Five interesting things that Hodges Capital research analysts discovered this week...
#1 YOUR FLIGHT’S BEEN DELAYED: According to estimates from consulting firm Oliver Wyman, the US airline industry is short 8,000 pilots, or 11% of the total workforce. Unions looking for better contracts, an unforeseen number of pilots accepting buyout packages or early retirements during the pandemic, and a lack of educated fliers are the primary drivers of the shortage. Southwest Airlines recently announced it would reduce the amount of experience needed to qualify for aviators in an effort to attract more pilots.
#2 OLD MACDONALD: According to the USDA, about 89% of the roughly 2 million U.S. farms were small family farms in 2021. Small family farms operated 45 percent of U.S. agricultural land and produced 18 percent of the total value of production. Small family farms have gross cash farm income before expenses below $350,000 annually. The total acres operated by all U.S. farms were 875.8 million.
#3 SOFTNESS IN LUXURY: “What we’re starting to see is a deceleration of the aberrational growth we experienced in the last few years, and I think we have to prepare ourselves for that and be very deliberate about our decision making,” Marc Metrick, the CEO of Saks Fifth Avenue. “Over the last couple of years, you saw a lot of people buying a lot of footwear and handbags. Those businesses are going to be a little bit softer,” said Metrick. “On the other side of it, as people continue to come out, continue to return to the office, continue to travel, you’re going to see some sportswear and evening-wear still be stronger. There’s going to be, as there always is in our business, pockets of strength and pockets of a little bit of softness.”
#4 HOME PRICE APPRECIATION: According to the National Association of Realtors, homeownership is the largest source of wealth among families, with the median value of a primary residence worth about ten times the median value of financial assets held by families. At the national level, a homeowner who purchased a single-family existing home ten years ago at the median sales price of $169,000 would have gained $225,000 in home equity if the home were sold at the median sales price of $363,100 in the third quarter of 2021. 86% of the gains come from price appreciation, and the remaining 14% comes from principal payments. The average home in San Jose/Sunnyvale/Santa Clara, California appreciated by $1.23 million in the last ten years.
#5 COVID BOOSTER: Pfizer reported more than $100 billion in revenue in 2022, and Covid products contributed ~57% of total revenue, according to Chartr. The pharma company is putting the Covid cash to work through acquisitions. Pfizer announced deals totaling $17 billion in 2022 and is in early talks to acquire cancer drug maker Seagen.
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