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

#1 CAN YOU FIND EGGS HERE OR THERE? CAN YOU FIND THEM ANYWHERE? Infected or exposed flocks are culled to prevent the virus from spreading, resulting in the depopulation of more than 44 million laying hens in the U.S. It takes healthy laying hens four to five months to “reach peak productivity” of about 24 eggs per month, according to the Agriculture Department.         

#2 HIGHER PREMIUMS: Car insurance rates are expected to increase by 8.4% across the U.S. in 2023, the largest rate increase in six years, according to the report from research firm ValuePenguin. The increase in premiums is due to a return to driving patterns resembling pre-pandemic life, the increased cost of car repairs, and the increase in medical costs. The rise of electric vehicles has also contributed to the price spike since insurance costs total about 28% more for electric vehicles than gas-powered ones.

#3 SLOWDOWN IN FREIGHT: The expenditures component of the Cass Freight Index, which measures the total amount spent on freight, fell 4.3% y/y in December, inflecting from a 4.7% increase in November. Expenditures fell 5.5% sequentially in December, reflecting a 3.3% decline in shipments and a 2.2% decline in rates. It is important to note that the expenditures component of the Cass Freight Index rose 23% in 2022 after a record 38% increase in 2021.

#4 MASSIVE UNDERINVESTMENT: “Since 2015, the oil and gas industry worldwide has been spending over $1 trillion less in investment than the 2010 to 2014 cycle.” – Scott Sheffield, CEO of Pioneer Natural Resources.           

#5 FAVORABLE DEMOGRAPHICS: “We continue to believe that the long-term outlook for the housing market remains favorable. The demographics of the Millennials and Gen Zs are advantageous for our business as we primarily serve first-time and affordable first-move-up buyers. Although existing home inventory has risen recently, there remains an undersupply of resale homes, particularly at our price points. And with the housing starts now down roughly 40% on an annualized basis, the industry is falling further behind in serving the underlying demographic demand.” – Jeffrey Metzger, Chairman and CEO of KB Home. 

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