Friday Fast Five - 9/24/2021
by Hodges Investment Team, on Sep 24, 2021 3:51:00 PM
Five interesting things that Hodges Capital research analysts discovered this week...
#1 TEXAS RELOS CONTINUE: Corporate relocations to Texas in 2021 are up 34% according to data from Ytexas.com. As more businesses seek out favorable tax and regulatory environments, the Lone Star State has attracted 147 relocations over the past five years from the Fortune 1000 list.
#2 BOXBOARD PRICES: Boxboard prices have continued to improve in September, reflecting rising production costs, steady demand, and supply tightness. CRB (uncoated 100% recycled paperboard) prices are up to $40/ton to just under $1,100/ton, which should bode well for the profits of boxboard producers in the current quarter.
#3 GOT CASH FLOW? A recent study published by Empirical Research Partners demonstrated that large-capitalization stocks of companies in the top-quartile of free cash flow margins tend to outperform over the long run, outperforming by 6% annually over the past five years.
#4 DIGITAL AD MARKET: According to eMarketer, the digital ad market for mobile apps is expected to grow double digits over the next several years from an estimated $189 billion in 2020 to $283 billion by 2024. Such growth creates investment opportunities for new disruptive platforms that capitalize on the migration away from traditional media.
#5 SMALL-CAP FLOWS: After seeing strong capital inflows during the first six months of 2021, the small-cap ETF (IWM) has experienced meaningful liquidations over the past couple of months. We view the recent reversal in capital flow as a compelling constrain indication that the selling in small-caps could be nearing capitulation.
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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.
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