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Today's data shows an easing in the labour market. We are a far cry from a recessionary level. Core PC was up 4.2%. The Fed may be done raising rates, but they won't ease, because their inflation target remains 2%. She's encouraged that the rally has broadened out recently, like energy beating tech. This reflects earnings coming in better than expected. Earnings have troughed. You still want to own tech and comm services, but don't make it 35% of a portfolio. That's too risky.
She bought more CDW on the Dell news today, because PCs were a $1 billion more than they expected and PCW has 30% exposure in PCs. They ahve a great business mix, changing to software and services which boast higher margins. Last quarter, it sounded like PCs were bottoming, so this is set up nicely.
Just bought it. Is down 25% from its high, so the PE is reasonable at 40x now. It's a compounder, and AWS's growth was 12% vs. 11% in the prior. They have easy comps. Margins are strong. Retail is accelerating after fixing supply chain problems and lowering operational expenses. Upside is coming.
In early August, Goeasy reported a convincing beat for Q2: loan originations rose 6%, their loan portfolio was up 35%, revenues jumped 20%, and adjusted EPS climbed 16%, all year-over-year. Also, the company posted record revenues of $265 million and record customer applications for credit, up 25%. This year marks Goeasy's ninth-straight year of raising its dividend (currently 3.01%), and 19 consecutive years of paying one.
Though shares have jumped in the past month, Merck could be entering a new breakout phase. Stability comes from its low 0.34 beta, strong cash flow and growing earnings. It has beaten its last four quarters. It pays a 2.65% dividend. However, its current PE of 90x is far from its five-year norm of 27.53x as well as its competitors Amgen, Eli Lilly and even Moderna. Clearly, the market is pinning high hopes on this name to trade at this valuation.
The unemployment rate rose today, largely because participation increased. Good news in terms of the Fed's rate hikes, but you also don't want this trend to continue. The market is focusing on 2024 earnings. We are set up for a huge Q4 rally after September seasonality. He's position for the market to rip after that. When a market has rallied like this has this year, it crescendos positively in Q4--people chase performance, Many felt when this year started that there will be a recession, and that hasn't happened. He likes the market broadening, though tech won't collapsed.
