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Hodges Friday Fast Five

"In the investment business, you go to school every day, but never graduate." - Don Hodges

 

Friday Fast Five - 5/31/2024

by Hodges Investment Team, on May 31, 2024

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

#1 HYBRIDS ARE GAINING TRACTION: According to data from Wards Intelligence, hybrids accounted for 7.6% of all new vehicle sales in the U.S. in 2023, up from about 3% in 2020. An article in Vox indicated that almost 80% of daily car trips in the U.S. are less than 10 miles, and most plug-in hybrids can function as fully electric for 20 to 40 miles at a time. Hybrids have been on the road since the Toyota Prius launched in Japan in 1997.  In 2023, hybrids sold for an average of $42,500 compared to $60,500 for EVs and $47,500 for conventional models.

#2 STAYING CONNECTED: According to the Pew Research Center, 80% of American adults indicated that they had home broadband internet service. This compares to just 1% of American adults in 2000. Today, 95% of U.S. adults use the internet, with the greatest adoption between the ages of 30 and 49. Women, college graduates, high-income earners, and those in suburban communities have the highest usage.     

#3 BIG LOSS FOR HERTZ: Hertz announced that it would offload 10,000 Tesla Model 3s and an additional 20,000 over the next year. According to the Car Dealership Guy, Hertz went all in on EVs back in 2021, purchasing 50,000 Model 3s as part of a 100,000-car deal. Since then, the Company has lost $440MM on the bet, mostly due to rapid depreciation.  Hertz’s depreciation cost per vehicle (DPU) skyrocketed to $592 in the first quarter of 2024, up from $498 in the previous quarter and $253 a year ago. Hertz bought near the top of the market, and Tesla has steadily dropped prices.  

#4 TIME VALUE OF MONEY: According to Grant’s Interest Rate Observer, stock market activity is increasingly concentrated in the final 10 minutes of the day. Data from BestEx Research shows that roughly one-third of average daily S&P 500 component volumes were logged after 3:50 pm Eastern in March. The rise in passive investing helps explain the migration, as index funds typically transact at day’s end to match their benchmarks.

#5 TOLL TRAP: According to the Dallas Morning News, Texas has built nearly as many tollway miles as the rest of the U.S. combined in the last 20 years. Between 2001 and 2021, Texas built more than 628 miles of toll roads. Lawmakers turned to toll roads to boost the Texas economy and address population growth without raising taxes. Texas’ population surpassed 30 million in 2022 and is expected to reach 47.4 million by 2050.

 

 

 HCM is an Investment Advisory Firm registered with the Securities and Exchange Commission (“SEC”), is a wholly owned subsidiary of Hodges Capital Holdings and serves as investment advisor to the Hodges Funds. HCM is affiliated with First Dallas Securities, Inc, a broker-dealer, and investment advisor registered with the SEC.

This discussion is not intended to be a forecast of future events and should not be considered a recommendation to buy or sell any security. Past performance is not indicative of future results. Investing involves risk. Principal loss is possible. Investing in smaller companies involves additional risks such as limited liquidity and greater volatility. No current or prospective client should assume that information referenced in this communication is a recommendation to buy or sell any security or is a substitute for personalized investment advice from your individual advisor. HCM does not provide tax or legal advice. Consult your tax or legal advisor for any related questions.

All information referenced herein is from sources believed to be reliable and is provided as general market commentary and does not constitute investment advice. This material was created for informational purposes only and the opinions expressed are solely those of HCM. HCM shall not in any way be liable for claims and makes no expressed or implied representations or warranties as to the accuracy or completeness of the data and other information. The data and information are provided as of the date referenced and are subject to change without notice.

Hodges Friday Fast Five

We aim to help investors separate the news from the noise by providing our perspective. Every Friday the Hodges Capital research analysts list the five most interesting things they discovered that week. Subscribe to receive the Hodges Friday Fast Five in your inbox every Friday. 

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