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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 - 5/20/2022

by Hodges Investment Team, on May 20, 2022 7:00:00 AM

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

#1 NO LOVE FOR ENERGY? Strategas highlighted a remarkable contrarian statistic this week that the XLE, an exchange-traded fund (ETF) that tracks the energy sector, is up 45.5% this year and has experienced year-to-date outflows of $23 million. In contrast, the 3X leveraged long QQQ ETF, designed to triple the return of the NASDAQ, is down 62.0% this year and has seen year-to-date inflows to the tune of $7.7 billion. (Data as of 5/16/22)      

#2 AMERICAN MIDDLE CLASS: According to Pew Research, the share of American adults living in midclass households has remained steady over the past decade. However, the percentage of aggregate income attributed to the middle class is estimated to have declined to 41% in 2020 from 62% in 1970, entirely due to larger gains in income among upper-income households.    

#3 HOUSING: “We continue to believe that the U.S. housing market is significantly underbuilt. And while I acknowledge higher mortgage rates will likely represent a near-term headwind to satisfying that demand, we continue to see tremendous momentum and long-term growth for the industry. – David Flitman, CEO of Builders FirstSource

#4 MORE CREDIT: Recently released data from the Federal Reserve has indicated that the use of revolving credit increased to more than $30 billion through the end of March. As a percentage of disposable income, revolving credit amounted to 5.9%, which is still below the pre-pandemic levels of 6.6%, suggesting that consumers have room to spend.

#5 USED CAR PRICES: “We clearly have returned to vehicles depreciating again. That’s a good news story for both inflation and for consumers looking to buy a vehicle,” Jonathan Smoke, chief economist at Cox Automotive, recently told CNBC. The drop-off in pricing comes as Manheim estimates that used retail sales declined 13% in April from March but remain up 15% from a year ago.  


Hodges Private Client is a program offered through Hodges Capital Management, Inc. (“HCM”). 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 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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