📊 32 Stocks & Profit Margins

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Happy Sunday!

A warm welcome to the 350+ new subscribers who joined us this week—glad to have you on board!

Although this week was shorter due to Labor Day, market volatility didn’t take a break.

The S&P 500 and Nasdaq both experienced their worst week of the year, dropping 3.64% and 5.54%, respectively.

And as if Nvidia hasn't been in the spotlight enough, the company continues to make headlines with record-breaking achievements.

According to The Kobeissi Letter, in 2024, Nvidia has:

1. Posted the largest single-day market cap gain in history ($326B)

2. Posted the largest single-day market cap loss in history ($279B)

3. Become the world’s largest public company

4. Erased $1T in market cap in under a month

5. Created an estimated 25,000 millionaires among its employees

Nvidia’s wild ride is a reminder of just how unpredictable and monumental this year has been for the markets and many key names.

Some key data bites from this week that you should know:

• EVs made up 94% of new car sales in Norway in August.

• The US added 142,000 jobs in August, below the 165,000 expected.

• VP Kamala Harris wants to raise the long-term capital gains tax to 28%.

• Blackstone $BX has acquired Australian data center company AirTrunk for $16.1B.

• The American Gaming Association expects a record $35B in NFL wagers this season.

• Verizon $VZ is buying Frontier Communications $FYBR in a $20B cash deal.

• Active ETFs are approaching $1T in assets.

• Apple $AAPL is trading at more than a 50% premium to its 10-year average earnings multiple.

In today’s newsletter:

• ⏱️ Time To Reach $1T

• 🧘 Buy & Hold Over Politics

• 📊 32 Stocks & Profit Margins

• 🏴‍☠️ Roadkill Stocks To Watch

• 👀 OnlyFans’ Explosive Growth

The road to $1T isn’t the same for every company.

Recently, Berkshire Hathaway briefly joined the elite group of public U.S. companies that have reached a $1T market cap.

• Of the companies to hit this milestone, Berkshire took the longest—approximately 44.5 years from the time it went public—according to data compiled by my friends at VisualCapitalist. 

• Notably, Berkshire is the first non-tech company in the U.S. to achieve this feat.

• In contrast, Meta reached the $1T mark in record time, just 9.1 years after its IPO.

The EV maker has faced a challenging couple of years and now trades at a $660B market cap.

Tesla is the only other name on the list that also hasn’t maintained their trillion-dollar status.

The EV maker now has a $660B market cap after a challenging couple of years.

The first debate between Donald Trump and Kamala Harris is just around the corner.

• The two will square off this week on September 10th, giving Americans a chance to hear each candidate’s policies ahead of the November 5th election.

As with any election, market nervousness can lead to panic or distress when it comes to investing.

However, the most important thing is to stay invested for the long term. 

Schwab strategists found that those who remained invested from 1961 to 2023 significantly outperformed those who chose to invest only when a specific party was in office.

Earlier this week, Bloomberg reported that the US Justice Department had sent a subpoena to Nvidia.

What exactly is a subpoena? 

• It’s a legal order requiring a company to appear before a court and testify on specific issues.

In Nvidia’s case, the Justice Department was reportedly investigating whether the company’s commanding position in AI processors may have breached antitrust laws.

However, a day later, an Nvidia spokesperson stated the company had not received any subpoena from the Justice Department.

Regardless, Nvidia’s dominance in the AI chip industry is undeniable, as seen in its impressive profit margins.

• At 55%, Nvidia’s margins are among the highest of any publicly listed company.

• For every $1 in sales, Nvidia keeps $0.55.

Every business dreams of margins like these. 

To put it in perspective, Nvidia’s profit margins were just 26% in 2020. 

The remarkable expansion highlights the company’s pricing power as it demands top dollar for its AI chips.

Note: It’s important to remember that profit margins vary by industry.

It's always best to evaluate companies within the same sector to get a more granular benchmark.

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Just because a stock has dropped significantly doesn’t mean it’s a bargain.

Many stocks on this visual have been crushed this year. 

• Some had valuations that were stretched too high and couldn’t meet lofty expectations, leading to a reset. 

• Others were already struggling, and things only got worse.

• But then there are those whose stock prices have fallen more sharply than their actual business performance. 

These are the hidden gems, offering a margin of safety because low expectations are already priced in.

Keep an eye on those that still have strong fundamentals—this is where you might find the diamonds in the rough.

Michael Burry once summed up his investment strategy by saying, “I try to buy shares of unpopular companies when they look like roadkill and sell them when they’ve been polished up a bit.”

OnlyFans continues to build its adult empire.

Fenix International, the parent company, recently released its financial results for the fiscal year ending November 30, 2023. 

• Gross payments—the total amount users spend on the platform—jumped 19% to $6.6B, up from $5.6B the previous year. 

• Revenue and profit also grew 20% YoY, reaching $1.3B and $485M, respectively.

The platform’s growth shows no signs of slowing. 

• The number of users ("fans") surged 28% to 305M, while the number of creators increased 29%, now totaling 4.1M.

OnlyFans’ business model is straightforward: it takes a 20% cut of creators’ earnings. 

The owner, Leonid Radvisnky, has now earned more than $1B in dividends over the last three years.

Notable Companies Reporting Earnings This Week:

• Tuesday (9/10):

  • GameStop $GME

• Thursday (9/12):

  • Adobe $ADBE, Kroger $KR

All of the companies that are reporting earnings next week can be viewed here.

📚 Recommended Reading

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Buys

• John James (R)

  • Company: Microsoft ($MSFT)

    • Amount Purchased: $15K - $50K

• Debbie Wasserman Schultz (D)

  • Company: Hecla Mining ($HL)

    • Amount Purchased: $1K - $50K

Sells

• Eleanor Holmes Norton (D)

  • Company: Berkshire Hathaway ($BRK.B)

    • Amount Sold: $15K - $50K

Buys

• Prospect Capital Corp ($PSEC)

  • Insider: John Barry (CEO)

    • # of Shares Purchased: 1,500,000

    • $ Amount: $7,800,000

    • SEC Forms: [1], [2]

• Dyne Therapeutics ($DYN)

  • Insider: John Cox (CEO & President)

    • # of Shares Purchased: 32,000

    • $ Amount: $1,057,216

    • SEC Forms: [1]

• Lululemon ($LULU)

  • Insider: Calvin McDonald (CEO)

    • # of Shares Purchased: 4,000

    • $ Amount: $1,040,000

    • SEC Forms: [1]

Sells

• Corpay ($CPAY)

  • Insider: Ronald Clarke (CEO & Chairman of BOD)

    • # of Shares Sold: 160,000

    • $ Amount: $49,520,000

    • SEC Forms: [1]

• Axon Enterprise ($AXON)

  • Insider: Patrick Smith (CEO)

    • # of Shares Sold: 120,539

    • $ Amount: $42,795,734

    • SEC Forms: [1]

• Microsoft ($MSFT)

  • Insider: Satya Nadella (CEO)

    • # of Shares Sold: 78,353

    • $ Amount: $32,017,224

    • SEC Forms: [1]

  • Insider: Amy Hood (EVP, CFO)

    • # of Shares Sold: 38,000

    • $ Amount: $15,600,794

    • SEC Forms: [1]

🤝 Review of the Week