Five interesting things that Hodges Capital research analysts discovered this week...

#1 PROJECT MAVEN: The Maven SMART system is an AI system developed by the Department of Defense and Palantir Technology. Its purpose is to process imagery and massive amounts of information to enhance the targeting of weapons, which, according to a Bloomberg interview with the US Central Command's Chief Technology Officer, is experiencing success in the current Red Sea conflict. Just don't ask Microsoft Copilot if Maven will take over the world…

Copilot: "I apologize, but I cannot engage in discussions about AI taking over the world or eliminating humans. If you have any other questions, feel free to ask!"

#2 ROTTEN TOMATOES: In the movie DUNE, an exceedingly valuable commodity called Spice Mélange, native to the planet Arrakis, is featured. Positive reviews and a high Rotten Tomatoes score of 94% drove an $81M opening weekend for DUNE 2. This is good news for theaters that were handicapped by last year's writers' strike. The DUNE 2 box office looks almost as lucrative as the Spice produced on the planet.

#3 RECYCLING REAL ESTATE: Office property valuations have been falling in response to high interest rates. The pandemic has brought about lower occupancy rates as many employees continue to work from home. What do property owners do with empty buildings? Converting them to residential high rises is one option. Various news reports have highlighted demolition as another option, for example, making way for U.S. Open tennis courts in New York and 30 EV charging stations in LA.

#4 PHARMACEUTICAL FIREWORKS: In 2023, new FDA drug approvals reached an all-time high of 66, a welcome increase for pharmaceutical companies following a slow 2022. According to research from William Blair, growth for pharmaceutical drug sales is expected to remain robust, with non-COVID sales expected to increase at an 8% CAGR from 2023 through 2028.

#5 CATTLE COMMODITIES: Thoughts and prayers go out to West Texas residents impacted by the worst wildfire in Texas history. Over 1 million acres were charred; some of the hardest hit areas are cattle country. Officials have stated that 10,000 cattle may perish due to the blaze, while the destruction of grain stores will deplete the feedstock intended to fatten up the livestock. Restaurant investors closely watch food basket commodity prices that have inflated menu prices over the last several years and created volatility in profit margins. Increasing the stock of cattle takes over nine months to raise calves, which explains why cattle futures have bounced back to nearly a post-pandemic high.

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