot contract that includes 34% raises. Moreover, the bottom line is still an improvement over the net loss of $940 million, or $1.48 per share, during the year-ago period when travel demand was still recovering.
Secondly, and more importantly, with the pandemic firmly in the rear-view mirror, consumers are ever keener to redeem their pile of airline miles on other travel rewards on their credit cards for new experiences through revenge travel. Revenge travel has its origins in “baofuxing xiaofei” or “revenge spending,” an economic trend that originated in 1980s China when a growing middle class had an insatiable appetite for foreign luxury goods.
Since e-commerce, albeit with a few hiccups in the supply chain, was able to satiate the appetite for goods through the pandemic, Americans are now going above and beyond to compensate for the years spent indoors trying to substitute real experiences with virtual ones.
Even “pent-up demand” turned out to be an understatement when Ed Bastion and his team at DAL found the gap between inherent demand for U.S. travel that couldn’t be met over the past three years, based on “any kind” of historical pattern to come in at $300 billion. The pleasantly surprised CEO revealed, “We’ve had the 20 largest cash sales days in our history all occur this year.”
Even corporate bookings have been recovering, with domestic sales in March 85% back to 2019 levels. The carrier also got a boost in its loyalty program with the contribution from its co-branded credit card partnership with American Express (AXP) coming in at $1.7 billion in the previous quarter, up 38% year-over-year.
Because of this explosive demand, DAL has forecasted its top and bottom-line performance for the second quarter to exceed analysts’ estimates. Mr. Bastion expects his airline to clock an operating profit of $2 billion, at par with Q2 of 2019, with lower capacity and higher fuel prices, while being the only airline with all the labor contracts in place.
As a result, the Atlanta-based carrier expects sales in the current quarter to increase by 15% to 17% over last year, with adjusted operating margins of as much as 16% and adjusted earnings per share between $2 to $2.25.
The confident CEO has also brushed off the potential consumer pullback in spending while expressing the conviction that pent-up demand for travel will be a multi-year demand set.
According to him, revenue from premium cabins like the first class was outpacing the revenue from coaches, and while sales professionals have moved partially online, consulting and professional service have been the highest volume contributors. They are expected to remain so in the foreseeable future.
How the Market Reacted?
Quite positively, in a nutshell. DAL’s stock has gained 20.5% over the past two months compared to 4.7% for the S&P 500. It is trading above its 50-day and 200-day moving averages and close to its 52-week high.
Pinch of Salt
“If something cannot go on forever, it will stop.” The obviousness of this observation made by Herb Stein was what made it famous.At times such as these, when air carriers have turned to bigger airplanes, even on shorter routes, and jumbo-jets, such as the Boeing 747 and the Airbus A380, are being brought back to help ease airport congestion and work around pilot shortages, it is easy to get carried away by the “pent-up demand” and “revenge travel” narrative.
However, it might be wise to consider certain things before indulging in the willful suspension of disbelief and extrapolating beyond the foreseeable future, like we are all guilty of doing in case of working from home, Great Resignation, and “quiet quitting.”Since the rise of remote work and virtual teams, facilitated by contemporary collaboration and productivity tools, seems to have become an immune and immutable remnant of the cultural sea-change our work and lives had to adopt and adapt to during the pandemic, new reports give us reasons to doubt whether business travel is ever going back to normal.
In such a situation, with traveling for leisure being an occasional indulgence in most of our lives, there are risks that the pent-up demand might not be enough to sustain the momentum that is propelling the growth performance of DAL and other airlines, which are primarily in the business of ferrying passengers.
As far as the largest cash sales days are concerned, we can be certain that inflation would ensure that cash days in the future would still be larger.Moreover, with ticket prices at all-time highs and JP Morgan and a few others predicting that the stash of pandemic stimulus cash, fueling the leisure travel boom, could run out over the next quarter, it is unsurprising to find tricks and trends, such as ‘skiplagging’ and consumers trading down on travel being on the rise.
Bottom Line
While DAL and its peers would want nothing more than for passenger demand to stay strong and, perhaps, keep growing, the most likely case would be a return to seasonality and cyclicality, as is typical of the airline industry.However, the possibility of passenger demand falling off a cliff and investors rushing for the exits only to find that the clock struck midnight and the chariot turned back to a pumpkin can’t be completely ruled out.Either way, every flight that takes off has to land at some point. The only problem is that nobody knows exactly when.

Artificial Intelligence (AI) is an umbrella term that denotes a series of programs and algorithms designed to mimic human intelligence and perform cognitive tasks efficiently with little to no human intervention. Reinforcement through Machine Learning (ML) changes the game by enabling the models and algorithms to keep evolving based on outcomes.
Unlike other next-big things, such as nuclear fusion, quantum computing, and flying cars, which are practically (and literally) pies in the sky, AI has been around for quite some time, influencing how we shop, drive, date, entertain ourselves, manage our finances, take care of our health, and much more.However, the technology came into the limelight late last year with the release of ChatGPT, which in its own description, is “an AI-powered chatbot developed by OpenAI, based on the GPT (Generative Pretrained Transformer) language model. It uses deep learning techniques to generate human-like responses to text inputs in a conversational manner.”
The Euphoria
The easily accessible chatbot, believed to be capable of eventually disrupting how humans interact with computers and changing how information is retrieved, took the world by storm by signing up 1 million users in five days and amassing 100 million monthly active users only two months into its launch. To put this in context, TikTok, the erstwhile fastest-growing app, took nine months to reach 100 million users.
ChatGPT is one of the several use cases of generative AI, the subset of algorithms that creates and returns content, such as human-like text, images, and videos, on the basis of written instructions (prompts) provided by the user.
Including this subset, AI in its various forms and applications is capable of analyzing large volumes of data generated during the entire course of our increasingly digital existence and identifying trends and exceptions to help us develop better insights and make more effective decisions.Given its massive importance, it’s hardly surprising that Zion Market Research forecasts the global AI industry to grow to $422.37 billion by 2028. Hence, this field has understandably garnered massive attention from investors who are reluctant to miss the bus on such a watershed development in the history of humankind.
Although OpenAI, the creator of ChatGPT, is not a publicly listed company, Microsoft Corporation (MSFT) has bet big on the company with a multiyear, multibillion-dollar investment deal. CEO Satya Nadella discussed, at the World Economic Forum held in Davos this year, how the underlying technology would eventually be ubiquitous across MSFT’s products. The process has already begun with updates to its Bing search engine.
MSFT’s rival, Alphabet Inc. (GOOGL), is in hot pursuit. With AI-enabled technology ubiquitous across its platforms, the company has unveiled its response to ChatGPT, called BardAI, with which the company is eager to reclaim its reputation as an early bird in the domain of conversational AI.
Chinese tech giant Baidu, Inc. (BIDU) has also followed suit with Ernie Bot. Amazon.com, Inc. (AMZN) and Meta Platforms, Inc. (META) are also among the notable players in this dynamic domain.
However, more recently, the company which made headlines when its stock got its moonshot due to the widespread public interest in AI is NVIDIA Corporation (NVDA). Post its earnings release on May 24, the Santa Clara-based graphics chip maker has stolen the thunder by becoming the first semiconductor company to hit, albeit briefly, a valuation of $1 trillion.
NVDA’s A100 chips, which are powering LLMs like ChatGPT, have become indispensable for Silicon Valley tech giants. To put things into context, the supercomputer behind OpenAI’s ChatGPT needed 10,000 of Nvidia’s famous chips. With each chip costing $10,000, a single algorithm that’s fast becoming ubiquitous is powered by semiconductors worth $100 million.
The Catch
Notwithstanding all the transformative qualities of AI, investors, who poured a record $8.5 billion of cash into tech funds last week, would be wise to be aware of the limitations and loopholes of investing in technology before FOMO drives them to inflate a “baby bubble” growing in plain sight.
While the technology is powerful (and useful, unlike most cryptocurrencies), the adoption is fast becoming so widespread that it remains unclear how it could help a specific business differentiate itself by developing enduring competitive advantages (read moats) and generating consistent profitability.Moreover, LLM-based generative AI chatbots such as ChatGPT and BardAI are simply auto-complete on steroids that have been trained on a vast amount of data. While they are really good (and continually getting better) at predicting what the next word is going to be and extrapolating it to generate extensive literature, it lacks contextual understanding.
Consequently, the algorithms struggle with nuances such as sarcasm, irony, satire, analogies, etc. This also leads to the propensity to “hallucinate” and generate responses even if those are factually and logically incorrect.
Additionally, with the widespread adoption of LLMs and other forms of generative AI, a massive amount of content will be ingested and regurgitated as canned responses echoed in infinite permutations and combinations. This oversupply could dilute the value and increase demand for qualitatively superior insight and discernment, which (still) requires human intervention.
(Relatively) Safe Havens
Just as we have learned during the dot-com, cryptocurrency, real estate, and numerous other bubbles through the ages, markets can stay irrational longer than investors can stay solvent.
Therefore, even if the next big thing comes along and changes the world (and electricity, automobiles, personal computers, and the Internet really did), it’s the fundamentals that determine whether a business can survive to capitalize on those windfalls.
Hence, it could be wise and safe for investors to stick to big tech mega caps (mentioned earlier in the article), which are involved in providing the infrastructure and computing horsepower required to make the data and power-hungry AI algorithms work.
Moreover, since AI is well-embedded into their business operations and market offerings and AI as a service is (still) a small portion of their revenue, concentration risks can be more easily managed.
Bottom Line
Rather than getting too carried away and stretching a worthwhile and useful innovation to frothy excesses with unrealistic expectations, it could be useful to remember that legendary investor and polymath Charlie Munger doesn’t think that AI is the silver bullet that can solve mankind’s pressing problems all by itself.
Even AAPL co-founder Steve Wozniak, who knows more than a thing or two about technology, agrees with the ‘A’ and not the ‘I’ of Artificial Intelligence.We hope this discourse will help investors cultivate discernment, discretion, and, if necessary, dissent while investing in this revolutionary technology since those are the ultimate indicators of intelligence.