🚴‍♂️ A Terrible Investment

Hi! In today's newsletter: 1) Peloton Crash, 2) Oil Prices Target $100, 3) Dividend Growth Stocks Analyzed, and more!

Author

Carbon Finance
October 03, 2023

It’s Tuesday.

In a dramatic turn of events, the looming threat of a U.S. Federal Government shutdown was averted as President Joe Biden signed a temporary funding bill just before the deadline, ensuring government agencies remain operational until November 17, 2023. While this move prevents an immediate crisis, the temporary nature of the funding and ongoing political divisions suggest that further governmental financial challenges may arise in the near future.

In today’s newsletter:

  • 🚴‍♂️ Peloton Crash

  • 🛢️ Oil Prices Target $100

  • 💰 Dividend Growth Stocks Analyzed

Let’s dive right in!

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🚴‍♂️ Peloton Crash

Peloton, one of the notable companies that thrived during the pandemic, has been facing multiple challenges in bouncing back from a slump. CEO Barry McCarthy has been forming partnerships with major brands, like Hilton, to stimulate growth.

However, Peloton's recent quarterly revenue outlook was disappointing, and the company has grappled with product recalls and executive changes, signaling ongoing struggles.

Recently, Lululemon and Peloton agreed to form a partnership, with Lululemon discontinuing its Studio Mirror fitness device and directing customers to Peloton's digital classes, while Peloton agreeing to sell co-branded Lululemon apparel.

This follows Lululemon's $500M acquisition of Mirror in 2020 to rival Peloton and a legal dispute between the two over apparel designs.

🛢️ Oil Prices Target $100

Oil prices are anticipated to surpass $100 a barrel for the first time in over a year, largely due to strategic oil output reductions by Saudi Arabia and the OPEC Plus group. The deliberate withholding of roughly 5% of global supplies has notably influenced the price of Brent crude, despite robust global demand, and a current supply deficit that is rapidly depleting key oil storage areas.

The rise in prices is also buoyed by the U.S. averting a government shutdown and positive factory activity data from China. However, European manufacturing data indicated a continued downturn in several regions, posing concerns for oil demand.

Despite the price surge, some analysts believe that reaching $100 might be short-lived due to global economic uncertainties and seasonal demand fluctuations. While some European refiners believe they can manage high prices, concerns arise about potential demand destruction if prices remain high. Meanwhile, America’s emergency oil stockpile has plunged to a 40-year low.

💰 Dividend Growth Stocks Analyzed

Dividend growth stands as a beacon of financial stability and prudent management, particularly during periods of economic uncertainty and macro pressures. Recently, many of these notable companies have increased their dividends such as Microsoft, Starbucks, Verizon, JPMorgan, and Deere.

When a company consistently increases its dividend payouts, it not only signals a robust and sustainable business model but also showcases a commitment to returning value to shareholders. During these times, a steadily growing dividend can act as a cushion, providing a reliable stream of income to investors when appreciation is unpredictable or stagnant.

Moreover, companies that prioritize dividend growth often exhibit disciplined fiscal management, which is always one of the most important foundations of a successful business. Companies that consistently increase their dividends for 25+ or 50+ years can join the exclusive Dividend Aristocrats or Dividend Kings, respectively.

🎮 New GameStop CEO. Billionaire Ryan Cohen has become GameStop's $GME new CEO amid company struggles and shifts in the gaming industry. [BB]

🚀 Walmart Tests AI. Walmart $WMT is experimenting with a generative AI tool to enhance shopping experiences, assisting in product visualization and decision-making. [AX]

🧑‍🎓 Student Loans Are Back. Approximately 40M Americans are facing financial strain due to the resumption of federal student loan payments, redirecting an estimated $7B-$8B per month away from consumer spending into loan repayments. [CNBC]

📊 Q3 Performance. In Q3, crude oil and short-term investments thrived due to inflation pressures and OPEC+ actions, while long-term bonds and most stocks, faced challenges; however, annual market returns remain positive. [AX]

🧑‍🎓 SmileDirect Bankruptcy. SmileDirectClub $SDC has filed for Chapter 11 bankruptcy, revealing $499M in assets and over $1B in liabilities. [BB]

🥗 BlueApron Acquired. Wonder Group, a food-delivery startup, is set to acquire meal-kit company Blue Apron $APRN for about $103M million. [WSJ]

Notable Companies Reporting Earnings This Week:

  • Tuesday:

    • McCormick & Company ($MKC)

  • Wednesday:

    • RPM International ($RPM), Tilray Brands ($TLRY)

  • Thursday:

    • Constellation Brands ($STZ), Levi Strauss ($LEVI)

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

Major Trades Published Week of 9/25. Trades may be those of family members. [Source: 2iQ]

Buys:

  • Michael McCaul (R)

    • Company: SAP ($SAP)

      • Amount Purchased: $100K - $250K

    • Company: Nvidia ($NVDA)

      • Amount Purchased: $100K - $200K

  • Bill Keating (D)

    • Company: Boeing ($BA)

      • Amount Purchased: $15K - $50K

Sells:

  • Michael McCaul (R)

    • Company: Meta Platforms ($META)

      • Amount Sold: $200K - $500K

    • Company: Astrazeneca ($AZN)

      • Amount Sold: $150K - $350K

  • Bill Keating (D)

    • Company: Simon Property Group ($SPG)

      • Amount Sold: $15K - $50K

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