COMMENT
Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research

Top Performers in June: 

Propel Holdings Inc. (PRL)

The best performer of June was Propel Holdings Inc (PRL) whose stock price was up 19.4% on the month, up 2.9% year-to-date, and up 48.5% over the past year.

PRL is an innovative fintech company operating through three main brands, MoneyKey and CreditFresh in the US, and Fora in Canada. It reported strong earnings in early May, which helped to improve its momentum, and since then, it has carried this positive momentum into June. The name was heavily sold off during the April Tariff turmoil decline, and since the market recovered, PRL has continued its climb higher. It trades at an 11X forward earnings, it has a 1.9% dividend yield, and with a strong growth profile, we feel this name can move higher in the coming year(s).

Galaxy Digital (GLXY)

The second-best performer of June was Galaxy Digital Inc (GLXY), whose stock price was up 17.4% on the month, up 19.3% year-to-date, and up 74.7% over the past year.

It operates across a few main segments: global markets (trading, lending, derivatives), asset management (venture investing, passive ETFs, etc.), digital infrastructure (data centres for blockchain and AI). It has now completed its uplisting on the NASDAQ exchange, and in June, it closed its first external venture fund at more than $175 million. This fund aims to back early-stage blockchain and digital asset startups. The crypto market has been moving higher in general, and this has helped to improve its price action. Lastly, it has established a strong partnership with CRWV and this has helped to drive growth and diversify its operations.

Magellan Aerospace Corp (MAL)

The third best performer of June was Magellan Aerospace Corp (MAL) whose stock price was up 14.4% on the month, up 91.7% year-to-date, and up 140.9% over the past year.

MAL is a small ($1.0 billion market cap) aerospace name that pays a decent yield of 0.5%. It has a diversified customer base and long-term contracts, serving customers like Boeing, Airbus, and Lockheed Martin. In late May, TD Securities upgraded MAL and raised its price target, which helped its price action into June. It also announced a dividend increase and it gained momentum from the rising global military and defense-related spending. Given its forward expected earnings growth rates, its valuation of 17X forward earnings seems fairly attractive to us.
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COMMENT

Rumours of Trump about to fire Powell sent markets tumbling and interest rates rising. Then, Trump denied the firing, and market rallied. The market said that Trump is wrong about firing Powell. While Powell made mistakes in the pass, raising them in late 2018 and calling inflation transitory post-Covid, there's no reason for him to cut rates. Trump would be smart to leave Powell alone. Firing him would rock the stock market and raise long-term interest rates.

DON'T BUY

Though +18% in the last 6 months, Japan (and Korea) are in the line of fire for tariffs.

WAIT

Up 13% in the last 6 months. The stock is inexpensive, but the chart tells him to wait. It had a good run, and now the market says it looks bad.

DON'T BUY

It acts like a bond. There's a lot of competition in telcos.

BUY

Just reported a clean top and bottom line beat. Loan loss provisions were lower than expected. Net interest income came in light. All businesses performed well, including commercial/investment banking beat handily while wealth management was in line. They raised full-year net interest income forecast by $1 billion. The CEO did cite risks from tariffs. 

BUY ON WEAKNESS

Sales and earnings beat, some of that was from lower provisions for credit losses. WF cut their full-year forecast. Shares were punished by 5% yesterday. He's sticking by this, though. Trusts the CEO to get things back on track.

BUY

They reported a big top and bottom line beat, sending shares rallying today. All five segments grew last quarter, led by wealth management (up 20%). Higher costs from their turnaround should decline next year, which the market liked to hear. The CEO is turning things around. Will keep climbing.

DON'T BUY

The only big bank that missed on the top line, due to a net interest income line miss. They maintained their full-year net interest income forecast. Falling short were markets and banking segments. Shares fell today.

BUY

Delivered a blow out quarter, top and bottom lines, thanks to their red-hot global banking and markets division. Investment banking is up 26% YOY. The return of M&A is a key driver. 

BUY

Had healthy top and bottom line beats. All three divisions beat. Wealth management is seeing huge inflows. 

BUY ON WEAKNESS

In Q1, staff retention improved further to help lift sales growth, has been improving their menu (capturing food trends, like adding vegetable dishes), and are opening more locations this year. Likes the company, but shares have run up hard this year. Wait for their next report though he expects another beat.

DON'T BUY

They cut the dividend, and burgers are a tough industry.

BUY

Up 40% since early April lows. Delivered a small revenue beat and nice earnings beat.

COMMENT

Has never been this cheap. Has high hopes for their new central nervous system drug; it if doesn't work, he will sell BMY.