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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 - 12/02/2021

by Hodges Investment Team, on Dec 3, 2021 10:00:00 AM

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

#1 BLACK FRIDAY: Retail data from Sensormatic Solutions indicated that store traffic on Black Friday declined 28% compared to 2019. This was likely driven by shoppers starting their holiday shopping much earlier due to supply chain concerns. 61% of shoppers surveyed by the NRF said they had started their holiday shopping before Thanksgiving compared to 59% last year.

#2 PROFIT MARGINS: A recent study published by Strategas suggests that estimated profit margins for the S&P 500 are expected to stabilize around 17% compared to just north of 15% before the pandemic. However, an extended period of higher input cost could threaten record profit margins in specific industries that lack pricing power.    

#3 CONSUMER SPENDING: Wedbush recently surveyed 500 mid-upper income consumers regarding their intention to purchase big-ticket durable goods over the next 18 months and found that 42% of the respondents expect to increase such spending. Only 21% were anticipating fewer expenditures on big-ticket items.

#4 STEEL PRODUCTION: Global steel production is up 6% year to date but fell year-over-year by 10.6% in October to 145 million metric tons. According to Bradesco BBI, the decline in October resulted from production curbs in China due to power shortages. In addition, steel production in countries like Turkey has been disrupted by input cost inflation in energy and scrap metal prices.

#5 U.S. LODGING: Last week, U.S. hotel RevPAR (Revenue Per Available Room) was up 108% from a year ago, according to a report published by Deutsche Bank Research. Rates were up 43.0% from the same period a year ago, and occupancy was up 45.2%.

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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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