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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 - 1/21/2022

by Hodges Investment Team, on Jan 21, 2022 9:00:00 AM

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

#1 FOURTH QUARTER: 4Q21 expectations are for revenue and earnings per share growth of 13.1% and 20.9% for the S&P 500, respectively. The market expects more than half of the earnings growth to come from Cyclicals. – Credit Suisse

#2 TRUCKLOAD RATES: We’ve learned that the recent surge in January truckload freight rates reflects higher diesel fuel prices, shift to truckload from intermodal due to rail issues, higher than normal product returns, and accelerated shipping ahead of Chinese New Year and the Olympics.    

#3 INTEREST RATES: The market foresees a 25-basis point increase for the federal funds rate in March. By the end of the year, the market prices in between four and five 25 basis point hikes by the Federal Reserve. – Cornerstone Macro      

#4 HOMEBUYERS: “We also look at our studio revenues and lot premiums, which we view as discretionary spending for our buyers. We would expect to see a decline if buyers are stretched, but studio revenues and lot premiums have increased even as base prices have risen. On a combined basis, buyers spent about $48,000 per home in these two categories in 4Q21. Finally, and perhaps most importantly, is the credit profile of our buyers. Their average FICO score in the quarter was 732, an all-time high. In addition, about 2/3rds of our buyers qualified for a conventional mortgage, and our buyers overall are averaging a down payment of over $67,000.” - Jeffrey Mezger, Chairman and CEO of KB Home

#5 LUXURY FASHION: “Our job is to make watches that connect to the heart, not to phones.” - Efraim Grinberg, CEO of the Movado Group


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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 Private Client 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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