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

#1 FINANCIAL VULNERABILITY: According to Morning Consult’s January Economic Outlook report, the share of Americans who lack savings to cover their basic expenses for a full month rose to 22.3% in December as inflation continued to drive up costs for food, gas, and other staple goods.  

#2 USED VEHICLES: The U.S. wholesale used vehicle market, which has seen sales begin to fall since November, has supply above average, and over the first two weeks of February, has seen the year-over-year price increase fall to 38% from 47% in December. Intermodal rail car shipments are also starting to show some improvement, suggesting bottlenecks are easing. – Macro Strategy Partnership

#3 PASSED ONTO THE CONSUMER: The cost of transporting freight on the ocean route between Asia and the U.S. West Coast for the week of 1/17/2022 was $15,171 per container, an increase of +250% compared to the same week in 2021 – Freightos Baltic Index

#4 FOURTH-QUARTER EARNINGS: The fourth-quarter earnings season is now more than 80% complete, and data provided by Strategas suggests that year-over-year earnings growth for the S&P 500 in the most recent quarter amounted to 32%. This increase compares to consensus expectations for roughly 22% growth at the beginning of earnings season. Notably, consumer discretionary has seen the most upside surprises.

#5 EXPECTATIONS: “Stock prices are the clearest and most reliable signal of the market’s expectations about a company’s future financial performance. The key to successful investing is to estimate the level of expected performance embedded in the current stock price and then assess the likelihood of a revision in expectations.” – Expectations Investing, Michael Mauboussin and Alfred Rappaport.  

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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.