🏋️‍♂️ These Companies Have The Most Debt

Happy Tuesday.

I hope you all had a relaxing weekend and got to spend time with friends and family on Thanksgiving. The market was closed on Thursday and closed early on Friday, but there were still some notable updates.

Some key data bites you should know: 

• Black Friday e-commerce spending in the U.S. increased by 7.5% from last year, reaching a record $9.8B.

• Apple iPhone maker Foxconn will invest $1.54B in India as part of its expansion plan.

• Hedge funds have suffered an estimated $43B in losses on short bets in US and European markets due to the recent sharp rally.

• Chinese leaders are intensifying efforts to resolve the property crisis by urging banks to fund an estimated $446B shortfall for the industry.

• U.S. consumers are expected to continue robust holiday spending this year, bolstered by $433B in excess savings.

In today’s newsletter:

• 🏋️‍♂️ Top 10 Companies With The Most Debt

• 📈 21 Stocks Ranked By Revenue Growth

• 🎮 Just How Big Is Microsoft

Let’s dive right in!

🏋️‍♂️ Top 10 Companies With The Most Debt

Here are the top 10 companies with the highest amount of debt.

We see them falling into distinct industry sectors, each using debt for sector-specific purposes:

1. Telecommunications ($VZ, $T, $TMUS): Large debt is often used to fund network expansions and technology upgrades like 5G.

2. Technology ($AMZN, $AAPL, $MSFT): Debt is typically used for diverse purposes like research and development, expanding digital infrastructure, and venturing into new market segments.

3. Automotive ($F, $GM): Debt is used primarily for manufacturing advances, developing electric and autonomous vehicles, and coping with the cyclical nature of the auto industry.

4. Media and Broadcasting ($CMCSA, $CHTR): Debt is used for content acquisition, infrastructure development for broadcasting, and competing in the rapidly evolving digital media landscape.

Accumulating debt can increase a company's financial risk, especially if a company has variable-rate debt, as rising interest rates can significantly increase its debt cost.

Key indicators like the debt-to-equity ratio and the company's ability to generate increasing revenue and cash flow are the key metrics to look at when determining if a company can manage its debt.

📈 21 Stocks Ranked By Revenue Growth

Now that most major companies have reported earnings, we can take a look at their 5-year revenue compound annual growth rates (CAGR).

As we see, companies with smaller market caps typically exhibit faster growth rates. While many investors focus on one-year revenue growth, which can vary for numerous reasons, a 5-year CAGR provides a more stable representation of a company's growth trajectory and long-term trend.

It's important to note that slowing revenue growth isn't necessarily the end of the world. Companies can compensate by improving their profit margins and operating efficiency, which can lead to increased cash flow and profits despite slower growth.

For example, Salesforce quickly achieved over 30% non-GAAP profit margins in Q2 by cutting costs, laying off staff, and raising product prices. Similarly, Meta Platforms enhanced operating efficiency by cutting annual expenses to $87B - $89B and reducing headcount by 21,000, resulting in a 40% operating margin.

🎮 Just How Big Is Microsoft

Microsoft has experienced remarkable growth this year, with its stock climbing 58.03% year-to-date, bringing its market capitalization to $2.81T. This is just shy of Apple’s $2.95T market capitalization. In January of 2022, Apple became the first company to hit a $3T market cap during intraday trading.

The enormity of these values, often overlooked by investors, highlights the staggering scale of these tech giants. To put it into perspective, Microsoft's current market cap is comparable to the combined market cap of 33 of the most recognized companies in the world, underscoring its significant presence in the market.

Notable Companies Reporting Earnings This Week:

• Monday:

  • Zscaler $ZS

• Tuesday:

  • Intuit $INTU, PDD Holdings $PDD, Workday $WDAY, CrowdStrike $CRWD, Splunk $SPLK

• Wednesday:

  • Salesforce $CRM, Synopsis $SNPS, Snowflake $SNOW, Dollar Tree $DLTR, Okta $OKTA, Pure Storage $PSTG, Foot Locker $FL, Victoria’s Secret $VSCO

• Thursday:

  • Dell $DELL, Marvell Technology $MRVL, Kroger $KR, Ulta Beauty $ULTA, UiPath $PATH

• Friday:

  • Genesco $GCO

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

Buys:

• Michael McCaul (R)

  • Company: JPMorgan Chase ($JPM)

    • Amount Purchased: $2M - $4M

  • Company: Taiwan Semiconductor ($TSM)

    • Amount Purchased: $250K - $550K

  • Company: AT&T ($T)

    • Amount Purchased: $115K - $300K

  • Company: Alphabet ($GOOGL)

    • Amount Purchased: $95K - $250K

Sells:

• Michael McCaul (R)

  • Company: JPMorgan Chase ($JPM)

    • Amount Sold: $2M - $4M

  • Company: Microsoft ($MSFT)

    • Amount Sold: $350K - $750K

  • Company: Nvidia ($NVDA)

    • Amount Sold: $200K - $500K

• Chuck Fleischmann (R)

  • Company: SPDR Portfolio Developed World Ex-US ETF ($SPDW)

    • Amount Sold: $15K - $50K

🤝 Review of the Week