Futures mixed, KB Home warns, Mobileye pops, Carvana upgraded, uncertainty in Canada
Somehow I am getting this newsletter out, while solo parenting, an hour ahead of schedule. And with less tears than usual (both mine and the children). Sure, I’m only getting a 30% hit-rate on teeth brushing, breakfast is an open jar of jam, and at least one child was sent to school without indoor shoes but the point is, I’m doing it!
A new episode of In the Money with Amber Kanwar is out now! In this episode we speak with Rebecca Teltscher of Newhaven Asset Management. She loves her defensive dividend paying stocks, and right now that is what’s in vogue. She gives her best dividend paying ideas including one stock she says is the best buy in the markets today. Tune in! Listen on Apple, Spotify or here.
This newsletter is sponsored by BMO InvestorLine. The newsletter and the podcast may give you some interesting investment ideas. To help you research and potentially act on those ideas, consider BMO InvestorLine. Their platform provides the resources you need to analyze potential investments, with the valuable tools and research you need when exploring the market. Plus, you’ll find the BMO Investment Learning Centre with educational courses and videos empowering you to make informed decisions. Learn how you can earn up to $3,500 cash back when you open a new account.
True north: Futures are indicating an ability to build on the surge in stocks yesterday. Tech stocks led the recovery yesterday on both sides of the border on reports the White House wouldn’t pursue industry specific tariffs. “My theory is that US stocks now underperform most when the tariff threat is the highest, because if you believe returns to capital have been greatest under global free trade, then the larger the threat to that, the larger the impact on the ultimate beneficiary of capitalism in recent years, namely US stocks,” surmises Jim Reid at Deutsche Bank. We won’t really have an idea until April 2nd when the announcements are made. Gold hanging out near record highs indicates there is still a fair bit of a defensiveness floating around. Still, since the 10% correction on the S&P 500 it has been pretty much a one-way ticket higher with every single sector up led by energy, tech and financials.
Cracks in the foundation: Shares of KB Home are down 8.5% in the pre-market after reporting a shortfall in profit and a miss on sales. Orders for new homes fell 17% from last year, which was much worse than feared. The homebuilder is cutting its sales and margin forecast for the year and the upcoming quarter warning that sales next quarter will now fall 9% compared to the expectation of only a 1% decline. This comes after Lennar posted similarly underwhelming results last week. “Consumers are working through affordability concerns and uncertainties related to macroeconomic and geopolitical issues, which are causing them to move slowly in their homebuying decisions,” said the CEO of KB Home Jeff Mezger. Shares are poised to open at a 16-month low.
Pact: Shares of Mobileye are surging 13% in the pre-market after announcing a pact with Volkswagen. The embattled maker of driver assistance technology is working with the carmaker to upgrade its advanced automated driving technology. Call it a short squeeze with nearly 30% of the shares outstanding short. Shares fell last week when Nvidia announced a partnership with General Motors.
Notable calls: Shares of CloudFlare are up 5% in the pre-market after a double upgrade by Bank of America. The analyst, Madeline Brooks, says fundamentals are improving and it is set to be an AI winner. She is boosting her price-target from a street low $60/share to $160/share implying nearly 30% upside. The bet is that provider of internet services can become an “AI-as-a-service” business. Carvana is getting a lift after Morgan Stanley’s Adam Jonas says there is an “unique” buying opportunity” in the stock right now. Shares have been under pressure recently but Jonas says he sees more than 30% upside from here. “While Carvana remains more exposed to a lower strata of auto credit relative to the rest of our auto coverage, the company has demonstrated execution with profitable growth and addressed leverage concerns,” said Jonas.
Certainly uncertain: As a result of tariffs economic policy uncertainty in Canada has reached a record high according to data collected by ATB Capital Markets. Which is pretty wild when you consider that just 5 years ago the whole world shut down and we never knew when we would be able to breathe the same air as other people. ATB is focusing on where the opportunity could lie in all of this. Eventually, uncertainty will abate and there could be a pop in stocks that have been hit the hardest by trade anxiety. “Some of the names that we believe could see some relief with some definition of a tariff regime at potentially lower rates, and also benefit from improved consumer confidence levels, include Air Canada, Cargojet, Exchange Income Corp, and NFI Group,” they wrote.
Don’t miss our next episode! Submit your questions here!
